Convenience Stores: Inc Impact of COVID-19 - UK - June 2020

OVERVIEW
What you need to know
Report issues covered in this Report
Products covered in this Report
EXECUTIVE SUMMARY
The market
Figure 1: Convenience store market size, (inc VAT), 2015-25
Impact of COVID-19 on convenience stores 
Shift to in-home food and drink brings opportunities to boost basket sizes for c-stores
Figure 2: Expected impact of COVID-19 on convenience stores, short, medium and long term, 2020
Real incomes growth continues
Figure 3: Average weekly earnings (excluding bonus pay) growth versus CPIH, January 2016- May 2020
Consumer confidence rose before the lockdown
Figure 4: Mintel’s Financial Confidence Tracker, January 2018-June 2020
Retail sales growth holding up
Figure 5: Retail sales: growth in all retail sales and all food retail sales, by value and volume, January 2018-May 2020
Move towards renting homes
Companies and brands
A year of consolidation
Consolidation in wholesaling
Other deals
Figure 6: Leading c-store retailers, shares of all retail sales, 2019
Huge tail
Figure 7: Leading c-store retailers, shares of all c-store outlets, 2019
COVID-19 – c-stores should prove to be a beneficiary
Technology – short-term boost for being hygienic
Brand analysis
Figure 8: Attitudes towards and usage of selected brands, April 2020
The consumer 
85% of all internet users have shopped in a c-store in the last year
Food the most bought item
Figure 9: UK:  Items bought from convenience stores, March 2020
Key to the appeal is the broad offering
Figure 10: Number of different types of items bought from c-stores, March 2020
Chilled goods most bought for the home
Figure 11: Usage of c-stores for food for the home, March 2020
Snacks the most bought food-to-go item
Figure 12: Usage of c-stores for food for the home, March 2020
Services very important
Figure 13: Usage of services in c-stores, March 2020
C-stores not enough
Figure 14: Grocery stores used by c-store shoppers, March 2020
75% of c-store shoppers use a c-store at least once a week
Figure 15: Frequency of c-store usage, March 2020
Tesco the most used store, followed by the Co-op
Figure 16: Stores used by regular c-store shoppers, March 2020
Figure 17: C-store most often used by regular c-store shoppers, March 2020
Convenience the main driver to purchase
Figure 18: Key factors behind choosing a c-store, March 2020
What people want from a c-store
Figure 19: Attitudes towards c-stores, March 2020
Time for lunch
Figure 20: Factors influencing lunch solutions, March 2020
What we think
IMPLICATIONS OF COVID-19 FOR CONVENIENCE STORES
Figure 21: Expected impact of COVID-19 on convenience stores, short, medium and long term, 2020
Short term
Medium term
Long term 
Opportunities and threats
Shift to in-home food and drink brings opportunities to boost basket sizes…
…but it also presents threats to traditional footfall drivers  
…but placed pressure on supply chains…
…and presents threats to traditional footfall drivers  
Location has never been more crucial 
COVID-19 to accelerate mobile scanning 
Figure 22: Sainsbury’s SmartShop, mobile scanning technology, July 2020
Convenience sector plays its part in ensuring access to groceries
Figure 23: Co-op notice board, April 2020
Figure 24: Tesco Nightingale London Excel, April 2020
Impact on the market
Figure 25: Convenience store market size, (inc VAT), 2015-25
Shift in consumer behaviour
A focus on localism can highlight the importance of c-stores to communities 
Figure 26: Co-op local cause funding, June 2020
Heightened online demand heralds more influence in the online channel for c-stores  
Figure 27: Deliveroo Grocery, June 2020
Impact on key consumer segments
Shift to online from older shoppers presents a threat 
Younger shoppers more financially impacted  
How COVID-19 recession will reshape the market
On the face of it convenience demand held up well in the past financial crisis 
Figure 28: Convenience store market size, including VAT, 2007-17
Impact on the marketing mix
COVID-19: Market context
