The Essential Guide to Convenience Retail Marketing
The Convenience Retail Market Opportunity
The UK convenience market is an exciting, buoyant, and vital part of the retail industry. With a current valuation of £45.2bn and an expected growth to £48.6bn by 2025, this market is expected to see a compound annual growth rate (CAGR) of 2.6% between 2022-2025. This growth is driven by the co-operatives and convenience multiples who are set to outperform the market with investments in store refits and physical expansion, as well as advancements in delivery services.
Not only are co-operatives and convenience multiples expected to thrive, but forecourts, symbol groups, and unaffiliated independents are also predicted to see growth, albeit at a slower pace. Shoppers are returning to their pre-pandemic habits, with 64% of UK adults having a convenience occasion (delivery, in-store or click & collect) and basket spend and size stabilizing at £7.18 and 2.7 items respectively.
The pandemic has accelerated the growth in delivered convenience store occasions, with delivery now accounting for 6.8% of total convenience occasions. This growth has only declined by 1.6ppts year-on-year, despite restrictions easing. The delivered route to market attracts valuable shoppers with higher frequency, larger basket sizes and larger average spends compared to in-store shoppers.
Younger consumers who traditionally underperformed in convenience have been retained and planned top-up missions have stabilized after a pandemic boost. The UK convenience market is a dynamic and promising market, with ample opportunities for growth and success.
Get ready for an exciting journey into the UK’s thriving convenience market! With 48,590 convenience stores across the country, independent retailers dominate the scene with a whopping 71% of the market share. From the 39% of unaffiliated independents to the 7% of co-operatives, the UK convenience market is made up of diverse players with unique offerings.
In this market, you’ll find a variety of retail locations that cater to different communities. From rural areas where convenience stores provide the only shopping option for the local community, to urban centres serving the needs of residents and workers, the convenience landscape is constantly evolving.
Maximizing sales and growth in this market is a top priority for new and established food and drink brands alike. With the right approach, convenience retail offers big rewards for those who get it right. The key to success in this market is creative and innovative marketing that understands the convenience landscape and knows how to make the most of it.
Whether you’re a brand looking to get a foothold in the market or an established player looking to take your sales to the next level, the UK convenience market is an exciting opportunity that’s waiting to be seized. Get ready to dive into the convenience landscape and discover the big rewards that await!
the challenges of convenience retail food and drink marketing
Once you’ve got your head around the market dynamics and the potential size of the prize across independents, symbol convenience and multiple convenience, your next priority needs to be reaching and engaging key decision makers. It’s not a job for the faint hearted, tackling and winning with food and drink trade marketing in this challenging market requires real focus and expertise. But fortunately, there is help at hand. jellybean has been operating in food and drink for three decades and we really do understand what is required to bring about success in convenience.
Unlike the grocery multiples, convenience is much more complex – albeit there has been a lot of consolidation and merger, so there is a much wider number of decision makers and influencers to reach.
As highlighted, the convenience market has many thousands of stores, operating entirely independently or as part of a symbol or multiple group. Each has their own route to market and specific set of challenges and opportunities. Defining focus and prioritising the right sectors for any food and drink brand is the first step on the path to successful food and drink marketing in retail convenience. A common mistake is for brands to be pulled by the opportunities presented by the market, rather than setting out with a clear plan of action based on product fit to market and the size of the sector opportunity.
Fortunately, there is plenty of data and insight available from trusted organisations in the sector, so there is a good deal of information available to accurately estimate the size of the opportunity and which groups of retailers to target. But the challenge of course is being able to really understand the different retailers, their commercial agendas, their route to market and their buying motivations and influences. Getting your product noticed and listed is the first hurdle. The next and perhaps more challenging hurdle is pulling sales through via the route to market from convenience retailers. Both require really effective and targeted trade selling tools and trade marketing campaigns.
Understanding the decision-making process and influencers within each organisation is hugely important. Are they a multiple convenience store with buying power at head office level, a symbol group c-store working to a fixed planogram but with some freedom and choice day to day, or are they an unaffiliated independent with complete autonomy over range and price? What challenges does their particular store format and location hold? Are they positioned in a rural, urban or high street location? What is their shopper profile and what missions are they on? Is it top up shopping, food to go or food for later that is driving their sales. What competition do they have on their doorstep? And how can your food and drink products help them to create real differentiation?
