Convenience stores – a key battleground for brands

15 years ago, the key battleground for brands was discounters. Aldi, Lidl and Iceland were growing rapidly and FMCG companies were looking at how they can gain share in these channels. Convenience was an important channel, but the entire channel usually got the same level of attention as a large supermarket chain did.

According to IRI, the convenience channel in the US grew by 7.7% in Q3, 2021. According to NielsenIQ, in the UK, the channel grew by 3.3% in the 4 weeks to 11 September 2021 vs supermarkets, which grew by 0.6% during the same period.

In mid to late 2020 and all of 2021, convenience stores were the go to channel for shoppers for regular ‘top-up’ shopping. This was because of two key reasons:

  1. While large supermarkets were suffering from empty shelves and stock-outs, most convenience stores, especially the independents, were well stocked.
  2. The stores were small enough that the consumer could come in, shop and leave the store in a fraction of the time – an important consideration during the pandemic. Speed of service was the key differentiator for convenience stores vs traditional retail during this time.

Convenience stores have a history of providing local products to the communities they serve. These retailers typically have stores that are smaller in footprint, thereby providing grab-and-go solutions to their customer base.

Typically each store owner or manager places orders with suppliers or wholesalers, and as they work closely with/also help with the tilling, they know what consumers in their neighbourhood are looking for. This meant that, in 2021, convenience stores had the right levels of stock of the right brands and products, while supermarkets had run out of stock as they were expecting sales similar to previous year sales and convenience stores had adapted to the way people shopped and what they shopped for post 2020.

So what are some of the watch outs for sales people and how can they grow sales at convenience stores?

  1. Partner with wholesalers and distributors for sales – Instead of selling to wholesalers who then sell into convenience stores, consider partnerships with your wholesaler for direct sales into smaller stores. Then treat all the convenience stores in one postcode or region the same as one customer. Visit them often to take orders and liaise with your wholesaler/distributor to ensure the order is delivered.
  2. Be prepared to switch up SKUs sold at the convenience store you sell to – As the store owner is closer to your consumers, they are more likely to change the range they sell frequently to provide their shoppers with what they are looking for.
  3. Develop relationships with the stores that helps you sell directly, no matter what technology they adopt – As the format grows, the stores are likely to adopt technology and more centralised buying (wherever one company owns the stores) to keep costs low. This is likely to result in store owners/managers not understanding their consumers as well as they used to. And may order the wrong quantities or the wrong products. Sales people who manage convenience stores should consider working closely with the store managers and encourage orders on a store level rather than at a centralised warehouse level/buying group level.
  4. Help keep prices competitive – In 2022, with rising inflation and costs, convenience stores will find it challenging to maintain marketshare as they would need to pass on at least part of the cost increases. Work with store owners and managers to keep in-store prices competitive or comparable vs supermarkets.
  5. Invest your time to understand shoppers and consumers around these stores better – Spend time at these stores and in their neighbourhoods to understand the people who shop there, what they buy, when they shop and how they live. Work closely with the store owners on re-order volumes, optimal in-store stock levels and promotions ideal for each store.

By working closely with convenience stores, your brand and your sales grows at par with the growth of the channel. Then it is up to the marketing & shopper marketing team to ensure you gain share from competition and grow ahead of the growth of the channel.