Post-coronavirus (COVID-19): impact on global convenience trends - May 2020
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Post-coronavirus (COVID-19): impact
on global convenience trends
May 2020
© IGD 2020 Image source: 7-Eleven
Introduction This insight presentation was prepared by:
Charles Chan Rachel Sibson
Senior Retail Analyst Retail Analyst
charles.chan@igd.com rachel.sibson@igd.com
At the start of 2020, we highlighted five
global trends we believed would shape the
development of convenience stores globally
in the short term.
While our trends remain relevant, the retail
landscape has, with Coronavirus (COVID-
19), undergone major changes. The
pandemic has impacted consumer
behaviour and the strategies of suppliers
and retailers.
Our own data for the UK, US and China
presents a mixed picture for growth through
2020 as a result of COVID-19.
Therefore convenience operators have
implemented measures to ensure shoppers
can safely access food and consumer goods
to ensure the channel remains relevant.
This report highlights how COVID-19 has
evolved or accelerated our global
convenience trends, using case studies for
inspiration and providing insight on how you
can respond.
© IGD 2020 Source: IGD Research
Content
1 Executive Summary
2 Convenience channel forecasts
3 Five global convenience trends
4 Areas to watch: North America, Europe and Asia
5 Key short to medium term implications
© IGD 2020 Source: IGD Research Page 3
Executive summary
Redefining Stronger health
Tech enabling Going beyond c- Better minimart
product range focus
convenience store retailing and local stores
• Convenient • Fresh-focused
• Automated • New innovative • Urban local stores
shopper-led store concepts
payment solutions tailored formats
merchandising • Community-
• “Just walk-out” • Targeting new • Expanding health focused initiatives
• Stronger frozen, and wellness
technology and missions and
prepared dishes ranges • Serving wider
frictionless stores offering new
and food for later community needs
solutions • Responding to new
• Delivering on-
• Non-food health trends
demand and the • Modular
categories
last mile convenience stores
emerging
Acceleration Adaptation Adaptation Adaptation Acceleration
• Increased • Practical formats • Greater focus on • Changes to • A preference to
adoption of tech over experiential core ranges packaging, support and shop
to enable in the short to especially fresh at local stores
contact-free medium term • Rise in meal
solutions and and bakery, and • Stronger support
shopping
• Reallocating frozen products how these are to the community
• More operators space in-store, served.
• Snacking • Urban stores
partnering but some • Temporary pivot
opportunities in most adversely
delivery temporary store towards health-
the home impacted by
providers closures related services lockdown in
many markets
© IGD 2020 Source: IGD Research Page 4Convenience channel forecasts:
US, China, UK 2020
2020 convenience shares: values in local currency
21.6% 21.6% 21.7% 21.7%
16.0% 15.4% 15.3% 15.1%
10.3% 9.6% 9.4% 9.3%
-4.8bn -4.6bn -3.9bn -84.4bn -106.9bn -123.8bn +1.5bn +1.8bn +2.1bn
USA China UK
pre-COVID-19 Low Medium High
This forecast builds on IGD’s pre-COVID market and channel estimates and provides a point-in-time view on the potential shifts in
context of three scenarios for the US, China and the UK. More data and insight on other grocery channels can be found here.
Convenience appears in different forms around the world. In USA, a large proportion of convenience stores are at gas stations,
which has seen a significant decline in footfall, driven by the lack of travel. In China, convenience chains are seeing bigger basket
sizes, but this has been offset by some temporary store closures and shoppers’ preference to shop online. In the UK, more trips
and larger top ups, along with new main shop missions will drive growth.
Just in these 3 markets you can see the mixed picture for the future of convenience, post COVID-19. Hence the need to respond.
© IGD 2020 Source: IGD Research Page 5Five global
convenience
trends
Technology enabling convenience
Going beyond c-store retailing
Redefining product range
Stronger health focus
Better minimart and local stores
© IGD 2020 Source: IGD Research Page 6Technology
enabling
convenience
Partnering with service providers Shopper use of apps soaring
On-demand restaurant delivery Convenience store ordering platform,
company, DoorDash, is evolving its Snappy Shopper revealed that stores
Speed and efficiency of service has
business model to offer delivery from selling through its app increased by a
always been particularly important in the
convenience stores, e.g. 7-Eleven, factor of five. The number of
convenience channel.
