Verdict European Convenience Retailing Case Study - Convenience in 2013 (T…

European Convenience Retailing
Case study: Convenience in 2013:
The Latest European Innovations
Innovation abounds in the convenience market
and grocers react to changing consumer habits.
Analysts at Verdict Research identify the key
trends in this dynamic market.

October 2012
www.verdict.co.uk

Case study: Convenience in 2013: The Latest European Innovations

Trends towards top-up shopping in Europe are bringing more frequent visits and more discerning
consumers to convenience stores. This has created a number of challenges for retailers seeking to
expand as well as opportunities to benefit from the spotlight on the sector. Five key strategies for
succeeding in this dynamic market are identified by Verdict in their latest research.

Multiples seek acquisitions to expand into
c-stores: Strategies for successful acquisition
As retailers seek to capitalise on growth in the European convenience sector, acquisitions are
tempting many as a quick route to increasing c-store coverage. Andrew Stevens, Retail Analyst at
Verdict Research notes, “Reitan Service Handel (RSH) and Valora are two European retail groups
which have benefited from expansion through acquisition, with 72.3% and 85.0% y-o-y uplift in
store numbers respectively in the year to June 2012.”

Figure 1: European multiples convenience store growth

85.0
72.3

21,775
18,720 19,404
16,584 16,182

2008 2009 2010 2011 2012
Store numbers Total store number growth (%)
Reitan store number growth (%) Valora store number growth (%)

Note: Total store numbers = 5 key European retailers (Tesco, Carrefour, Spar, Reitan, Valora) convenience stores
Source: Verdict Research

2 www.verdict.co.uk


“However, acquisitions cost more than the asking price for the stores in question,” Stevens
cautions, “They consume much management time and represent a long-term financial
commitment.” There are some simple assessments retailers should make when considering this
route to expansion;

• Seek an established retailer – One with a well developed portfolio will not require too much
management time
• Consider product sourcing – Valora’s acquisition came alongside a five year agreement with
Lekkerland. However, supplying symbol groups will always present a difficult task
• Plan for the future – Ensure there is a contingency plan in place if a partnership with a wholesaler
should end
• Seek new territories – Avoid cannibalisation by looking outside the home market
• Recognise cultural similarities – Seeking similar cultures will ease the transition to a new market.
Reitan have expanded within Scandinavia and the Baltics to avoid unknown territory
• Appreciate the aftermath – Valora’s acquisition of Convenience Concept added 1,300 stores to its
portfolio, covering the Cigo, ServiceStore DB and U Store fascias leaving the retailer with seven
fascias in total which it plans to consolidate into just three.

3 www.verdict.co.uk


The arrival of the grocers brings a new fresh
focus in c-stores: M Local leads the field
As multiples expand into c-stores they bring a Figure 2: Morrisons first M local store at Ikley 2011
new expectation from shoppers who are seeking
supermarket quality on fresh from local stores.
There has been a marked improvement in
quality standards and availability in fresh foods
at European convenience stores in 2011/2.
Morrisons in the UK is pioneering both innovative
merchandising and new supply chain conventions
for its newly launched c-store fascia, M Local.

M local stores are around 3,000sq ft with 58.0% of
space dedicated to fresh food. As at June 1, 2012
there were four M local stores with a further 20
openings planned for the remainder of the financial
year to March 2013. Morrisons hopes to roll out a Source: Morrisons, Verdict Research
further 50 convenience stores in the year to
March 2014.

Figure 3: Morrisons hub and spoke convenience model 2012

M Local
M Local M Local

M Local M Local
Morrisons
Supermarket

M Local

M Local

Source: Morrisons, Verdict Research

4 www.verdict.co.uk


Senior Analyst at Verdict Research, Cliona Lynch explains how the retailer is innovating in its supply logistics,
“Morrisons operates a hub and spoke model to supply its growing convenience estate. This means that
between four and eight smaller M local stores will be serviced from a larger Morrisons’ supermarket. This
supermarket will provide deliveries of fresh fruit, vegetables, meat, ﬁsh and so on up to four times daily to
the convenience stores.”

Figure 4: Fresh food merchandising in M local 2012 “This model will ensure the high
standards in fresh from counters in
supermarkets are consistent in smaller
stores and, more importantly, that
customers can depend on availability.”

