Understanding the dynamics of our market

In such a competitive landscape we are always trying to improve our offer as if you don’t you will be left behind. During the year I was fortunate to see a few overseas markets and some outstanding offers in which convenience stores are continuing to outpace the growth of supermarkets. Over the last few years the level of investment by most retailers has led to improvements in how people use/shop the channel.

The truth is we had to, as movement would happen naturally with the increase in fuel efficient cars and having less of need to use the “servo”. As we migrate to true Convenience through the instore offerings that are broader than smokes, drinks and lollies, we have had to create both a better environment and offer for shoppers. In visiting overseas markets the focus has been on the broadening Food offers both in Convenience and on the go outlets as well how creating an atmosphere or a place to stop has enhanced the offer. I believe that while I haven’t visited all Convenience markets that we can learn by what WAWA, Sheetz and Rutter’s have done in Philadelphia as well as what SPAR, Applegreen and Topaz have achieved in Ireland. Some outstanding offers that have been able to achieve significant growth as well as a real destination for Convenience shoppers.

While we can learn a lot from overseas markets there is certainly offers that have been developed in Australia. When we were looking at our Shopper Data (CMA Shopper Report) what was exciting was the NPS (Net Promoter Scores) on the various offers in the market place were very strong, showing high levels of customer satisfaction. This doesn’t mean that there are no opportunities for improvement however, we are doing certainly do some things well. When we look at what is working in Australia we often look at what is happening in the metropolitan cities however, we have seen some strong results come out of regional areas in Australia.

The biggest difference has been the penetration of Hot food and Hot Coffee which is almost reversed to the overall average.  While metropolitan areas have seen significant improvement in the penetration of Hot Coffee it is Hot Food which has increased in it’s penetration to over 30% of all transactions in regional areas. A lot of this drive has come from the independent sector with APCO and UCB over indexing versus the average.  A lot of it has come from differentiation of products to the standard offer and not necessarily health or ‘’better for you” products.

In fact, when you look at the make up of the basket nearly 90% of all food to go products sold are hot food. These products can be anything from burgers, dim sims, Hot chips and fried chicken wings so while we have continued to drive “better for you” health offerings in metro areas, it is the American style Kitchen/fried food offer that is working in regional areas. What is happening however, is that Hot Coffee sales are not as strong in these areas as shoppers co buy with cold beverages instead.

The key learning is that we need to continue to understand the store and region dynamic and ensure that you sell products that are relevant to the area rather than just take a holistic approach. This is where understanding the data is so important as many missed sales opportunities can happen by not understanding the area dynamics.

Overall Shoppers are happy with the Convenience offer however, promotions and value remains the greatest challenge and we have seen some recent movement that has made the Convenience landscape more competitive with other channels.


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