Top Menu

Feature article: Food, glorious food

The trend that has seen convenience putting a greater emphasis on fresh food has paid huge dividends for the channel, and all the signs are that there is more of the same ahead.

While growth in the category may have slowed slightly in the past 12 months or so, it is still exceptionally strong as operators continue to improve their offer and customers continue to adjust their expectations of the channel.

While at first glance, the surging sales figures would suggest the category has been an easy win for convenience stores, the simple narrative of strong growth has been underpinned by an enormous amount of hard work, investment, and clever category management.

With consumer lifestyles changing and people showing a growing preference for fresh and healthy options, many stores have reacted by offering close to a full bakery ‘experience’. Stores taking on a café aesthetic and ambience are creating the potential to drive basket spend.

Fresh food has certainly boosted convenience stores looking to offset the declining sales in more traditional convenience categories, but it has also presented significant challenges. The logistics of the Australian supply chain make it very difficult for this country to do ‘fresh’ the way it is done in countries with a more compact population spread such as the UK.

There is also the capital cost of setting up a store as a genuine fresh food destination, as well as a significant investment in staff training.

The food area must be kept well cleaned, well stocked and well promoted at all times. There is nothing more certain to deter a hungry customer from making a food purchase than seeing a wrap or roll displayed in unhygienic looking conditions, or it looking like it has been sitting around for an extended period. The oft-repeated mantra that no one wishes to buy the last pie in the pie warmer is based in fact. When selling any sort of food, stock management, presentation and customer perception are everything.

It is important then that stores keep fresh food displays well stocked and this means it is inevitable there will be an element of wastage. This is something that all operators have to learn to accept. A limited amount of wastage is a price well worth paying for retaining a reputation for always offering quality product and for retaining long-term food customers.

According to the latest state of the industry report from the Australasian Association of Convenience Stores (AACS), as the food category continues to evolve, operators will need to look to add new capabilities to meet more missions as they look to extend their food-to-go offer. The report says that throughout 2018 there was an increase in breadth of range in traditional products, and introduction of new sub categories.

Data from IRI Market Edge and Supplier Contribution shows sandwiches and wraps have shown the biggest growth, increasing dollar sales by 17% last year, and a whopping 26% in 2017. Hot food grew by 7.5% last year and 11.2% in 2017. In terms of overall share of the category, hot food now makes up 39%, sandwiches and wraps 31%, and fresh cakes 21%.

The AACS says there are two trends happening in food on the go, with a clear importance around breadth of offer and healthy options.

The report said: “Healthy alternatives of sandwiches, salads and sushi are now represented in almost 30% of all food-on-the-go baskets, while ‘other’ hot food is the largest category in terms of total penetration represented in 33% of baskets.”

The AACS says that when customers were asked what was most important consideration when buying fresh or hot food from convenience stores, freshness and quality topped the list at 43%, followed by availability of product at 14%, range of options on offer also at 14%, and value for money at 13%.

The Handmade Food Co says there is a market for offers that are both made on site and pre-packaged, depending on what facilities stores have, and the level of risk that the owner is willing to take.

It says that the benefits of a pre-packaged food offer are;

– Less risk of product contamination

– No sourcing and distribution of raw materials needing to be arranged

– No wastage (raw materials ie bread)

– Special consumer requirements can be met ie gluten-free

– Less handling and therefore lower food safety requirements

– A more consistent product every time

– No labour costs (which continue to rise year on year).

– Quality control system ie product specifications on all raw ingredients

The Handmade Food Co, which offers a range of products, ranging from Aussie classics such as the ham and cheese toastie to on-trend flavours such as the roast chicken and Sriracha bacon ciabatta, says innovation is essential for the category to keep developing.

The company’s General Manager Sales and Marketing Sally Brown said: “More and more consumers are looking for ‘food on the go’ as we are all living busy lives so stores should make sure they have the classic sandwiches and a wrap. A food offer will bring additional foot traffic to stores and can create a loyal consumer… if their needs are met they will continue to return to the store.”