ISSUES AND INSIGHTS
Sunday trading – Not to everyone’s taste
The facts
The implications
Time for a shakeout in the symbol groups
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
Real incomes growth continues
Consumer confidence rose before the lockdown
Retail sales growth holding up
Move towards renting homes
MARKET DRIVERS
Strong underlying growth in real incomes
Figure 29: Average weekly earnings (excluding bonus pay) growth versus CPIH, January 2016- May 2020
Consumer confidence on an upward trend, pre-COVID-19
Figure 30: Mintel’s Financial Confidence Tracker, January 2018-June 2020
Retail sales since lockdown buoyed by greater in-home food demand
Figure 31: Retail sales: growth in all retail sales and all food retail sales, by value and volume, January 2018-May 2020
Figure 32: Supermarkets, performance of large and small businesses, January 2018-May 2020
Inflation trending downwards in 2020
Figure 33: Inflation in core food and drink categories, 2015-May 2020
Housing tenure – recovery in numbers of homeowners
Figure 34: UK households, by tenure status, 2009-18
Ageing population
Figure 35: UK population, by age, 2014-24
Household size decreasing
Figure 36: UK household size as a percentage of all households, 2014-19
MARKET SIZE AND FORECAST
A record year forecast for 2020
Figure 37: Convenience store market size (inc. VAT) and forecast, 2015-25
Following a rebalance in 2021, steady growth is forecast for the sector through to 2025 
Figure 38: Convenience store market size (including VAT), 2015-25
THE CONSUMER – WHAT YOU NEED TO KNOW
85% of consumers have shopped in a c-store in the last year
Food the most bought item
Services very important
C-stores are primarily a secondary location 
75% of c-store shoppers use a c-store at least once a week
Tesco the most used store, followed by the Co-op
Convenience the main driver to purchase
What people want from a c-store
Time for lunch
CONVENIENCE STORE SHOPPERS 
A note on the timing of this research 
The vast majority shop in convenience stores 
Figure 39: UK:  Items typically bought from convenience stores, March 2019 and 2020
Convenience use peaks in urban areas
Figure 40: Usage of c-stores, by type of location, March 2020
Products purchased by age and income
Figure 41: Profile of c-store shoppers, by age and income, March 2020
Most use c-stores for a variety of missions
Figure 42: Number of different types of items bought from c-stores, March 2020
Figure 43: Profile of c-store shoppers, by number of items bought, March 2020
IN-HOME FOOD PURCHASING
Over half (55%) of consumers buy food for home from c-stores
Figure 44: Usage of c-stores for food for the home, March 2019 and 2020
Younger shoppers key in-home food shoppers
Figure 45: Profile of shoppers of food items, by age and income, March 2020
Number of food-for-the-home items bought
Figure 46: Number of different types of food for home items bought from c-stores, March 2020
ON-THE-GO FOOD 
44% of consumers buy on-the-go food from c-stores 
Figure 47: Usage of c-stores for food to go, March 2020
Younger shoppers over-index in terms of food to go 
Figure 48: Profile of shoppers of food to go, by age and income, March 2020
Number of food-on-the-go items bought
Figure 49: Number of different types of food-to-go items bought from c-stores, March 2020
LUNCH SOLUTIONS
Pricing crucial for lunch
Figure 50: Factors looked for in lunch solutions, March 2020
Figure 51: Factors influencing lunch solutions, by type of location, March 2020
Meal deals crucial for current users, but more healthy options could bring in more consumers
Figure 52: Factors looked for in lunch solutions, by current level of c-store lunch buying, March 2020
SERVICES USED IN CONVENIENCE STORES 
Services a crucial footfall driver 
Figure 53: Usage of services in c-stores, March 2020
Figure 54: Users of c-store services, by age and income, March 2020
Number of services used
Figure 55: Number of c-store services used, March 2020
CONVENIENCE STORES IN CONTEXT
Where else do c-store shoppers shop?