Wawa, Casey’s General Store, and customers using the app increased
Following the outbreak of COVID-19, the Circle K. by 360% and the value of sales
need to make shopping frictionless has through it jumped by 520%.
become even more important.
We have seen retailers use technology
and digital commerce to encourage
contact-free and cashless shopping and
contactless delivery.
To reach shoppers unable to physically
visit stores, we have seen many retailers
partner with service and on-demand
fulfilment platforms to deliver their goods.
Strengthening fulfilment capability Contact-free shopping
With many consumers staying at Loyalty marketing platform, Liquid
home and using online shopping, Barcodes, launched a “pre-order and
Columbia’s market leader, D1 has pre-pay” technology solution. It
partnered with two third party last enables shoppers to order products
mile delivery services Mi Aguila and from their smartphone or computer,
Picap, to offer home delivery. choose a (partner) store location and
pickup time, and pay for the order.
© IGD 2020 Source: IGD Research Image sources: Liquid Barcodes, Snappy Shopper, DoorDash, D1 Page 7Going beyond
c-store retailing
Combined store formats Improving accessibility
JD opened its first JD Convenience FamilyMart introduced two new
Store with an in-store bakery in models to improve accessibility.
We expect the development of experiential
Beijing. Products like doughnuts and FamilyMart Corner is a colourful food
convenience formats to slow down
bread are baked onsite. The aim is to and drinks container mart while
because of COVID-19.
offer combined store formats to meet automatic vending machines installed
However, retailers will remain committed the diversified needs of shoppers in outside selected stores offer
to delivering products and services that the ‘new normal’. convenience to consumers on the go.
extend into areas beyond conventional
shopping missions associated with
convenience.
Retailers are reallocating space and
adjusting how they trade. Practical stores
that can be rolled out quickly, targeting
specific missions have also arisen, while
so have formats and initiatives that keep
both staff and shoppers safe.
Elements like leisure, restaurants, seating, Alternative dine-in options Pop-up stores
dining areas have been removed / 7-Eleven’s Night Market On-Line Tesco opened pop-up stores at NHS
temporarily stopped. allows consumers to stay at home and Nightingale sites across the UK to give
conveniently order Taiwanese snacks healthcare workers easy access to
and meals. The retailer is promoting food and essential household items.
the service on social media and using The first store opened at the ExCel
‘online big sale(s)’ to engage new Centre in London.
customers.
© IGD 2020 Source: IGD Research Image sources: Tesco, FamilyMart, JD, 7-Eleven Page 8Redefining
product range
Foodservice partnerships Dine at home experiences
Alfamart partnered with famous Fresh the Good Food Market
COVID-19 has reshaped, although Filipino fast food chain Jollibee to partnered with two Dublin
probably only temporarily, what products offer marinated frozen chicken cut- restaurants to bring customers a
are available in convenience stores ups, enabling shoppers to recreate cook at home dining experience. The
globally. the Jollibee experience at home. two BBQ meal kit boxes were
prepared by ASADOR and PRADO.
‘Top up’ missions have increased, plus
there are more regular shopping trips.
While daily visits to convenience stores
for ready-to-eat and beverages in many
markets in Asia, for example, have
shifted towards products that can be
consumed in the home.
Retailers have also partnered with
foodservice brands to bring dining out
experiences inside the home.
Focusing on core essentials Limiting items per shopper
Lawson is expanding its readymade Around the world convenience
side dishes for evening meals. It is retailers introduced limits to the
strengthening its range of long-life number of products shoppers can buy
staple goods, geared towards the trend to maintain supply. These limits are
of remaining at home for long periods, on staple items, or across the entire
e.g. frozen foods, instant noodles, range depending on the retailer.
retort packaged food and tins.
© IGD 2020 Source: IGD Research Image sources: Alfamart Page 9Stronger heath
focus
Precautionary measures for fresh Health-related products
7-Eleven implemented measures for 7-Eleven worked with startup
Historically, shoppers have often its fresh food offer. All self-serve fresh NGOHub to provide supplies to the
prioritised convenience and time food items are now clerk-served, fresh elderly, e.g. supplements and hand
optimisation at the expense of health or bakes goods are sold pre-packaged, sanitisers. It also partnered Lucence
price in convenience retailing. and fresh condiment bars are replaced to donate 2,000 saliva collection test
with pre-packaged condiments. kits to the Health Ministry.
