The Rise of the Modern Convenience Store in Europe

The Rise of the Modern Convenience Store in Europe

The FINANCIAL -- The slow economic recovery in Europe hasn’t delivered as much positivity as consumers had expected, keeping optimism in short supply. Consumers remain cautious, and the economic turbulence of the last five years has changed shopper behaviour in the process. In short, shoppers have grown increasingly focused on value, cost and convenience—attributes that have sparked expansion in the discount trade channel, the development of smaller store formats in many countries and the creation of a new online channel in some countries, according to the Nielsen Company.

Prior to the economic rebound, inflation and new space from large stores were the primary drivers of growth in Europe’s existing store formats. With a recovery still some way off, a new race to drive consumer packaged good (CPG) spend is underway, and this race is developing the modern convenience store.

The Modern Convenience Store

In the context of the changes brought on by the recession, more and more consumers are seeking shopping options that fall between full-fledged supermarkets and traditional convenience stores. In the U.K. for example, 70 percent of shoppers say they typically prefer to shop for food and drink on a weekly basis, suggesting that many may not visit larger, out-of-town stores. The “modern convenience store” will meet the lifestyle needs of consumers wishing to buy a range of food and drink “little and often” and for the next few days, rather than shopping at large supermarkets to hold them for the next two or three weeks. These new stores will have a smaller grocery range, but importantly more space for fresh foods: chilled foods, fresh fruit and vegetables, bakery and fresh meat and poultry. Fresh foods will account for up to 50 percent of the category sales in these stores, according to the Nielsen Company.

The modern convenience store will also include a strong “good to go” proposition, offering shoppers plentiful opportunities to buy “food for tonight.” Consumers will also visit these stores to stock up for meal preparation in the week ahead. With consumers typically shopping once every three or four days, modern convenience stores will perfectly meet the lifestyle needs of today’s consumer.

The Importance of the In-Store Experience

Discount retailing is another trend that’s gaining momentum across Europe, particularly as consumers remain sensitive to cost and compare product prices before opening their wallets. Consumers have become used to benefiting from the intense price and promotional competition between supermarkets and hypermarkets. They’re also keen to capitalize on the relentless value messaging that discounters deliver through powerful advertising on TV, in the press and via some very effective local leaflet marketing. As such, consumers have never been more aware of pricing and what they’re willing to spend. In fact, more than 50 percent of consumers say they know the prices that they pay and notice when prices change, according to the Nielsen Company.

Consumers will carry this expectation of value for money over when shopping at modern convenience stores.

Regardless of market or channel shifts, however, location will still be critical for small store retailers. While shoppers typically visit an array of stores frequently (e.g., discount stores, convenience stores and online), most still visit the closest store.

Additionally, shoppers say they typically visit the same store each time they shop, which suggests that in addition to offering good prices and promotions, successful convenience retailers will be the ones that also offer the right ranges, shopping ease and fresh foods. This will, in turn, lead to repeat visits and a larger share of the consumer’s wallet.

Shoppers will seek a reason to choose a convenience store based on the wider store experience and not just location, and retailers will be rewarded with more shopping trips and increased spending at small stores, according to the Nielsen Company.