Innovative merchandising in M
Local stores provides a signpost to
the importance of fresh food to the
offer. Cliona Lynch describes how
Morrisons is setting a high standard
for convenience retailers, “Fruit and
vegetables are merchandised loose
and in rustic, market style baskets.
Stores also include fresh bread, freshly
squeezed orange juice, coffee bean
grinders and a strong range of food-
Source: Steve Dresser to-go products, including salad and
www.ukretailers.blogspot.co.uk, Verdict Research prepared fruit counters.”

5 www.verdict.co.uk


With fresh & quality improvements come
a blurring of boundaries with foodservice:
Rewe-to-go can learn from Sainsbury’s
Fresh Kitchen
Food-to-go in convenience stores is not new. However, in 2012 we are seeing the food-to-go offer of
retailers improving in range and quality to a stage where it rivals foodservice. As these improvements
tempt shoppers to trade down to benefit from the value of convenience stores, foodservice providers
become direct competitors. But there are untapped opportunities for c-stores if they can deliver
further innovation.

Figure 5: Meal time opportunities for convenience retailers

Lunch meal deals

Breakfast & Dinner OOH

Improving quality & range

High street café look & feel

Source: Verdict Research

Rewe-to-go, the Rewe group’s standalone food-to-go store, opened in Cologne, Germany in the spring
of 2011. The flagship 130m ² store has six express check-outs, an instore microwave and sells exclusively
food-to-go products. Cliona Lynch notes “The most interesting aspect of this opening by Rewe is the
comment by the group’s CEO that key competitors for the store were McDonalds and Starbucks.”

“This clearly signifies a shift in grocery retailer competitive strategies to target not only other retailers
but also foodservice providers.”

6 www.verdict.co.uk


Figure 6: Sainsbury’s Fresh Kitchen 2011

Source: Sainsbury’s, Verdict Research

However, lessons must be learned from the experience of Sainsbury’s in the UK. Fresh Kitchen, a stand
alone food-to-go concept was opened by the retailer on London’s Fleet Street in July 2011 and closed
in March 2012. “While the foodservice market may appear lucrative to grocers is it important that they
do not underestimate existing foodservice competitors who will be fighting to retain share,” warns
Lynch “There must be a sufficient gap in the market for a new entrant, as was not the case in London,
or the entrant must introduce something significantly different from the store offer, with new and
exciting products and instore ambience to tempt shoppers.”

7 www.verdict.co.uk


Tempting online shoppers instore through
Click & Collect: Carrefour sets the standard
Carrefour has introduced click & collect on groceries at its Carrefour city convenience store outlet
in Paris’ St Lazare train station. The store opened in March 2012 and the Mon Panier app launch
coincided with the opening.

Figure 7: Carrefour city’s Mon Panier app 2012

Source: Carrefour, Verdict Research

The app lists 1,500 core items and is linked to store availability. Staff Figure 8: Mon Panier kiosk
at the store pick orders ensuring collection is available two hours after
an order is placed. There is no minimum spend for shoppers and no
charge for the service.

According to Cliona Lynch, Carrefour’s innovative new app sets a
high standard for the emerging area of click & collect groceries
at convenience stores. “The two hour deadline set by Carrefour
is industry leading,” Lynch notes. “However, it matches shopper
demands which are ever-increasing. Improvements in technology and
service levels are creating higher expectations among shoppers for
how retailers can and should be meeting their needs.”

Source: Carrefour,
Verdict Research

8 www.verdict.co.uk


Create virtual theatre to inspire shoppers:
Delhaize trumps Ocado in bridging online
gap with shopping walls
UK online grocer Ocado has opened its third pop-up shopping wall concept in Birmingham on 16
July. The walls are used by Ocado to generate publicity and shopper interest in its mobile app. But the
problem with Ocado’s wall is that static images do not excite a tech savvy shopper and the missing link
to click & collect limits the appeal.

Delhaize has taken the shopping wall concept one step further, by positioning its ‘cubes’ in busy train
stations across Belgium and adding click & collect to the offer. Positioning in train stations targets
commuters at a key dwell time in their day. Moreover, Delhaize’s concept allows shoppers to order
products for collection at the other end of their commute.

Figure 9: Delhaize Shopping Cube

Source: Delhaize.be, Verdict Research

Lynch believes there is huge potential in shopping walls, “Both Ocado and Delhaize merely scratch
the surface of what could be a game-changing concept bridging the gap between the growing online
and convenience food retail markets in Europe.”

