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Feature article: Gifting an opportunity

The man in headphones using mobile phone, sitting with coffee at cafe

While earning a reputation for being able to efficiently cater to the everyday needs of customers is the cornerstone of any convenience store’s success, the channel has long since moved beyond being seen simply as a reliable source for bread and milk.

In responding to changing customer expectations and to the challenges facing key categories such as tobacco, convenience has tried adopting a number of innovative strategies to keep profit levels up. Most notably, these have included putting a greater focus on hot food, but there is also a growing awareness of the potential presented by special occasions like birthdays and Christmas.

Stocking a good range of gift cards is a starting point, but the arrival of a wider range of affordable and small footprint gadgets and gizmos means convenience is now more suited to satisfying gifting demand than ever before. Stores are increasingly finding that carrying a variety of gifts and gadgets is an effective way to significantly increase overall customer spend and to lift profits.

Companies such as Pacific Optics, which supplies a variety of products in this space, say the opportunity has never been greater.

Pacific Optics General Manager Sales Theo Foukkare said: “Christmas and in particular, the holiday travel period is very important for tech, gadgets and gifting”.

“Tech accessories and pre-paid handsets can grow by 50 to 60 percent in sales, whilst gifting of toys can double or triple in sales if you have the right range,” Mr Foukkare said.

In a channel such as convenience where space is a premium, getting the range right is absolutely critical.

“Each store is different, and understanding what is right for you is part of the process of winning, so trial and error with a trusted supplier is part of this learning process.

“Getting this range right can deliver upwards of $1000 in retail sales per month for an average store, therefore gifting in the toys and promotional category needs to be judged based on the consumer breakdown for the store, which will then drive the range.

Of course, tech products are now an essential part of any gifts range, and Pacific Optics boasts items such as cables, chargers, power banks, headphones, in-car accessories, Bluetooth products, and mobile phones. From a gift perspective, it has an everyday range of licensed toys across all of the leading brands, including plush toys, die cast cars, dolls and collectibles. This year, it has also focused on two major movies, the recently released Toy Story 4 and Frozen II, which is due to hit cinema screens in November.

Other companies such as Eastrade International also have a range of mobile accessories in convenience such as wall chargers, car chargers, portable chargers, earphones, USB cables and so on, as well as a range of travel adapters.

With statistics revealing that 88 percent of the Australian population owns a smartphone, Eastrade said nine out of ten people walking into a store are therefore potential customers in this category. It says phone chargers, cables and travel adapters are among the most common emergency purchase in general merchandise.

Eastrade Marketing Director, Hong Shin Tan said: “Using point of sale (POS) merchandising such as our medium stand or counterstands, and ranging product around the cashier area or queue area can boost sales”.

“You want eye catching packaging to subconsciously direct your customer’s interest, which is what our Esonic packaging is designed to do,” Mr Tan said.

Pacific Optics said that to succeed in the category stores need to consistently showcase new products and innovation by creating impactful displays in high-impulse areas and grabbing customers’ attention.

“Don’t half create a display – build a category home, offer a complete range and always maintain maximum stock weight,” said Mr Foukkare.

“Challenge the status quo when it comes to store layout… does confectionery need to be in all of the bays walking towards the console, or can some bays be replaced?”He says category adjacencies also play a role in maximising the opportunity and suggests positioning tech accessories with Telco’s to drive companion purchases, as well as putting new tech accessory new lines on the front counter or in arm’s reach from front counter to drive impulse sales.

While all convenience stores can benefit from stocking a good range of gifts and gadgets, different locations meet different needs.

“If you are in the city where there are lots of offices nearby, extra products like HDMI cables and powerboards are good sellers, but if you are a convenience store near apartments, audio cables and Bluetooth earphones for jogging are popular,” said Eastrade’s Mr Tan.

“Most importantly, retailers themselves have to understand and research their local customers’ interests… and the most direct way to do that is through talking with those customers.”

Mr Tan believes that gifts and gadgets have a long way to go in convenience, which he said has significant advantages over other channels. He said supermarkets are still too closely associated in the customers’ minds with groceries to be viewed as a logical place to buy something like a USB cable, and he said specialist phone shops can be seen as too expensive without offering the benefit of the convenience that convenience stores do.

“The concept of convenience is to buy time and mobile accessories are fast becoming a commodity that customers expect convenience stores to stock,” he said.

“You wouldn’t go all the way to JB Hi-Fi or Telstra shops to buy a USB cable… you just go to your local convenience store.”

Mr Tan said that in the same way as Uber Eats customers are willing to pay the extra freight to give themselves more time to do other things, so too are convenience customers willing to pay extra to buy gifts and gadgets in the convenience channel.

Stores that have the right range of gifting or tech products or gadgets can then drive ongoing incremental purchases. However, retailers need to really get behind the category and to consistently refresh the offer to make it exciting or else they risk customers seeking the ‘surprise and delight’ element elsewhere.

* Convenience & Impulse Retailing magazine would like to thank Pacific Optics and Eastrade for supplying information for this article.

 

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