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Scott Annan: convenience stores can offer fresh, locally sourced products |
In the UK and Ireland, fresh and chilled foods appeal to more and more consumers, and in turn, more and more convenience retailers.
From fresh produce to fresh meat and fish to ready-made meals and soups, fresh and chilled has become a leading sales category in many convenience stores — one that continues to develop among retailers that control their own multi-temperature store distribution, own quality proprietary products and manage category merchandising. As a result, retailers from around the world now recognise the UK and Ireland as two of the most advanced convenience retailing markets in the world.
But there is an added twist to the success of this category in the UK and Ireland: localisation. Locally sourced fresh and chilled products are further helping these retailers differentiate their store offer, which includes products from the immediate region, such as dairy, breads, vegetables and meats, or craft potato chips and beverages. The localisation effort also embraces more than just the products: it encourages shoppers to understand their own needs, creates new vendor partnerships and increases loyalty among existing and new customers.
The amount of store space allotted to the fresh category dictates much of the growth of fresh products in convenience stores. For example, convenience retailers in the UK and Ireland commit almost 40% of their selling space to fresh products.
Shelf space for locally sourced fresh foods has grown more than 10% in the UK and Ireland in the last year.
Convenience retailers and suppliers realise that these products are a perfect complement to global health and wellness trends and sustainable business models. And, as many consumers continue to reevaluate their lifestyles in today’s economic climate, localisation and price are becoming as important to customers as speed of service and convenience.
Two international franchised retail brands have locally sourced fresh foods at the core of their retail strategy: Spar retails in 34 countries with 15,000 independent and company-owned stores trading under EuroSpar, Spar and Spar Express fascias, and the Irish company Musgrave Group supplies independent retailers trading as Budgens and Londis stores in the UK and SuperValu and Centra stores in Ireland.
These two companies successfully compete directly against big food retailers such as Tesco.
Spar Battlefields is a UK flagship store committed to its local community and local sustainability efforts. The forecourt sells BP fuels and competes with a neighboring Tesco Extra hypermarket, and the store sells local brands, which are highlighted by “local hero” point-of-sale materials that tell the story behind the label and explain the quality of regional foods.
Spar’s “Keep it Local” campaign is in its seventh year and is central to the company’s sustainability strategy. 11% of store sales is invested in local goods and services and all of the hot-to-go foods are made in the store. Battlefields also features Spar’s proprietary Treehouse juice bar where fresh juices and smoothies are made to order.
This past July, I visited Trolan’s SuperValu Ballymoney store in Northern Ireland. Owner Patsy Trolan locally sources 100% of his vegetables and meats and 90% of his dairy and food-to-go ingredients. The store also sells thousands of espresso-based coffees each week in an area abundant with coffee houses and traditional cafés. The coffee condiments are locally sourced.
Also in Ireland, Frank McPolin, owner of a Musgrave Group’s Centra store in Banbridge, locally sources 100% of his breads, cakes and dairy products and 90% of his delicatessen. McPolin fully supports Centra’s proprietary products and is at the heart of his community with local school programmes that promote safe cycling and healthy eating. He also runs 300 weekly value promotions that include many half-price brands.
Trolan’s SuperValu and McPolin’s Centra stores also prioritise their destination categories with merchandising and promotions, particularly with locally sourced beers and wines. Trolan’s SuperValu store has Northern Ireland’s only walk-in beer cave, which is a big draw against other big food retailers. It’s about 4˚C (39˚F) — making the beer and wine American cold! Both retailers prove that convenience food can successfully offer foods that are fresh, healthy and locally sourced, which also supports the local economy.
At last year’s NACS Show in Chicago, I co-moderated the workshop “Making Local Sourcing Your Point of Difference” and noticed that a number of retailers nodded positively when we discussed the total store impact of fresh and local foods. One attendee wanted to understand how he could change his vendors’ “constant pushing” for more space and racks for salty snacks and drinks and instead work with them to grow his total store sales.
My recommendation, based on srcg programs for local sourcing, is this: fresh and chilled foods have the highest penetration potential and deliver significant ancillary growth for other categories — like salty snacks and drinks. The rationale for branded suppliers to support retailers’ fresh and chilled food development is very simple: it brings more customers to the store that will also buy more of their brands.
In developed markets such as Hong Kong and Japan, shoppers have not traditionally bought fresh food in convenience stores since freshly cooked local foods are readily available elsewhere. However, this trend is starting to show signs of growth in Asian convenience stores.
During a recent trip, I saw excellent fresh meals, local bakery and fruit drinks in Circle K Hong Kong and Circle K Sunkus in Tokyo. The bakery and meals at Circle K Hong Kong’s Hot & In and Circle K Sunkus’ new rubetta Italian meals (pasta) and proprietary Cherie Dolce desserts are a great example of fresh foods that taste superb.
Scott Annan is a principal of srcg Limited (www.srcg.com), a retail strategy consultancy in Wimbledon, UK. He can be reached at scott.annan@srcg.com.
This article first appeared in NACS magazine. For more information or to subscribe, please visit www.nacsmagazine.com