Convenience stores grow fresh food sales to almost a third

Fresh foods are the star performers at UK convenience stores, according to the IGD’s Convenience Retailing 2010: Future Trading Strategies report.

The study found fresh food participation has grown at a faster rate than any other category and now accounts for 31.9% of sales in the convenience sector.

According to Jamie Trust, senior business analyst at the IGD, fresh participation is greater than the sales of confectionery, tobacco and newspapers combined.

“Chilled foods, in particular, remain a key driver of this growth overall, emerging as the fastest growing category in convenience stores in the 12 months to April,” said Trust.

“Although development in this area has historically come from the convenience multiples, our research also reports an increase in sales of chilled foods in symbol group-owned stores."

Musgrave Retail Partners GB launched Londis Fresh, a multi-million pound investment to improve the Londis fresh food range and distribution network in May 2009, for instance. Spar retailers, AF Blakemore (Tates) and James Hall & Co, have also sought to strengthen their fresh food trading teams and expand their warehouse capability for chilled products.

According to the report, promotional innovation including rounded price points, meal deals and event-based marketing, has also become a key feature of the sector in the last 12 months.

The convenience sector now accounts for 20.9% of the total UK grocery market and increased in value by 6.3% to £30.9bn in the last 12 months, says the IGD. It is growing at a faster pace than the overall UK grocery market and is forecast to rise to £41.3bn by 2015.

Store numbers are virtually unchanged at 48,410 convenience stores in operation - down 0.5% on 2009.

The number of forecourt convenience stores declined by 2.1% over the year, although sales increased by 1.9%.

Symbol groups were the fastest growing convenience segment in the last 12 months, with more than 1,000 new stores added and a 10.6% increase in sales.

According to Trust, the symbol group segment has focused on demonstrating greater value for money to its customers in the last 12 months.

“The growth of symbols groups has also been widely supported by new format development, greater supply chain investment, new ranging initiatives and focusing on greater national exposure - an investment which has paved the way for new TV, radio and national press advertisement campaigns,” he said.

At the beginning of 2010, just five months after its first national newspaper advertising feature, Nisa-Today’s announced plans to run a series of national television campaigns, with the first run of adverts expected to hit towards the end of 2010.

Rival operator, Spar UK, announced a similar move in June 2009, with details of a new £5m advertising campaign to support the re-launch of its entire private label range.

Additionally, the launch of new store formats, both at the small and larger end of the convenience spectrum, have enabled many symbol group operators to widen their scope and offer more customised solutions to independent retailers than previously, said Trust.

In March 2009, for example, Booker launched its new Premier Express fascia for convenience stores under 800sq ft, with over 130 such stores trading by the end of 2009.