Lynch adds “Our research highlights convenience and online retail are the most buoyant channels for
food and grocery spend in Europe as more people seek anytime, anywhere shopping. The
typical convenience shopper is young; 43.1% are aged between 18 and 24 years. While Delhaize is
ahead of the competition there is much more convenience retailers can do to satisfy the needs of
these shoppers”.

9 www.verdict.co.uk


Andrew Stevens, Analyst at Verdict concludes “Creating interactive virtual shopping walls across
metropolitan train stations will engage shoppers as they consider meal options ahead of their journey
home. Incorporating recipe ideas and real-time promotional offers will create a more eye-catching
display and generate click-through to the retailer’s mobile site or app. “

“Key to success of the concept is linking to quick and easy click & collect facilities at a convenience
store at the other end of the shoppers train, tube or bus journey.”

As top-up shopping becomes a norm for European grocery shoppers, the convenience sector
is adapting to new challenges. Expanding multiples are seeking acquisitions to facilitate
growth, fresh food is reaching new standards and as it does so, food-to-go is becoming a key
battleground. Meanwhile, innovations in technology will see click & collect grow in importance
as virtual shopping facilities attract attention away from the c-store itself.

10 www.verdict.co.uk


This case study was taken from Trends and Innovations in European Convenience Retailing –
a Verdict Channel Strategy Report.
For more information on this report please email information@verdict.co.uk or
visit http://bit.ly/RKQJrE

Trends and Innovations in European
Convenience Retailing
Introduction
As top-up shopping becomes a norm for European consumers, the convenience sector is having
to adapt to new challenges. Shoppers regularly visiting their local c-store are demanding improved
ranges and innovative services. C-stores which adapt quickly to implement strategies which
respond to these demands will reap rich rewards.

Features and beneﬁts
• Justify investment in the convenience retailing sector by uncovering evidence of the consumer
trends supporting
• Choose the best path to growth based on case studies of convenience strategies of Carrefour,
Morrisons, Rewe, Delhaize, Reitan, Tesco & Valora
• Quantify the potential of introducing click & collect facilities and shopping walls to integrate new
technology with c-stores
• Assess the potential risks and beneﬁts of expanding into convenience through acquisition and
into food-to-go, foodservice and fresh from a c-store

Highlights
European shoppers are switching away from hypermarkets and are buying little and often in a
store close to their home or work. The ongoing move towards top-up shopping is validated in our
Consumer Insight Survey which shows the proportion of shoppers who make top-up purchases
every day at a convenience store has risen to 5.1% from 2.6% in 2009.

Food-to-go in convenience stores is nothing new. However, the food service propositions of
some c-store retailers, such as Rewe, are improving so rapidly that they are starting to rival
traditional food service specialists. This has created a blurring of the boundaries between the
two types of retailer.

Virtual shopping walls in c-stores serve to create a bridge between two grocery retail channels,
catering for the needs of tech savvy convenience shoppers who also want to use online shopping
services. Such initiatives scratch the surface in terms of the possibilities for channel integration and
this report explores further opportunities.



Your key questions answered
• How is the growth of multiples impacting the convenience market? What paths to growth are
multiples pursuing? How does this affect your business?
• What are the latest innovations in convenience retailing? How have Carrefour, Rewe, Morrisons
and Sainsbury’s innovations performed?
• How can I adapt my strategy to beneﬁt from growth in top-up shopping? What are the pitfalls to
avoid and the key areas to invest in?
• Which retailers have been making acquisitions and what features should I be looking for in an
acquisition target?
• Which convenience retailers have managed to develop strong food service propositions and
which parts of their strategy should I replicate?

About Verdict
Verdict is a retail information specialist within the Informa Group. With almost 30 years’ experience,
Verdict publishes unrivalled independent analysis. We provide a complete picture of the UK and
increasingly the international retail arena, helping retailers, manufacturers, service suppliers,
analysts and consultants to fully exploit opportunities within the industry.

www.verdict.co.uk


Verdict European Convenience Retailing Case Study - Convenience in 2013 (T…

Recomendados

Recomendados

Más contenido relacionado

Destacado

Destacado (20)

Verdict European Convenience Retailing Case Study - Convenience in 2013 (T…