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Changes Still Needed in the Convenience Food and Drink Sector
11 March 2010 - The Food, Drink and Agricultural Group (FDA) of The Chartered Institute of Marketing hosted a debate this month at New Zealand House in central London. Keynote speaker James Lowman, the Chief Executive of the Association of Convenience Stores, told delegates that the convenience sector is growing faster than the rest of the more conventional retail sector in the UK - with consumers being motivated by more than just price. At the same time, it needs to keep on changing with current trends and look for new ideas and levels of professionalism to keep ahead.
Lowman also commented on the trend towards more locally based shopping and the fact that the convenience sector had made huge improvements in the standard of product presentation and display as well as quality in recent years. It had also been able to take advantage of the increasing number of single person households in the UK, which he said will increase from its current level of six million to over 11 million over the next 10 -15 years.
Many shoppers in the UK are often buying “little and often” and a key criteria is now the need to provide excellent value for money instead of just being focused totally on price. Availability and ease of access is seen as being just as important for consumers and where the convenience sector can excel. The symbol sector looks sett for further growth in this market segment and independents will continue to come under pressure in the future, Lowman also commented.
The convenience formats of the leading retailers had also made a strong impact based on the combination of their model of a limited range of products and tight control of the business. Both these are significant pointers for the rest of the sector if they are to prosper in the future.
The convenience sector must also look at what is driving the wider food market if it is to continue to meet consumer needs and expectations – providing more fresh produce, fish and poultry based products and dairy products, such as yoghurts while scaling down on products which are seeing declines in consumption over the longer term. The convenience sector must also reduce its dependence on tobacco and change the perception of the sector as just a destination for “top up shopping”.
The idea that the food retail sector was somehow recession proof was just a fallacy said Lowman and was a dangerous trap to fall in to. In some ways the worst of the recessionary impacts on consumer spending might still be to come, as public sector cuts begin to really bite over the next 12 – 18 months.
In response to questions on the role of a future retail ombudsman, he also commented that while this sort of organisation might curb the worst excesses of over dominant supermarket power, their overall muscle in the wider market would see them retain a strong position over suppliers.
Summing up, Lowman concluded:
There are lots of opportunities in the convenience sector but we have to move with the times. We need to give shoppers what they really want and if we claim to be part of the community – then really prove it and show we can be an important part of our customers’ lives.
Many of our 33,500 members act as part of a community and social hub, but we need to be more than just this. We have to look and feel different from other retailers and also recognise we can be competing with other sectors, such as foodservice. Too many convenience stores still stock too many products they can’t really sell.
We need to focus clearly on excellent availability and service and look at opportunities to provide added services that others no longer provide to consumers such as travel, postal and other financial services too.
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