Prior to the recession food, non-food and home-related sectors of the retail industry were all doing reasonably well. Retail expenditure year-on-year growth was around 3.6%. However, with a recession there are inevitably some winners and losers in retail. By 2012 non-food retail had shrunk by £0.7bn and it has been further hit by the unseasonable weather this spring.
So what exactly is happening in the non-food sector and who has been affected?
Volumes of non-food have decreased this means that there is less opportunity to sell, which is particularly worrying for non-food retailers who depend on economies of scale.
So who’s suffered the most?
Homeware as well as the music and video industry have taken the brunt of the recession. Not only are consumers cutting back on luxuries but the weather in the UK has not helped consumer spending. B&Q took a £25m hit on its bottom line due to the wet summer last year and the icy weather in UK has affected the store further. At a time when people have normally snapped up BBQs people have instead wanted warm up under a blanket with a cup of hot chocolate. Further, the collapse of Blockbuster and HMV were another sign that the non-food sector was struggling.
However, it’s not all bleak, the food sector has been benefitting from the recession but is also having to adapt to the changing buying behaviour of consumers.
But what’s going on in the food sector, it doesn’t seem to be fairing so badly?
Food retail has continued to grow, with inflation causing consumers to spend more on their weekly shop. Food purchasing now makes up 45% of the total retail spend which makes a difference of 7% from 2004.
Here are some of the big changes in buying behaviour that have affected food retail:
– Consumers are tending to eat at home rather than eat out at restaurants.</span
– Consumers are buying little and often.
– Click and collect is bringing increased footfall to convenience stores.
– Consumers are focussing more on price and are looking for value.
– Increased use of technology.
What does technology have to do with c-stores?
Technology is influencing consumers buying behaviour and it’s important that c-store retailers stay on top of developments to ensure that their customers’ needs are met. Key developments include:
Payment Technology: Consumers can not only pay by cash, credit and cards but also online and via their mobile phone. Even though only 6% of consumers use smartphones to make purchases, the smartphone is become a key influencer in buying behaviour. Increasing numbers of consumers use their phone to price check and research the product; this is also often called showrooming. Showrooming can be bad news for retailers; however there are tactics that retailers can use to overcome showrooming. To find out more check out this article which gives retailers some useful showrooming hints and tips: https://retailaccounting.wordpress.com/2013/04/08/showrooming/
Ageing Population: The population is also ageing and increasing numbers of convenience retailers will need to look at how they can attract the over 65s, particularly as family shoppers (age 35 – 44) are tightening the purse strings.
Overall the future is looking bright for convenience retailers who are the most likely to benefit from the change in buying behaviour
The key to success for convenience retailers is driving customer loyalty so it’s important to stay on top of developments within the evolving industry.