Act small, think big: the rise of convenience stores

The trend of ‘shopping local’ has risen steadily over the last few years, due in part to the increase in the number of convenience stores in various locations across the UK. In England specifically, there is one convenience store for every 1,455 people, with plans for new stores continuously emerging. The Co-op, for example, is planning to open 50 more stores and extend other branches to meet the changing shopping habits of its customers.

This growth isn’t set to slow down. Between 2015 and 2020, the industry grew by an average of 2.6%. Looking ahead this year, revenue is anticipated to increase at a compound annual rate of 4.9%. There is clearly demand for convenience stores – both shopping locally and having control of spending as a result of smaller basket sizes still appeals, despite consumer confidence increasing slightly this month.

With demand rocketing and consumer shopping habits frequently changing, what are the key considerations for convenience stores as the trend continues to rise?

Broadening product range
What started as a small store to pick up essentials such as eggs, milk, a newspaper or a lunchtime snack has quickly expanded to become a one-stop-shop for a much bigger range of products. From washing powder to meat, bakery items, flowers and fresh fruit and vegetables, consumers now expect to be able to get the same items from their local convenience store as they can from their usual supermarket.

Convenience stores are no longer purely centred on picking up additional or last-minute items; now it is considered the norm to see consumers exiting these stores with bagfuls of shopping. As a result, convenience stores need to consider which products they need to add to their range, having knock-on implications on the store layout to fit in as many products as possible, whilst still enabling consumers to complete their shop in a safe and socially-distanced manner.

Furthermore, broadening the product range will also have serious logistical implications. With fresh meat, fish, fruit, vegetables and bread to deliver, from a large range of suppliers, how can convenience stores get the products they need, to the right place, at the right time?

Planning the logistics
Grocery retailers face large and complex logistics networks, but for convenience stores, the challenge is only exacerbated. Firstly, the size of the store means limited stock can be held, so smaller deliveries need to be made to stores, more often, in order to meet consumer demand and expectations.

Yet, despite the location of these stores being extremely convenient for consumers, they’re not very convenient for the drivers that often need to make deliveries in very large trucks, to small village or local hub locations that aren’t traffic-friendly. More restrictive locations often come with regulations of time windows for deliveries, especially if the store is in a residential area.

With more parameters to contend with, the entire logistical planning process becomes far more complex. To combat this, it is essential that Transport Management Systems (TMS) and Warehouse Management Systems (WMS) communicate with each other, to assist the planners and to ensure capabilities and expectations are aligned. With a scientific, data-driven approach, TMS planners can have a holistic view of what stock is required to be delivered where, and therefore continuously optimise the network to make it as efficient as possible.

Learning from bigger players
As popular as local convenience stores may now be, it is also essential for these retailers to use technology wisely; not only behind the scenes for logistics purposes, but also consumer-facing by adding delivery options such as click-and-collect, or, in the case of some Co-op stores, using robots to deliver goods right to the consumer’s front door. In fact, the Co-op has recently revealed plans to expand its robot home-delivery service and extend its click and collect services to 1,000 stores by the end of 2020.

Using advanced technology such as robotics won’t be realistic for every convenience store, with a small number of employees often carrying out multiple roles, but technology is still the answer to increase efficiencies. Stores could provide employees with mobile devices to carry out tasks more efficiently and a wider range of checkout options, such as by mobile app, could be offered.

It is now expected that larger grocery supermarkets have a range of delivery options, especially in light of the Covid-19 pandemic. Convenience stores are no exception to this, so using technology to provide a seamless experience both ‘behind the scenes’ and ‘front of house’ is essential to ensure both new and existing convenience stores meet consumer expectations.

Embracing opportunity
The future might be looking uncertain in many other areas of life, but for convenience stores, the future is looking bright. Whilst convenience stores might not take over the local butcher or bakery, and they might not replace the supermarket giants, there is certainly a very strong demand for these stores in the current climate and beyond.

Convenience stores have a very real opportunity to become strong players in the grocery market, and by broadening their range and using technology to make both the logistics and customer experience seamless, there is every chance for these stores to continue to grow.

Alex MacPherson, Director of Solution Consulting & Account Management, Manhattan Associates

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