The Handmade Food Co says its Everyday Café brand has been a real hit in convenience, and sandwiches such as ham, cheese and pickle, chicken, cheese and mayo and roast beef, cheese and relish, as well as the chicken caesar wrap, sell very strongly.

While classic sandwich fillings and other food offerings are seen as a must, stores also need to continually revitalise and change their range as new product development is vital for continued category growth.

Ms Brown said: “Consumers on the go are purchasing across all day parts – breakfast, lunch, dinner and snacking occasions – and this will only continue to increase with innovation in the on-the-food category so it pays to have more range and an increased offer to the consumer. With this in mind, stores should ensure they get to know who their consumer base is and meet their needs.”

A measured range to suit a cross section of the consumers is critical, and operators need to fully understand the particular demographics of their area. Stores in central business districts surrounded by shops and offices or perhaps those located on busy highways can do particularly well from offering a strong fresh food offer. Everyone from tradies and office workers are potential customers and store operators will quickly learn the specific time of day busy periods relevant to them, with mornings and lunch times generally being the busiest times.

As well as keeping the food well presented and well stocked, staff should be trained

to communicate the food offer to the customer, especially if there are any specials on offer. Beyond asking customers if they would like to try one of the sandwiches or rolls on offer, staff can talk about the combo deal or special promotional deal available.

The classic food and drink combo deals are an established sales driver. Fresh, healthy food is a natural partner to healthy beverages such as bottled water or iced tea. When offered together at special combo prices, basket size is lifted and profits increased. In order to maximise the opportunity, stores should offer a core range of good selling lines positioned with the cold drinks and as close to the front counter as possible.

Of course, the rise of the fresh food offer in convenience has happened in tandem with the rise in hot beverages. The AACS notes that beverages and food continue to grow in terms of basket penetration, with the beverage category now represented in more than 70% of baskets, and hot drinks represented in almost 50% of beverage baskets.

The most recent AACS state of the industry report said: “Retailers are using hot coffee as a combo product with on-the-go food; especially driving more occasion based promotional offers. Hot beverages visit frequency is the strongest of any category and sits at 30% above the channel average … the hot beverage shopper has the strongest single mission of any category highlighting the strength of the category in driving foot traffic.”

Although consumers expect to pay more for fresh food at a convenience outlet, it is important that convenience operators get the balance right and don’t get tempted to sell at too high a margin. The risk in asking too high of a price is that a customer who might have gone on to become a regular food purchaser will instead become a one-time only consumer.

While the food offer in Australian convenience has evolved rapidly in recent years, the experience in other parts of the world suggests there is still considerable growth opportunity to be realised here.

Today’s on-the-go consumers are shopping across channels for grab-and go breakfasts, quick snacks, and dinner-time solutions. By offering a quality food offer that is consistently available, Australian convenience operators can then help make their store part of the consumer’s daily routine.

The Mintel Global Food & Trends Report 2019 concludes that the best food-to-go operators are aware of the wider mindset of their shoppers and have responded to shape their wider propositions accordingly.

The report said: “Increasingly this will become expected by food-to-go consumers. And those that don’t keep up will lose out.”

* Convenience & Impulse Retailing magazine would like to thank the Handmade Food Co and the Australasian Association of Convenience Stores for supplying information for this article.

 

AT A GLANCE

  • In buying fresh or hot food from convenience stores, 43% of shoppers said freshness and quality was the most important factor, followed by availability of product at 14%, range of options on offer also at 14%, and value for money at 13%.
  • Data from IRI Market Edge and Supplier Contribution shows sandwiches and wraps have shown the biggest growth in food, increasing dollar sales by 17% last year.
  • Healthy alternatives of sandwiches, salads and sushi are now represented in almost 30% of all food-on-the-go baskets.
  • The classic food and drink combo deals are an established sales driver and, when offered together at special combo prices, basket size is lifted and profits increased.

, , , ,

, , , ,

No comments yet.

Leave a Reply