By Kevin Coupe
Sydney is hardly typical of Australia, a country and continent so vast there are still areas that have never been comprehensively mapped, and that, according to author Bill Bryson (author of the excellent In a Sunburned Country), contain more deadly species than anyplace else on earth, such as “the delicate and diaphanous box jellyfish.”
Then there is the Sydney Harbour Bridge, an 80-year-old historic landmark that offers visitors a specific and timely challenge — to climb to the top of the 440-foot-high single-span bridge and glimpse a unique perspective on the largest city in Australia.
But the people attending the NACS Global Forum in Sydney were less concerned about the challenges of facing off with a box jellyfish or climbing the Sydney Harbour Bridge. During the June event attendees focused on the heightened competition hitting the c-store sector — from big box stores, drug chains and supermarkets to pretty much every one looking to market their stores around the convenience experience.
NACS Global Forum attendees came from around the world — New Zealand, China, the United States, Canada, Mexico and even Angola — hoping to see their own challenges and opportunities reflected through a different prism, and thereby view new approaches and solutions.
For example, Brett Barclay, founding CEO of research consultancy him! Australia and New Zealand and NACS Global Forum speaker, noted that supermarkets — especially relentless market leaders Woolworths and Coles — have been attacking the retail sector on price. The result, he said, has been the Australian consumer’s diminishing confidence of the integrity of retail prices in all sectors.
The effect has been especially felt by convenience stores. In fact, Barclay noted that more than a third of convenience shoppers today believe that pricing is worse than it was two years ago, and another 37 percent believe that it is no better.
Even as supermarkets use price as a bludgeon and self-checkout as a wedge, convenience stores also have to face competition from the likes of McDonald’s with its popular McCafé outlets, and small format pop-up stores that seem to be cropping up with greater regularity.
In his presentation, Kosta Conomos of The Nielsen Company’s retail services for Australia and New Zealand noted that as immigration continues to rear its head — just as it has in the United States — the demographics of Australian shoppers will change.
Australia is home to about 22 million people (most of them in very specific population centers on the east coast), but predictions forecast another four million people moving there by 2020. To keep this figure in perspective, even though Australia may be the sixth largest country in the world, it is only 224th in terms of population density.
That’s a lot of potential new customers, and also a different customer base. Many of these immigrants come from places like China, Indonesia and India, and bring with them very different palates, views of brands and definitions of what is convenient. By 2050, Conomos said, one-fifth of Australians will either be Asian born or of Asian descent, which creates both challenges and opportunities in the food sector.
Speaker Warren Wilmot, CEO of 7-Eleven Stores in Australia — which has undergone a highly successful transformation with the development of urban units offering what he called the “ant’s pants of foodservice” (judging by his enthusiasm this is a good thing) — urged attendees to confront their issues with a passion for innovation. “The more research you do, the more you can convince yourself that you can’t do some of these things,” he said. In the end, to succeed, retailers need to be marketers, they need to be merchants — and they need to sell.
Indeed, the opportunity, said Ted Zittell of Ted Zittell & Associates and McMillan/Doolittle, may be in taking a counterintuitive approach. If the major supermarket chains are focusing more on private label as a price/value tactic, then perhaps it makes sense for convenience stores to look for innovative ways to collaborate with CPG companies on new offerings that can “wow” the customer.
Zittell advised retailers to be cautious, however, since a balance needs to be struck between “brand stretch” and “brand snap.” But at the very least, retailers need to show a greater degree of specificity about what they are and who they are serving.
One of the things most interesting about global meetings is the ability to visit stores. And the mix of supermarkets and convenience stores we visited during the Global Forum offered some excellent marketing and merchandising lessons.
One of the most interesting was Thomas Dux, one of 11 neighborhood stores operated by market leader Woolworths, which cross-pollinates the best features of a convenience store with a fresh foods store. Dux is a small format store, with the center and right wall dominated by fresh foods, mostly produce, and a smattering of grocery products — many of them identified as “local” or “organic” — along the left wall.
The store has a Whole Foods vibe, with a little Trader Joe’s thrown in for good measure. There’s also a “foodie” expert in the store who is cooking up samples, answering questions and doing a bit of selling to curious shoppers.
Interestingly, the store was in the upper middle class suburb of Lane Cove — located right next door to a Coles supermarket and down the street from a classic Woolworths store. To be honest, the Thomas Dux store had a lot more imagination and character than both of them.
The prices may be a bit higher, but this is a store that clearly is not in the lowest common denominator business. Woolworths seems to be making a smart bet by appealing to a different kind of consumer via Thomas Dux. At the same time, it could learn some things from its smaller format that it could incorporate into its more traditional format, thereby making it more interesting and formidable.
An endearing quality of a number of stores we visited is how they open up to the outside environment by not using doors. Sure, Sydney has this advantage because of its climate, but you don’t often see stores embrace light and take advantage of their space. The Dux store essentially had no front door at all. Similarly, a health food store called About Life used light extremely effectively, and even an urban 7-Eleven convenience store had a completely open front.
We also visited one 7-Eleven store in a Sydney suburb on a strip that must have had seven or eight independent specialty coffee shops. It had a big sign out front — Lavazza coffee for a buck. Interestingly, coffee is a big item for the store, we were told, demonstrating that there’s a simple way to compete with the more upscale guys: Undercut them on price. As one participant put it, sometimes “loyalty is something you have to buy.”
In short, the problems described and solutions suggested during the Global Forum were both universal and specific. Some of the issues will have evolved when it comes time for the NACS Global Forum in Vancouver next June, and it is likely there will be at least one or two topics discussed there that weren’t even on the radar this year.
In Australia, to use the local slang, they had a corker of a NACS Global Forum, and there’s better than a fair go that attendees got a high level of good oil (which translates to “useful information”).
Kevin Coupe is the founder and “Content Guy” of MorningNewsBeat.com, a daily online information service that offers “news in context and analysis with attitude.” He is also the co-author of The Big Picture: Essential Business Lessons From the Movies.