This notion, however, has been gradually
changing in recent years, with better fresh
food and lifestyle products emerging.
COVID-19 has increased demand for
health-related products and services that
support the general public.
However, these are likely to subside in the
longer term. Products that can restore the
feeling of normalcy will become more
important.
Social distancing in-store Investing in health and safety
Many retailers have introduced Co-op invested £3m on thousands
practical social distancing measures to of protective Perspex screens at
help prevent the spread of COVID-19. checkouts in its 2,600 stores, along
Initiatives include stringent cleaning with providing more gloves and
measures, introducing floor markers to hand sanitiser for colleagues.
guide shoppers, and increased
hygiene around food and beverages.
© IGD 2020 Source: IGD Research Image sources: 7-Eleven, Lawson Page 10Better
minimart and
local stores
Supporting the most vulnerable Working with not-for-profit
organisations
Franprix launched a dedicated phone
Convenience operators around the world line for elderly customers in France. It 7-Eleven donated 70,000 food meals
have launched initiatives to support enables them to order a food basket to families through its ‘one heart
communities during the COVID-19 and get it delivered for free. Three support’ campaign. The public can
pandemic. types of basket are available; donate one rice voucher at a price of
standard, organic, and premium. HKD15 (US$2) and select the
A preference for consumers to support organisation to donate.
and shop at local stores is expected to
last, with the connection between
communities and neighbourhood
convenience stores strengthened.
Furthermore, with restrictions being
introduced into many stores (opening
hours and access), more people are
choosing to shop at local convenience
stores for a quicker and easier in-store
experience. Using local stores to distribute high
Supporting families
demand products
Co-op provided lunch for 6,500
students who normally receive 7-Eleven, FamilyMart, Hi-Life and OK
government-funded free school meals mart, used their stores as pick-up
at its 25 Academies. This will be in the points for the government’s online
form of a gift voucher for every week of mask-rationing system.
unplanned school closures.
© IGD 2020 Source: IGD Research Image sources: emask.taiwan Page 11North America:
areas to watch
What to keep an eye on Where?
• 7-Eleven (Texas)
• Several tests are underway of cashier-less solutions, mainly in • QuikTrip “On-Lot Pickup”
Technology response to the continued roll-out of Amazon Go service
• Enhancing convenience status • Liquid Barcodes “pre-order
and pre-pay” solution
• Delivery has become a major focus for the industry with several
• Sheetz and Grubhub
retailers extending their partnerships with third-party, on-demand
• DoorDash partnering 7-
companies
Eleven, Wawa, Casey’s
Partnerships • New ways to meet shopper needs are being developed through
General Store, Circle K
partnerships. With around 90% of convenience stores at gas stations in
• 7-Eleven and delivery
North America, traffic to convenience stores following Coronavirus
partnerships
outbreak has been down significantly, driven by the lack of travel
• Circle K is expanding its
• Retailers continue to pivot to a fresh-focused foodservice model,
food at scale pilot, aiming to
offering a wider variety of products
be at 1,500 stores by 2021
• Electric vehicle charging points at stores to respond to fuel disruption
• 7-Eleven Evolution pilot
Format now and in the future. This can help attract shoppers that might not
• Alltown Fresh
development necessarily have a reason to visit. With customers waiting for vehicles
• QuickChek ‘Fresh to Go’
to charge, retailers will make changes to store layout and product offer
format
• Development of food-only (no fuel) store formats to meet the needs of
• Kum & Go
the neighbourhood (e.g. Kum & Go and Casey’s in West Des Moines)
• OnCue
© IGD 2020 Source: IGD Research Page 12Europe:
areas to watch
What to keep an eye on Where?
