Amongst all modern retail channels, the impact of COVID-19 from a global perspective, has varied the most in convenience. The channel, however, continues to offer a massive opportunity for retailers and suppliers globally, benefiting from longer term consumption trends such as smaller households and more consumers shopping locally. With this in mind, we have identified five themes that we expect to shape convenience retail in 2021 and beyond...
1. Convenience and technology to connect further
With accessibility and ease of shopping at the heart of convenience retail, technology that enables convenience will continue to emerge no matter the location or store size, with services also increasingly digitised. New paths to purchase will offer products increased visibility, new ways for brands to interact with customers online and the potential to reach new types of shoppers. More cashless transactions and payment digitisation will continue. Technology will also help solve longer term challenges for retailers such as rising labour costs, last mile delivery and drive efficiencies in stock and payment management.
Source: IGD Research
2. Physical expansion will recover
Physical expansion in convenience retail is much more fluid compared to larger formats. While this has slowed since the pandemic, plans that were placed on hold are being relaunched, and investment in new locations recovering in many markets. With more consumers choosing to support local businesses and shop closer to where they live, independents, plus convenience stores in neighbourhood and suburban areas will continue to play an important role in serving local communities. We expect to see more innovation, with investment rebalanced from urban stores - historically prioritised due to higher footfall. Some retailers, however, will look to fill the gaps in their store networks, taking advantage of lower rents in city centres and in areas where other retail businesses have vacated space.
3. Reinventing in-store
Historically, tobacco, fuel, confectionary and newsprint have been the key footfall drivers in convenience, but there is now increased fragmentation and more different reasons to visit. COVID-19 has reshaped convenience in many markets, with changes in demand for different categories, bigger basket missions and store layouts redesigned.
There will be a greater focus on how space is used in-store, with dine-in space likely to continue to reduce or be repurposed where COVID-19 remains a risk. Existing categories in-store are adapting and new ones emerging. In Japan, for example, low selling products at convenience stores can be discontinued as quick as one week, and so the pace and agility in convenience retail is quite different compared to other channels.
4. Revisiting health and sustainability
Sustainability and convenience have historically had a relatively loose connection, but environmental and ethical issues are rising up the agenda. We expect convenience retailers to begin revisiting their commitments to sustainability and reduction to food waste, plus empowering individuals to make better lifestyle choices around healthy eating.
Energy transformation and electrification will continue, resulting in more EV charging stations being installed. While creating and ensuring safe shopping spaces will remain important. Best practice will continue to be widely shared and adopted across the industry, with retailers looking for ways to give shoppers more confidence to return to their stores.
5. Future-proofing convenience
The lasting impact of COVID-19 will continue to shape development of the convenience channel. Pushed on value by discounters, whilst adapting to target new grocery missions served by supermarkets, the boundaries of convenience retail and its differentiating elements continue to blur. Format innovation will help future-proof convenience, with retailers launching new concepts to test initiatives, e.g. mission-focused formats, vending, drive through convenience stores and mini ‘dark stores.’
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Read our in-depth report, Global trends in convenience retail 2021, for more detail on each of these trends and case studies from around the world.