New year, new challenges in convenience.

8 January 2021

Convenience retail is going to rise to all the challenges and grow again in 2021. We look at the key predictions and what retailers need from brands in the year ahead.

Nobody could have accurately forecast 2020 or really be certain what is going to happen in the year ahead. One thing we do know is that convenience retailers will be required to step up to the plate again while adapting, innovating, and serving their local communities as the pandemic continues.

Convenience was a success story last year in terms of service and sales but will the sector continue to thrive? What were the key drivers behind growth and will they change in the year ahead? How can brands help retailers to evolve and best serve the needs of their customers?

We look at key predictions and trends likely to continue into this new year, with the views from leading trade media commentators and our network of independent convenience retailers.

Despite wider uncertainty the expectation is that the convenience market will continue to grow. The IGD tips the UK market to grow by 13.2% in value terms by 2022 and Mintel predicts consistent growth of up to 3% through to 2024 when it’s forecasted to reach £49 billion in sales.

“Convenience will remain one of the key growth channels and as such a key battleground for existing convenience operators, major supermarkets and key new players alike.”
Reports, Ronan Hegarty at The Grocer

As another national lockdown bites, convenience retailers are again on the frontline providing an essential service to their local communities while adapting to ever changing consumer needs and behaviour.

Impacts from the pandemic will be with us for some time, but eventually things will improve, so what then? The context for convenience retailers, as Costcutter boss Darcy Willson-Rymer put it last year, is turning “lifeline shoppers into life-long customers”. What becomes pivotal is for retailers and brands to collaborate and best understand what drives people to buy.

Value therefore is going to be a key battleground in 2021 as households will be watching their spending. If people shop ‘little and often’ more frequently to manage cash flow then smaller shops will benefit. As Aidan Fortune, editor of Convenience Store states: “retailers will have to work hard to ensure their proposition is competitive.”

Brands must play their part in working collaboratively with retailers. Not just in terms of price but to advise retailers more effectively on what to stock - why certain brands or services will work better for them, how they can best promote their brands and help improve their store environment. The opportunity is there for brands to become category leaders.

Londis retailer Atul Sodha said: “we need brands to recognise that local independents/symbol operators are at the mercy of restrictive ranges from head offices. Many lines are either not available or not for convenience.” This is despite numerous examples where independent retailers effectively delivered NPD from brands to local communities. As Sodha points outs: “we source it, merchandise it, social media it and shift it. Leave us out of your plans at your peril!”

The challenge from most retailers to suppliers is to work harder in collaborating with them and the benefits will come. Raaj Chandarana, Londis independent retailer, asks for more from brands. “We live and breathe your brands. Give us more credit, more support. Don’t think it’s ok to just send us one package, one email or one industry article thinking that’s enough. Big suppliers are guilty of going missing! Now more than ever we need to collaborate to solve issues not just within convenience but also problems in society”.

Paul Cheema, Nisa independent retailer, suggests wholesalers must do more to help as they work with both the brands and retailers.

“Do they really understand the needs of a convenience retailer? They need to better understand ranging for stores and allocating stock so that there’s a better end result for all”.
Paul Cheema, Nisa independent retailer

Home delivery was a roaring success for retailers in 2020 and is not going away. According to Fortune: “retailers have introduced or enhanced a delivery service to suit changing shopping trends with Lumina Intelligence reporting that 70% of consumers intend to use on demand convenience more in the future, this will continue into 2021.” Fortune adds that measures from brands such as delivery-friendly pack sizes/less packaging may be a positive, especially as sustainability is likely to become a priority again in 2021. More activation tools are expected to emerge this year, and brands can help within this area.

Convenience retailers are passionate and ready to continue stepping up. Nisa independent retailer Harry Goraya speaks for many longstanding retailers “as looking to see 2021 as the catalyst that will allow us to shine in our true light”.

More investment is coming into convenience as pointed out by Chris Dillon, Head of Insights at NewTrade Media: “We’re expecting to see more retailers taking on a second, third or fourth site as commercial properties become available, while many retailers will consider joining a symbol group or switching providers. Brands also shouldn’t just rely on the same well-known retailers as more voices will come into the spotlight and there are so many brilliant retailers out there who are looking after their communities in unique ways.”

Mercieca conducted extensive research last autumn, Convenience Connections, which highlighted key learnings for brands with the continued importance of comms channels, category advice, retailer/promotional support, social media, click and collect opportunity and much more.

Food-to-go, technology, consumer choice and shopper habits will all continue to evolve in 2021, presenting opportunities to fuel further growth, so smarter, closer collaboration between retailers and brands will become even more essential.

As the specialist trade agency representing brands in the convenience sector, we will be working with our clients again to maximise scope across the sector but in an agile, collaborative and responsible way. Convenience will continue to be crucial for consumers and grow but there is a real opportunity for brands to work more effectively with retailers to benefit consumers and communities they serve.

For any brands keen to explore specific opportunities across this sector please get in touch hello@mercieca.co.uk and we would love to chat further with you.

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