• The development of faster payment solutions, e.g. scan and go or Albert Heijn, M&S, Monoprix,
Technology checkout-free stores, will accelerate Sainsbury, SPAR (CH),
• Ecommerce and digital solutions for independent stores may grow Tesco, Vkusvill, Zabka
• Partnerships with local businesses, restaurant chains and even other
Albert Heijn, BP Poland with
Partnerships retailers (mainly non-grocery) are areas retailers will investigate to
UberEats, Franprix, Jumbo
maintain profit margins and attract shoppers to store
• Savvier shopping behaviour could create a challenge for convenience Most convenience store
stores, pricing is expected to be reviewed operators in Europe will need
Ranging and
• Convenience stores’ focus on food-to-go and food-for-later solutions will to review their ranging,
pricing
be reviewed due to coronavirus, with new solutions being needed in the especially from a profit point
medium term given need to limit products’ exposure to shoppers of view.
• Some stores were switched to act as fulfilment centres for online orders
during specific hours, this could be here to stay to support wider
Format Albert Heijn, Franprix,
ecommerce demands
development Monop, PLUS
• Evolution of stores to prepackaged meal solutions could support longer
term trend towards the development of ‘grocerant’ style stores
• Our latest ShopperVista insight reveals that we are seeing more top-up
Changing
and main shop missions in Great Britain from convenience stores
shopper Carrefour, Coop Italia
• Recent results from retailers across Europe suggests a greater use of
profile
convenience and proximity stores by a wider range of shoppers
© IGD 2020 Source: IGD Research Page 13Asia:
areas to watch
What to keep an eye on Where?
• 7-Eleven
• A key region for inspiration on how to implement useful technology
• FamilyMart
• Contact-free shopping, e.g. unstaffed stores, solutions to open
• Lawson
refrigerator doors and general navigation
Technology • GS25
• Increased investment in self-checkouts and cashless payment
• CU is allowing customers
• Increased development of retailer mobile applications and accelerated
pay using the Paycoin
user adoption
cryptocurrency
• Convenience operators
• Growing number of new partnerships with on-demand fulfillment partnering, e.g. GrabFood,
platforms and foodservice providers, while existing ones will be foodpanda, Uber Eats,
Partnerships strengthened / rolled out further JDDJ, Meituan, Ele.me,
• More retailers using their stores as ecommerce pick up locations or even Yogiyo
fulfilling orders for some websites • Dairy Queen at Tesco
Express in Thailand
• Rise in meal solutions and frozen products that drive in-home • All convenience operators,
Ranging and
consumption especially Japanese
pricing
• Sales promotions to boost ready-to-eat private label products convenience chains
• Central Food Retail
Format • Practical stores that can be rolled out quickly, targeting specific missions
• 7-Eleven
development • Expansion of minimarts and local stores that can serve communities
• Alfamart
© IGD 2020 Source: IGD Research Page 14Key short to
medium term
COVID-19 has accelerated shoppers’ familiarity with
1 technology. Suppliers need to consider new paths to purchase
and be flexible to meeting changes in demand.
implications
Long-life items are currently prioritised over fresh and food-to-
go, but there will be a shift back towards these categories,
supported by innovation. Ready-to-eat food need to be adapted
2 and made available for delivery and takeout. While packaging
is also a growing consideration for consumer purchasing
decisions, e.g. prolong storage and hygiene concerns.
Some shopping habits may last, e.g. purchasing frozen and
3 meal solutions from convenience stores, increasing average
basket size.
Create experiences inside the home. The close proximity of
4 convenience stores may offer snacking opportunities within the
home.
© IGD 2020 Source: IGD Research, short to medium term implications for up to 12 monthsKey short to Invest in initiatives that keep both staff and customers safe. In
medium term 5
Japan, the leading convenience chains have implemented a
series of precautionary measures, including protective shields
implications at checkouts, temporarily closing toilets and ventilating stores
by regularly leaving the store door open.
There will be new learned capability in delivering health
services, but only some will take up longer term, e.g.
6 businesses operating in markets, e.g. older population or
greater familiarity with health in convenience like in Japan.
Accessibility has always been important in convenience
retailing. Stores located in urban areas, transport hubs and
7 office buildings face a major challenge due to a reduction in
footfall. While this will slowly recover, there may be a reduction
in the supply and diversion to where demand is high.
New loyalties and a greater appreciation of local stores is
8 creating new marketing opportunities in convenience, e.g.
hyperlocal campaigns via social media.
© IGD 2020 Source: IGD Research, short to medium term implications for up to 12 months Page 16Want to know more?
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