The route to market for convenience is complicated. In order to reach independents, you need to gain listings with wholesalers and/or the symbol group head offices who service your target sector. There are the big national delivered wholesalers including Booker and Bestway who also own and run symbols. There are many hundreds of traditional cash and carry depots throughout the UK including the likes of Dhamecha, Parfetts some of whom operate as part of a bigger buying group network and many own their own symbol groups too. Also, there is a whole raft of regional and specialist wholesalers, as well as the symbol groups who deliver to their members including: Spar, Costcutter, Premier, Londis, Budgens, Nisa and the list goes on.
Here you need to understand how you can offer the wholesaler or symbol group value and help them grow the category and drive margin. Indeed, margin is an important factor to consider when looking to grow your brand in convenience as the wholesaler or symbol group will add a mark-up as will the retailer, therefore you need to ensure your sell-in price and RRP is realistic to allow for both stages of mark-up.
Of course, the product format and fit for convenience is also critical. The convenience channel wants products designed to meet their needs and the needs of their customers. The right pack and case format, the right packaging and the right price point (including PMP’s where appropriate) are critically important.
The convenience market is in a continual state of flux expect to see more twists and turns along the way.
Navigating the Latest Trends in Convenience
The convenience retail sector is facing a host of challenges, from rising food prices and energy costs to the impact of HFSS regulations and growing employment expenses. But retailers and food & drink brands can overcome these obstacles by tapping into the latest shopper trends, including food to go, treats, meal occasions, delivery, and T-commerce.
Battling the Cost-of-Living Crisis
Shoppers are becoming increasingly cost-conscious due to the cost-of-living crisis, resulting in declining basket size, frequency, and spend year-on-year. However, in-store purchases have increased by 5 % driven by shoppers venturing out more now that restrictions have eased. Delivery services, which saw a surge during the pandemic, have now declined.
Capitalizing on the Trending Missions
Missions for treats, food to go, and meal occasions have seen the largest growth in share year-on-year, driven by the return of workers to their workplaces. On the other hand, top-up planned missions have declined, indicating that shoppers are opting for main shopping trips at larger stores to save costs. Co-op and Tesco Express have benefited from this trend, with a 2% increase in share year-on-year.
Diminished Impulse Purchasing
Shoppers are less likely to make impulsive purchases, with a 3% decline in the proportion of shoppers purchasing on impulse. However, the influence of temptation has grown by 3%, highlighting the importance of effective in-store marketing and appealing packaging. The purchasing of products on promotion and PMP has also decreased, as shoppers reduce their top-up purchases of chilled foods and bakery items from convenience stores.
The Convenience Store Market:
The convenience store sector is constantly evolving, adapting to new trends and consumer demands. According to Lumina, there are six major trends shaping the industry: T-commerce, The Lipstick Effect, Home: The Central Hub, Sustainability, Value Above All and Healthier Eating.
T-commerce, or e-commerce, accounts for 4% of the convenience market, primarily through app ordering and delivery services. To keep up with this trend, it is crucial for convenience stores to enhance the online ordering and delivery experience by providing clear imagery, easy navigation and accurate product descriptions. Targeting the young, male and affluent consumers who are more likely to use delivery services presents a unique opportunity for suppliers to cater to their specific needs and preferences.
The Lipstick Effect, also known as LA DOLCE VITA, refers to the tendency of consumers to indulge in treats during recessionary periods, regardless of changes to disposable income. Convenience stores must find creative ways to cater to these consumers’ needs for treats, whilst adhering to healthy food and beverage legislation. Families, who spend 8% more on treat missions and represent 34% of convenience shoppers, are a key demographic to target in this trend.
Home: The Central Hub highlights the lasting impact of the pandemic on the way we work. With over a third of consumers preferring remote working, there has been an increase in at-home food preparation. Convenience stores can appeal to these shoppers by offering meal kits, concessions, and other inspiring culinary solutions to enjoy at home. Additionally, with 1 in 8 shoppers purchasing coffee from a retail store, convenience stores should have a strong coffee offering and cross-category promotions to drive sales.
