The grocery market and the lasting lessons of Covid

You must stay at home. It is almost exactly two years ago – 23 March 2020 to be precise – that prime minister Boris Johnson uttered those fateful words to the British public.

The rules to prevent the spread of coronavirus included leaving home only to shop for the basic necessities, to take one form of exercise a day, or for medical needs. The public was told to work from home if at all possible, not to meet up in groups of more than two, and to use food delivery services if they could.

As we know, in the months that followed, independent convenience stores played a vital role in keeping the nation fed as supermarkets saw panic buying, empty shelves and massive queues. But, as we emerge from the pandemic, what longer-term lessons should we learn and what lasting changes will it leave behind for our sector?

Vital sector

James Lowman, chief executive at the Association of Convenience Stores (ACS), believes Covid made people realise just how important local stores are to communities across the UK. “If convenience stores ever doubted they were relevant to their communities, the pandemic showed exactly why our industry matters,” he says. “I think that really struck the government too, as they realised just how vital our sector was to feeding and supporting local people.

"The spike in home deliveries – especially to vulnerable and isolating customers – was the most compelling illustration of how our sector responded to the challenge, but the speed at which we rolled out Covid-safe measures in stores was equally impressive.”

That view is shared by Dawood Pervez, managing director at Bestway, which is responsible for symbol groups including Costcutter, Bargain Booze and Best-one. “The pandemic resulted in convenience stores becoming a vital piece in the UK’s retail jigsaw,” he says, “and while some high street stores have struggled, this is a channel that will continue to thrive thanks to a shift towards shopping locally and the channel playing a key role in the take-home mission.” Louise Hoste, managing director of Spar UK, believes the make-up of the sector has also changed fundamentally as a result of the crisis. “Barriers have been broken down in terms of what convenience stores can offer,” she says. “There is now a much broader offer and a variety of services available at convenience stores today as a result.”

One such change was that more shoppers visited their local store on either a full-shop or ‘meal for tonight’ mission, rather than just for top-up shops. John Miller, head of franchise at One Stop, says: “As customers changed their habits from shopping in supermarkets to local convenience stores, they have demanded more value, and excellent-quality fresh items have become a lot more important.”

One major shift came in the field of technology and digital media. Says Lowman: “Especially early in the pandemic, stores with good social media and digital communications were at a significant advantage. They could tell customers about new services and stock levels in real time, talk about policies like distancing and wearing face coverings, and reach out and explain to their communities the role they were playing. Social media remains an important asset in convenience retailing and one we should be developing more quickly.”

Home delivery

Perhaps the biggest shift when it came to technology was the roll-out of home delivery services, many of them app-based. Pervez says: “The pandemic highlighted the importance of digital in the convenience channel. Strong social media presences and grocery delivery options, such as Jisp and Uber Eats, have become increasingly important for independent retailers to attract and retain customers.

With younger shoppers driving growth in the channel, retailers should embrace the platforms they use.” Miller at One Stop says online delivery not only attracts customers that are near to the store but also reaches people miles away, therefore pulling in completely new shoppers. “We’ve seen exponential growth in this area, and we don’t see this changing any time soon. As we emerge from the pandemic, we can see customers who are still nervous in inside spaces and like to get their food delivered, as well as customers who now prefer that way of shopping.”

Kash Khera, co-founder and director of the Simply Fresh symbol group, adds: “Deliveries are here to stay – retailers just need to make them economical and sustainable.”

Khera also believes long-term structural changes to where people work and how they travel will have a profound effect on convenience.

Lowman agrees: “Into the future, we can expect much more working from home than pre-Covid and that has to be an opportunity for neighbourhood stores close to where people live. Capturing more of that lunchtime and snacking spend isn’t easy, but I can see lots of focus on solutions targeting this market.”

Shopping online

He adds: “More customers have got more used to shopping online, whether for clothes and big purchases or for food and convenience products. The establishment of the Q-commerce operators like Getir and Weezy offer those customers another form of convenience shopping, and many convenience stores have stayed in that market themselves.

"There is clearly going to be an online convenience sector moving forward, and retailers need to decide how they want to position themselves in this market.”

So where does the sector go from here? Miller at One Stop says that with living costs now rising in the wake of Covid-19, a strong value proposition will be vital to retain shoppers who have made the switch to convenience stores.

“We need to keep our prices low and quality high so we can drive sales and profitability for our independent retail partners,” he believes.

Lowman says that while in the longer-term, the pandemic will make the sector more relevant to consumers, medium-term we face some painful adjustment across the global economy that will impact local shops.

“Inflation, supply issues and labour shortages are going to be a factor for at least the next 12 months and it’s going to take all the ingenuity and resilience we saw during the pandemic to get through this period,” he says.

“The watchword for me is relevance. Faced with lots of tough decisions, if retailers can focus on what’s going to make their business more relevant into the future, that’s a pretty good place to aim.”

Source: Talking Retail