European convenience stores outpace market, reports Verdict

Neighbourhood and local stores have proved more resilient than larger supermarkets and hypermarkets in the last year, according to new research from Verdict.

Its Future of Convenience Retailing in Europe Study reveals convenience stores have been the star performing format for many European grocers including Carrefour and Casino.

Hypermarkets, conversely, have suffered a significant drop in footfall as shoppers cut back on discretionary spending such as non-food.

“Local neighbourhood stores have become the first port of call as more consumers are shopping locally,” said Simon Chinn, retail consultant at Verdict.

Verdict’s report analyses the competitive European landscape, different consumer behaviours and retailers’ strategic response.

As smaller format stores flourish, Verdict finds Europe’s leading grocers are increasingly growing their convenience store estate faster than larger formats. In some cases, such as in France, more lenient legislation for opening smaller stores is fueling c-store development.

Retailers committed to expanding convenience chains include the UK’s Tesco, Sainsbury’s and Waitrose; Zabka in Poland and the Czech Republic; Franprix (Casino) in France and Reitan with its 7Eleven format in Scandinavia.

Discounters are also muscling in on the convenience action with Dia enjoying success with its DiaMarket convenience concept in Spain and Netto launching its Dogn Netto small format in Denmark.

Other retailers providing smaller-sized formats include Condis with its Express stores and El Cortes Ingles with a downsized department store, both in Spain.

Changing demographics and consumer behaviour are creating new opportunities for convenience in Europe and will further boost competition, says Verdict.

A growing number of single person households and aging population is driving top-up shopping and boosting demand at local stores, say researchers.

Convenience stores are also poised to benefit from the trend to online shopping, claims the study. As more consumers embrace the online channel for larger shops, they will turn to local shops for perishable items and essentials as well as food-to-go.

“Rather than being a threat, [online] works hand in hand with c-stores,” said Chinn.

C-store shoppers will emerge as the greatest supporters of local produce too, says Verdict. Similarly, fresh produce and healthy eating choices are poised to be in greater demand in future, it says. Private labels will begin to feature more in top-up shopping baskets too.

“It is very much a growth area,” said Chinn, “and retailers should extend this offer more to their convenience stores.”

Retailers are responding to the changing landscape and consumer trends, finds Verdict.

Retailers, which have ramped up their private label offering, include Carrefour (France), Budgens (UK) and Sisa (Italy).

They have also reacted with formats to meet more time-pressed consumers, said Chinn.

Recent examples include Albert Heijn’s new ‘to go’ stores in travel hubs and Sainsbury’s Local, catering for out-of-home eating in the UK and offering a time of day food strategy to cater for different meal occasions.

Elsewhere, CBA in Hungary has expanded its fresh produce offering and Mercator in Slovenia has developed a strong delicattesen counter in store.

Retailers are also beginning to extend the concept of localisation to environments, said Chinn. Increasingly stores are adapted to different markets such as Carrefour’s City (urban), Contact (rural) and Montagne (alpine) concepts.

Retailers that manage to find a a balance between a standardised convenience format and localised aspects such as layout and merchandising mix will have greater success in drawing in footfall and keeping local customers coming back on a regular basis, said Chinn.

Simon Chinn: neighbourhood stores are first port of call