IRI mid-year convenience update

    Reflecting on the first quarter of the calendar year, 2021 provides a more favourable performance narrative for the petrol and convenience industry compared with the same time last year. At that point, the grocery channel was recording explosive dollar growth (12.7 per cent, QTR to 5/4/20) amid unprecedented stockpiling. Meanwhile, the convenience industry was confronted with marginal value declines (1.7 per cent, QTR to 12/4/20). Much of the sales divergence between channels was underpinned by extraneous circumstantial factors, but made for unfavourable comparative context, nonetheless.

    Industry insiders, somewhat over-optimistically, clutched onto the idea that safety-conscious Australians would place added value on the convenience store format’s smaller size, comparatively low foot traffic, and convenient locations. However, our research with shoppers continually reveals very low levels of agreement among Australians that they are embracing the channel more frequently because of location convenience. In fact, 54 per cent of respondents ‘do not agree at all’ with that notion.

    Instead, the data from our 13,500 shopper panellists affirms that Australians have been doing even more shopping in large-format stores to minimise trips. And less commuting has resulted in fewer opportunities to pop into convenience stores near work and home. Among employed Australian adults, an additional 17 per cent of the population are now taking advantage of flexible working arrangements to work from home. Overall, this amounts to 41 per cent of the working population, according to ABS survey data.

    It was the larger independent grocers (mostly under Metcash) that benefited from the surge in ‘shopping local’ as we recorded significant share gains for Metcash in the space of eight weeks in March/April 2020 via our shopper panel read. Scan data sales told the story of a P&C channel that was lagging because of reduced social mobility and, by implication, lower demand for impulse items. Furthermore, the channel arguably lost its leadership edge in offering time-saving convenience as more Australians turned to online shopping to fulfil desperation and planned purchases. This is a call to action for the industry to adopt new technologies to accommodate online orders, kerbside pick-up and even delivery.

    Ongoing research conducted with our household panellists in Q1 reinforced how Australians are cognisant of buying more online (in January/February 2021), but also aware that their use of P&C stores had subsided because of reduced mobility. We recorded a net change of -12 per cent for the channel in lieu of 22 per cent of panellists saying they are buying less from the P&C channel compared with the same time in 2020. In stark contrast, we recorded a net change of +32 per cent in the proportion of respondents who say they shop online more than in the previous year.

    P&C sales declines in 2020-21 would have been more significant had it not been for the enormous spike in select grocery and household categories (mostly led by the range advantage held by Coles Express). That said, we’ve recorded high single-digit dollar growth in grocery product sales throughout the timeframe in question. In contrast, household product sales were down 42.5 per cent in the latest quarter, influenced by the normalisation of demand for toilet paper (at least until the more recent lockdowns in late June/early July at the time of writing). Such pronounced fluctuations in sale performance are once again reinforcing the ephemeral and circumstantial nature of Covid influenced behaviour.

    Read the ‘IRI Mid-Year Convenience Update’ report in full in the July/August issue of Convenience World

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