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Next step in convenience store home delivery
December 2, 2020Retail
**Guest Blog** – Taking Convenience store home delivery to a new level
We're delighted to have David Rees, convenience industry commentator and former editor of Convenience Store magazine for over 15 years, write a guest blog on what he sees as one of the biggest opportunities to come out of 2020. Often referred to as 'convenience on demand', David investigates how convenience store home delivery has boomed. He argues that now is the time for it to move to the next level.
Delivering a big opportunity
"Many food and drink suppliers will be accustomed to the view of the convenience sector as being a place entirely for impulse, distress and occasional top-up shopping.
Although there is still some truth in this statement, it is certainly less true than it was a year ago. The cumulative effect of national lockdowns and restrictions on movement has at first disrupted, and then re-set, previously predictable patterns of shopper behaviour.
Everything we might have thought we knew about about grocery trade channels at this time last year probably deserves a rethink as we head towards Christmas 2020.
Supermarket sales as a whole have increased during the lockdowns. But it is also true that there are many shoppers who are no longer using the big grocery retailers at all. I don't just mean this in the physical sense, with consumers switching from in-person shopping to home delivery, but also due to fears of virus transmission and frustration in the long wait for home delivery slots, if they can get a slot at all.
One of my neighbours, for instance, disliked the crowds and the shortages in the local supermarket during the early days of lockdown, and was unable to secure a home delivery slot. So she now receives regular deliveries from a local foodservice wholesaler, which has re-cast its operation to include B2C as well as B2B, supplemented by regular visits to the village shop and does not engage with the grocery multiples at all. Others I have spoken to still do not consider public spaces such as large supermarkets to be safe places while virus infection levels remain high.
Supermarkets have disappointed customers
The level of disappointment with the supermarkets during the initial stages of lockdown translated into shoppers calling on their local convenience store even more than usual. The owners of those local shops did everything in their power to make sure that they didn't let their new and existing customers down.
Local shops are continuing to do an excellent job in retaining those customers, meaning that the supermarket operators are not the only game in town when it comes to a big weekly shop or feeding a household any more.
But of course in order to meet safety concerns and fulfil broader shopping requirements, convenience stores and local independents have had to take on the challenge of home delivery to a greater extent than ever before. Practically every small store is now offering this service. And I would argue that this is a game-changer not just for retailers but for all those who supply them too.
Home delivery is a game-changer
Home deliveries from convenience stores are not a new thing brought about purely by the lockdown. In fact, local shops have been delivering to customers' homes for many years as a service to the elderly and the infirm. They are usually carried out on an informal basis by a kind-hearted member of staff during quieter periods or at the end of their shift.
Some stores already had quite structured processes in place before the lockdown, often linked to in-store concessions such as dessert bars or Subway counters or existing delivery operators such as Deliveroo or Uber Eats. But what is new is the level of demand for home deliveries from a local shop. And the fact that this demand has gone beyond treats and instant gratification into the realm of a full household weekly shop.
Technology will be a driver in delivery
Technology has a role to play, and an entire industry has sprung up developing and promoting apps for small businesses to take orders over the internet, as well as digital and remote payment solutions that convenience stores have traditionally not had to consider.
Research carried out by KAM, TWC and Cirkle indicates that 84% of shoppers want to place that order online. 35% mention an app specifically. The important thing to remember here is that not every delivery customer is choosing to use that technology. 14% of customers say they want to place the order by telephone. Indeed, the customer base of local shops is generally skewed towards the elderly, who in many cases prefer to use their phones to talk to a member of staff rather than using an app or a website.
Home delivery customers are valuable shoppers
As a result, much of the delivery volume going through smaller local shops is being processed in an analogue way, with orders taken over the phone and picked from the shelves by in-store staff.
Delivery customers typically spend more, and shop more categories.
This makes it very difficult to evaluate the scale of local grocery delivery across the country as a whole, as these sales won't show up in industry data as part of an online "channel". But whether you can measure it or not, it is entirely intuitive to believe that delivery customers typically spend more, and shop more categories than those who carry their own shopping home, and this is the really significant change.
Retailers have taken advantage of increased at-home consumption
For these reasons, we can be sure that changed shopping patterns have created new business for many local convenience stores. They are driving growth in products and product categories not normally considered key for convenience – across all three meal occasions, scratch cooking, big nights in and family dining.
Lockdowns have been, sadly, devastating for the hospitality trade but have boosted the take-home market for alcohol. Local shops have a natural advantage here as they are able to serve people quickly, and with product chilled and ready to drink. And on top of this, of course, we have surging grocery food sales with more meals being eaten in the home.
Huge opportunity for retailers to trade-up
It hasn't always been easy to predict each new wave of public restrictions and relaxations, but some form of family get-togethers will be permitted at Christmas-time. So there is a huge trade-up opportunity there for all parts of the grocery trade, including local shops.
Having said that, with the economy damaged and unemployment rising, value is going to be a key shopper requirement into next year and beyond.
Are suppliers getting it right?
Local convenience stores, for all the reasons outlined already, will be active in all of these marketplaces to a degree not seen in recent years. So the question for suppliers is, are you trying to service the convenience channel with the right product range and maximum levels of availability bearing in mind all the changes that have taken place?
Store owners, too, are going to be continually challenged by new patterns of demand, and staffing levels are not always easy to maintain, particularly as retail employees are often vulnerable or carers themselves.
The daily life of convenience retailers always comes down to prioritising time: there is still a lot more they would like to do, and like to do better, if they only had the time or more people on the payroll to do it.
And this is where suppliers can really help.
Can you do any more to save time for retail staff? Are you maintaining good availability through wholesalers, so that store owners are spared the time of having to source alternatives elsewhere? Are pack sizes consistent and consistently priced? Are products easy for staff to pick and pack? Do you have good availability of product through the convenience supply chain for consumers who want to trade up at Christmas, but are either unable or unwilling to use the major supermarkets?
Do you also have an offer (or offers) that would ensure that consumers can get value at their local shop, both now and in the future?
Are there any other forms of support you can provide? Where retailers are needing to purchase delivery vehicles and/or new hardware is there an opportunity to assist them through brand sponsorship perhaps?
Convenience store home delivery is here to stay
Nobody would say these aren't difficult times, but there are lots of reasons why the convenience sector will continue to demonstrate strong business performance as well as support for the most vulnerable within local communities, both in-store and by physically delivering products to people's doorsteps.
What we once took for granted as trade channels have been re-set during the pandemic based around who can do the best job for local customers.
Delivery from c-stores is here to stay – 86% of retailers say they will continue with the services after all the lockdowns have ended, according to KAM and TWC research – and store owners have had to adapt to survive. Are suppliers adapting too?
Convenience stores, for many shoppers, are no longer the last resort, but instead the first place people turn to, and it would be a big mistake for suppliers not to see the opportunity in this.
The opportunity might be bigger than you think
So in conclusion, convenience retailers need their suppliers to think seriously about availability, simplicity, flexibility, value and, above all, optimism for the sector as a whole. Local retailers know their customers personally and are continuing to do a great job in looking after them. The more suppliers can do to support them the better the outcomes will be for all. The opportunity might be bigger than you think."
David Rees
@DavidCStore
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