Sustainability is becoming an increasingly important factor in consumers’ purchasing decisions. Consumers are seeking deeper connections with brands that prioritize authenticity, ethics, honesty and environmental and social governance (ESG) to foster brand loyalty. Retailers must prioritise provenance, local buying, supporting small businesses and net-zero and carbon neutral retailing to appeal to sustainability-conscious consumers.
Value Above All highlights the increasing emphasis on value in consumers’ purchasing decisions. Consumers are evaluating costs and benefits more closely and making decisions based on factors such as price, quality and convenience. Convenience operators must offer products that meet consumers’ needs and preferences to maintain their relevance and footfall. With greater value scrutiny, the standard is higher than ever for retailers.
Healthier Eating is a growing trend in the food and beverage industry, with health-consciousness and sustainability being major drivers. 44% of consumers state that they are very health-conscious, and we can expect to see a lot of creativity within this space to help consumers stay focused on their health goals while satisfying their cravings.
The convenience store sector is expected to see consolidation through investments, mergers and acquisitions, driven by recent supply chain challenges. Promoting local and artisanal products and brands will become even more important as the UK distances from the EU. The use of technology in convenience stores will continue to grow, as a way to save costs and increase efficiency. Despite competition from new channels, convenience stores will remain resilient through their in-store services and accessibility, reinforcing their convenience value proposition.
Clearly the convenience retail market is evolving, and understanding the latest trends is critical for success. Whether you’re a new food and drink brand looking to break into the market or an established brand, the key to success is creative and innovative marketing. By staying ahead of the game and adapting to the changing shopper landscape, retailers and food & drink brands can unlock big rewards.
the world of convenience retail marketing
At jellybean, we understand the significance of forming strong ties with key organizations to drive a brand’s success. We work closely with various parties including publishers, associations, social media groups and charities to ensure our clients’ success. These partnerships play an important role in helping us achieve our goals.
Associations / Organisations
Reaching Retail Convenience Decision Makers
At jellybean, we understand the intricacies of marketing in the retail convenience sector and have over 35 years of experience in crafting compelling campaigns that connect with key decision makers. Whether it’s through trade press, advertising, category communications, wholesaler and retailer relationships, or the latest technology – we know what it takes to stand out in this competitive market.
Fuel Your Marketing with Trade Press Influence – Keep your brand top of mind by utilising PR to engage with journalists and increase your share of voice through news, features, opinion pieces, and profile interviews. We’ll help you create the right trade press plan that maximises return on investment and demonstrates your support and presence in the channel.
Maximise Your Category Communications – Let us help you deliver award-winning category communications programs that engage with your audience. From creating the program’s identity to executing in-depot activations and retailer forums, we are a one-stop shop for effective trade communications.
Harness the Power of Peer-to-Peer Advice – Our relationships with wholesalers and retailers allow us to create retailer ambassador campaigns that drive word of mouth. By working with high-profile retailer influencers, we can create trials and case studies that become powerful sales tools for your brand.
Stay Ahead with Technology – As convenience retailers become more progressive and entrepreneurial, they expect brands to engage with them through video, web, email marketing and social media. We know what works and how to create communications that your trade audience will act upon.
Don’t Neglect Traditional Trade Communications – Printed trade press, promotional brochures, high impact DM, trade shows, flyers and in-depot communications are still important in communicating with retailers. We’ll help you find the right balance between old and new channels.
A Recipe for Success – A strong foundation of food trends, insight, market expertise and standout creative is the secret to success in convenience retail. Let us be your trusted partner and help you achieve marketing excellence in this exciting and challenging market!”
You can see examples in our portfolio here.
Choosing the Right Convenience Retail Marketing Agency
Our expertise in the food and drink industry is backed by three decades of experience, an integrated approach and a dedicated team. We aim to deliver the best results and ensure that our clients are fully satisfied.
What sets us apart is the confidence that our clients have in our capabilities, as reflected in their testimonials. If you’re looking for a reliable and knowledgeable partner, look no further than jellybean.
Contact us today and discover how we can help take your business and brand to the next level.
NB: Please note all statistics are correct at the time of publishing February 2023. However, as the convenience market is a dynamic one they are changing frequently.
Data sources unless otherwise stated are:
ACS Local Shop Report 2022
Lumina Convenience Tracking Programme December 2022
Lumina The Future of Convenience Feb 2023