Brett Barclay of Him! Australia on the latest CTP findings

The Australian retail market dodged a bullet and escaped the recession. The government stimulus package, while putting the country in significant debt, helped save jobs. Housing prices are booming due to the relaxing of foreign investment laws and have been a driver of four interest rate rises in six months…all true statements but right now retailers are finding it hard going. Last year the market rebounded strongly from the previous year’s performance in the global meltdown. This year, it is a tougher trading environment.

In a struggling market retailers are looking at shopper behaviour for solutions more than ever before. For the first time in Him’s four-year history of measuring consumers in Australia, their actual spend is equal to their intended spend. This is driven by promotions and the fact customers now have greater choice in categories than they had previously. Promotions are a way of competing against all retail formats and they also provide value. We see younger shoppers, especially, have become very aware of promotions and are engaging in them at more than twice the average rate.

One of the challenges faced within the convenience channel is continuing product availability on fresh and hot food. This year the importance of product availability has jumped from 17% to 46%. This is a dramatic change of customer mindset and shows a need for retailers to be better prepared for key selling periods in their stores. While some retailers at store level insist on running out of product, it continues to build customer frustration.

Staff also play an important part in delivering customer satisfaction. Eighty six per cent of customers interviewed identified if the console operator said ‘thank you’. Sixty seven per cent had been asked if they had found what they were looking for but only 17% had been informed of promotions. The opportunities still exist to advise shoppers of offers even if customers are sometimes dismissive of the approach. Our study in the past has found that about 50% of customers do not mind or like to be up sold products.

Encouraging shoppers to come in and purchase on a more regular basis is a challenge for the market in future. Visitor frequency in the channel remains stagnant and the alignment to fuel continues to attract a lower value shopper.

NACS, the International Association for Convenience and Petroleum Retail, will be hosting its Global Forum in Sydney, Australia, 19-21 June 2010. This event offers convenience retailers from around the world a unique look into best practices in the dynamic and rapidly developing Australian market.

Programme overview

This exclusive, highly interactive programme combines presentations, case studies, panel discussions, round tables and visits to retail formats as well as a number of networking opportunities. Specifically, the forum provides retailers with a fresh perspective from performance-driven industry leaders and experts to help them turn ideas into concrete business success.

For NACS Global Supplier Council Members, the Forum also provides an introduction to leading retail executives from global chains as well as programming on trends and opportunities for companies in global markets. Topics include:

• Case study: 7-Eleven’s successful franchising model in Australia
• Market segmentation: who does it well and how to do it better
• Forecourt focus: establishing a stronger convenience offer
• Channel blurring: supermarket/fuel/c-store convergence — small format supermarkets challenging the convenience shopper
• Loyalty programmes: fuel discounts by supermarket operators
• Food trends: healthy eating and effectively communicating the offer
• Food service development: bakery, coffee and hot foods as key drivers
• Credit card interchange fees: the Australian experience and what’s happening globally on payments reform

Store format tours include:

• Woolworths/Caltex
• Caltex Star Mart
• Coles Express/Shell
• 7-Eleven
• BP Connect

New Zealand convenience market update

The New Zealand convenience market has had a difficult two years in line with the global financial crisis. What has made it even tougher is three out of the four major retailers have indicated they want to exit the retail market in line with global strategies.

Chevron will be exiting retail at the end of 2010 and is currently inviting tenders to control this part of its business.

Shell has just announced it has completed the deal to sell all assets in New Zealand to Infratil and the New Zealand Superannuation Fund. Exxon Mobil, as in Australia, has indicated it would like to sell but there has been no further development.

The convenience market has continued to record flat to negative growth but hopefully the upcoming changes will provide some positive results for the channel.

Some of the challenges the New Zealand market is facing are very similar to Australia and one of the most significant is the decline of spend per customer - dropping by around 15% over the past two years.

Fuel continues to be the major driver for shoppers to come to the store and the food and coffee offer continues to improve with BP’s Wild Bean and Mobil’s On the Run formats being key drivers.

Retailers have continued to evolve their promotional programmes and this, together with a focus on customer service (staff friendliness was ranked number one in importance) and product availability, will see this market through the changes and challenges ahead.

Brett Barclay: availability still a key challenge in Australia