CONFIDENCE IN CONVENIENCE MEANS SUPPLIERS MUST GET ON BOARD

25th March 2014
As the viability of the major supermarket model comes under international scrutiny and consumer awareness increases on a daily basis, the convenience store is emerging as one of the brighter and more positive retail stories of 2014.
With reason to be confident about the future the industry, the Australasian Association of Convenience Stores (AACS) has a message to suppliers who may have neglected convenience stores and focused their efforts on the two major chains: it’s time to support these small businesses which have always supported you – before it’s too late.
AACS CEO Jeff Rogut said the convenience industry has remained resilient despite the aggressive moves by the major supermarkets over the years, through a focus on customer service and evolving to respond to changes in consumer behaviour.
“The major chains have pulled out all the stops to drive smaller, independent retailers out of the market, through excessive milk and bread discounting, anti-competitive petrol discounting and rewards for liquor purchases to name a few. Yet convenience stores have endured,” Mr Rogut said.
“Even in the face of uncaring and at times ignorant Government legislation, our industry has continued to adapt, seeking out new opportunities.
“Now, as more and more consumers become dissatisfied with their treatment at the hands of the major supermarkets – not to mention how they have treated others in the supply chain – the convenience industry has the opportunity to wrestle back market share.
“In recent years convenience stores in Australia have experienced suppliers shifting their attention to the major supermarkets, taking their collective eye off the convenience ball in the grab for quick volume. Many suppliers have reduced investment in the convenience channel, be it through innovative new products, account management teams and even promotional activity.
“The efforts of the convenience industry to adapt have gone unrewarded by some suppliers, while others have remained highly supportive. However, for those who have neglected to invest in our channel in favour of the majors, there is mounting evidence for a need to re-focus, before it’s too late,” Mr Rogut said.
Recent reported profit dips and market share losses from major chains in the UK, such as Tesco, Sainsbury’s, Asda and Morrisons, have led some industry commentators to question the future viability of the model these companies have used to great effect in times past. The growth in alternatives such as Aldi has shone the spotlight on the potential longer term obsolescence of the majors’ model.
“The fact the major chains now wish to target the convenience sector head on through smaller high street outlets indicates they themselves are aware their time might be coming to an end. Unfortunately, this is not their core market and they lack the experience and expertise of convenience stores which have operated successfully in this space for decades,” Mr Rogut said.
“Traditional pillars on which the supermarkets based their value proposition, such as lower prices, increased convenience and a larger product choice, are being viewed with greater scepticism.
“People don’t want to wait for other shoppers to leave so they can get a park. Nor do they want to travel to a destination shopping centre when they could be supporting local businesses while enjoying increased convenience at the same time.
“Consumers are becoming more aware and resentful of having supermarkets selling their own private brands, limiting choice and potentially contributing to higher prices. There is greater recognition of the neglect the majors have shown certain primary producers.
“And supermarket prices themselves are no longer going unnoticed. It seems every sales promotion is connected to other category purchases in the supermarket’s collective, be it through their associated liquor or petrol outlets, meaning consumers are actually being encouraged to buy more.
“From our industry’s point of view, we welcome greater scrutiny of the major supermarkets. Our value proposition is clear. We are open 24/7, 365 days per year, in locations that are convenient to visit and quick to navigate for time poor people.
“As convenience stores continue to evolve their offering to respond to changes in consumer behaviour, through healthier snack options, fresh food and coffee, the future for our industry appears bright.
“We encourage those suppliers who have diluted their convenience channel efforts to cater to the major chains to refocus, to re-engage and to re-energise. The convenience industry comprises stable, long term businesses with strong brands, systems and proven managers not just seeking the quick buck at the expense of all else, but innovatively developing their businesses.
“Putting all your energies into one or, as is the case in Australia, two major baskets may not be the wisest strategy in the long term,” he said.
A detailed analysis of the confident outlook for the convenience industry in Australia is expected to be a main feature of the upcoming release of the annual AACS State of the Industry Report in early May. Details for the release of the AACS State of the Industry Report are below. Bookings are essential.
Sydney: Tuesday May 6th 2014
Dockside
The Balcony Level (1st floor)
Cockle Bay Wharf
Melbourne: Wednesday May 7th 2014
Victoria University Convention Centre
Flinders Street Campus
Level 12, 300 Flinders Street
Further information:
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores
Ph: +61 467 873 789
Media enquiries:
Stephen Naylor
Wise McBaron Communication
Ph: +61 (2) 9279 4770