Convenience is booming, however, in the face of online grocery growth, how do physical stores remain relevant?

Conveniencestore.co.uk recently reported that the convenience sector is set to grow by 18% between 2017 and 2022, to £47.1bn. In the same period, online grocery retail is forecast to grow most quickly, increasing 53.8% to £16bn.

Neither of these statistics are particularly surprising. Online grocery shopping offers personalisation of service, convenience, and proven final mile capability. Equally, changes in purchasing behaviours continue to drive growth in the convenience market. Consumers are time-poor and top-up shopping is more prevalent than ever.

Prompts me to ask a number of questions...

  • Online grocery retail potentially presents the ‘ultimate' convenience proposition. How do physical convenience stores remain relevant?
  • Does the traditional triumvirate of price, product and promotion provide sufficient grounds to deliver and retain competitive advantage?
  • How do convenience retailers prevent a decline in footfall?

One potential answer is to create ‘positive friction’, a subject I briefly touched upon in a previous blog. The focus will shift evermore to understanding & fulfilling the customer needs, through technology and instore customer experience.

Clearly recognising this, Waitrose recently announced a long term deal with Ecrebo, a point of sale marketing specialist. The proposition is integrated with the Waitrose Loyalty scheme, using customer insights to present highly targeted coupons and promotions in real time, at the point of payment. Personalised instant gratification!

‘Frictionless Retail’ is a concept which has been discussed and theorized upon for some time. The objective of frictionless is to deliver retail experiences which remove the ‘negative friction’ for customers. To simplify or improve the efficiency in elements of the process which don’t add value. In the case of Amazon Go, queuing at a checkout to pay.

Whilst loyalty schemes provide customer insight into purchasing patterns, understanding physical interaction between customers and physical stores is on the rise. A recent cbcommunity article commented on opportunities presented through Wifi Analytics. Insight into customer traffic can be used to inform more effective store layout, obviously. However Wifi Analytics moves beyond this. Combining consumer traffic with product purchase insight again presents opportunities to offer personalised promotions – direct to mobile.

There are clearly challenges to this – both from an infrastructure investment perspective and persuading customers to connect to wifi. How likely is it that convenience shoppers would take the time to connect to retailer wifi? There are a couple of potential answers. Firstly, as Forbes recently discussed, digitally native millennials are having a significant effect on retail.

Secondly, multi purposing retail spaces is becoming more prominent. The growth in fresh ‘Food to Go’ propositions is meteoric, and presents consumers with a reason to remain in store longer (whilst fresh food is prepared). The increase in on premise time spent is an ideal opportunity to present customers with hyper relevant content. Indeed, in announcing the new Simply Fresh city centre convenience format, Kash Khera highlighted the aspiration to achieve 50% profit from the kitchen, and 50% from the store. This clearly represents a remarkable shift in retailers viewing ROI per sq foot of stores.

So, can convenience stay relevant in the face of online growth? Yes, absolutely!

About the Author...

Rich heads Answer Digital Retail, delivering world class solutions to clients including Costcutter Supermarkets Group, FCUK, Arcadia and Ramsden International. Richard has a passion for retail and the transformational impact technology is having on customer experiences.