Everyone feels that sigh of relief when convenience stores sport summer merchandise as the next step into the longed-for warmer weather.
However, all the indications point to this summer being somewhat different for the sector, but not necessarily in a negative way.
The recently released AACS State of the Industry Half Yearly Report 2020, prepared for AACS by Convenience Measures Australia, shows the industry achieved sales growth of 0.8 per cent for the half, helped by a two per cent quarterly sales increase in the June quarter.
The report shows that just as the pandemic has impacted states differently, so too has the convenience channel varied in performance across borders. Over the year-to-date, Victoria recorded a 3.7 per cent decrease in total sales while New South Wales was down one per cent.
On the flipside, Western Australia achieved significant growth of 9.3 per cent for the half, while South Australia was up 3.4% and Queensland convenience stores recorded sales growth of 3.3%.
“The first half result for the convenience channel, particularly given the circumstances, is very strong and a testament to the quality of service, safe store environment and consistent hard work of the operators and employees in our industry,” AACS CEO Jeff Rogut said.
He says that many consumers prefer the convenience store experience in the current climate because of the safe and clean shopping environment on offer, and because stores are less crowded.
The report shows that growth in packaged beverages category was subdued at one per cent, with energy drinks and carbonated beverages being the bright spot, having maintained strong growth on a moving annual turnover (MAT) basis of 3.8% and 3.2% respectively.
Food on the go was the second highest category in terms of both dollar and percentage growth in 2019 but declined over the June quarter by 4.4%. However, reflecting the unique circumstances, take-home food was up 7.8% in the last quarter.
New normal comprising old and new
IRI Worldwide Lead Consultant Justin Nel points out that the word recession is being bandied about and that there’s no going back to normal – there’s only a new normal comprising the blending of old and new.
Mr Nel cautions that “it’s an incredibly difficult time for the food and beverage industry” as evident in information that came to the fore in two IRI Worldwide waves of research in April and May. The second wave revealed that 74% of Australians had indicated a change of habits in terms of how they shop, including a notable increase in online shopping.
Most people feel their financial situation is worse off at this time compared to last year – basically Australia has a pessimistic consumer – and nearly half the Australian population does not have a good outlook for the financial situation right now as well as into next year, Mr Nel says.
“They’re expecting the impacts of Covid-19, the recession and things like that to have lingering effects because many of us have lived through the 2008-2009 GFC.
“The research in April showed that 45% feel household income is at risk while 37% of households say that their income has not been affected – so 45% of the population is feeling the impact.
“This is important for manufacturers because you now have a completely segmented or different market. Half of them are okay, you know, still a little bit pessimistic, perhaps, and the others have been impacted. So your shopper has changed.”
This means that penny pinchers would definitely think twice about their usual convenience impulse purchases over the summer period.
Finances aside, Mr Rogut says it is of great importance that retailers customise their stock according to customer requirement and that they remain abreast of changing customer requirements such as offering bait and tackle if near a fishing venue, as an example.
As summer is usually warm, retailers would do well to stock items from sunglasses to coolers and if near a beach to consider all relevant items consumers might require from lip balm and sunscreen to insect repellent.
As a result of Covid-19 manufacturers and retailers can also take advantage of the fact consumers are looking to convenience stores more for household cleaning products, hand sanitisers, toiletries and medicinal products according to IRI Food and Grocery Consultant Brooke Olliver-Burnside.
Integral to the merchandise mix are snacks and beverages, with frozen and novel beverages enticing consumers in with the promise of relief and a taste reprieve as well as easily accessible condoms as we all know summer fun can be synonymous with sex.
Read more in the September/October issue of Convenience World.