The NACS Insight Convenience Summit – Europe kicked off earlier this week in Berlin, bringing together convenience and fuel retailing industry professionals from around the world to discuss new ideas and gain new commercial connections. Yesterday, the Summit moved to London, for two full days of general sessions and a day of Retail Study Tours, as well as Thursday’s presentation of the International Convenience Retail Awards.

By Fiona Briggs

LONDON – The hard discounters are a threat to the convenience operating model and stores need to keep on their toes, according to a panel of leading retailers.

Interviewed by Henry Armour, president and CEO of NACS, during a Retailer Roundtable at the NACS Insight Convenience Summit - Europe on Wednesday, Musgrave Group CEO Chris Martin said that the discounters were a permanent fixture and had become mainstream.

“In the U.K.’s deflationary environment, value and what the discounters are delivering is very important,” he said. Martin revealed that in Ireland, the discounters portray themselves as “the local retailer” and have moved from selling a limited range to including foodservice. “They’re evolving well,” he commented.

This observation was echoed by Jill Bruce, head of food business development and international for Marks & Spencer, who revealed that the upmarket retailer’s shoppers are now also shopping at Aldi and Lidl. “We have to be aware what’s in their total basket and their impact on us,” she said. “Our offer is differentiated enough from them to see it off, because so much of what we do is fresh, but their growth is also linked to fresh and local,” Bruce explained.

Andy Rowlinson, former operating model director at Tesco, agreed that discounters were now part of the competitive set and timing was on their side. Musgrave’s SuperValu format has gone head to head with the discounters in Ireland, Martin told Summit attendees. “We’ve had to work damned hard on productivity. Being able to carry a price premium is no longer acceptable,” he said.

And according to Martin, while convenience has been somewhat “immunized” until now, retailers should not be complacent. “The price premium convenience could carry due to its location has certainly diminished because of the reference point of the discounters,” he pointed out.

Discounters have also been phenomenally successful at developing their own brands and this will cause competitors to relook at their own “good, better, best” propositions. Martin said retailers would need to evolve their own brands in order to “attack the discounters” in the future. Bruce agreed, saying that the packaging and quality of the discounters’ own brands is very good. “We ignore them at our peril,” she said.