Figure 56: Grocery stores used by c-store shoppers, March 2020
Figure 57: Store format where the most is spent in a typical month, November 2019
Frequency of c-store usage 
Figure 58: Frequency of c-store usage, March 2020
Figure 59: Frequency of c-store shopping, by age and income, March 2020
Frequency of c-store shopping by products bought
Figure 60: Purchase of items from c-stores, by frequency of purchase, March 2020
RETAILERS USED
All stores used
Figure 61: Stores used by regular c-store shoppers, March 2020
Figure 62: Number of c-stores used, March 2020
C-store most often used
Figure 63: C-store most often used by regular c-store shoppers, March 2020
Figure 64: Profile of shoppers at leading c-stores, by age and income, March 2020
Most often used stores by location
Figure 65: Distribution of customers for most often used stores, by location, March 2020
Most often used stores and what is bought
Figure 66: Buyers of food-to-go goods relative to the proportion of all shoppers, March 2020
Figure 67: Buyers of newspapers and lottery relative to the proportion of all shoppers, March 2020
KEY ATTRIBUTES FOR A CONVENIENCE STORE 
Convenience naturally crucial for patronage
Figure 68: Key factors behind choosing a c-store, March 2020
Key factors and favourite retailers
Co-operative Food
Figure 69: Co-operative Group key factors relative to the average, March 2020
M&S Simply Food
Figure 70: M&S Simply Food key factors relative to the average, March 2020
Sainsbury’s Local
Figure 71: Sainsbury’s Local key factors relative to the average, March 2020
Tesco
Figure 72: Tesco Express key factors relative to the average, March 2020
Symbol groups
Figure 73: Symbol groups key factors relative to the average, March 2020
ATTITUDES TOWARDS CONVENIENCE STORES
C-stores seen as essential to the community
Figure 74: Attitudes towards c-stores, March 2020
Younger shoppers value the multi-mission experience
Figure 75: Agreement to attitudes towards c-stores, March 2020
Development of range is crucial to continue to engage young shoppers
Figure 76: Agreement to attitudes towards c-stores, March 2020
LEADING RETAILERS – WHAT YOU NEED TO KNOW
A year of consolidation
Consolidation in wholesaling
Other deals
Huge tail
Technology the way forward
COMPETITIVE STRATEGIES
Sector structure
Convenience stores not as homogeneous as one might expect
COVID-19 early results
High-footfall stores
Major multiples
Co-operative societies
Figure 77: Leading Co-operatives’ sales, 2017/18-2019/20
Figure 78: Leading Co-operatives’ outlets, 2017/18-2019/20
Figure 79: Leading Co-operatives’ sales per outlet, 2017/18-2019/20
Low-footfall stores
Figure 80: Leading symbol groups, 2019/20
Other – predominantly wholly owned groups
Petrol forecourts
Figure 81: Total number of, and breakdown in ownership of, UK forecourts, 2016-19
LEADING RETAILERS – KEY METRICS 
Turnover
Figure 82: Leading c-stores’ sales, 2015/16-2019/20
Figure 83: Leading c-stores’ outlet numbers, 2015/16-2019/20
Figure 84: Leading c-stores’ sales per outlet, 2015/16-2019/20
MARKET SHARES 
Figure 85: Leading convenience stores’ market shares, 2015-19
Figure 86: Leading convenience retailers’ share of all c-store outlets, 2019
LAUNCH ACTIVITY AND INNOVATION
Supermarkets’ smaller neighbourhood retail formats
Figure 87: Aldi Local, Balham, 2019
‘Cashierless’ convenience stores
Student campus convenience store opportunity
Emphasis on expanding foodservice and food-to-go proposition
Convenient vending
On-demand delivery
Vegan convenience store concept
Convenience store’s pop-up food market
Reducing food waste and tackling plastic pollution
Convenience stores adapting operations to cope with COVID-19 restrictions
ADVERTISING AND MARKETING ACTIVITY
Supermarket and c-store advertising spend up 1.2% year-on-year in 2019
Figure 88: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and convenience store operators, 2015-19
Convenience store campaigns
Figure 89: Leading UK supermarket and convenience store operators’ recorded above-the-line, online display and direct mail total advertising expenditure, 2015-19
Majority of advertising spend channelled through TV
Figure 90: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and convenience store operators, by media type, 2019
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
Brand map
Figure 91: Attitudes towards and usage of selected brands, April 2020
Key brand metrics
Figure 92: Key metrics for selected brands, April 2020
Brand attitudes: Spar and the Co-op well trusted
Figure 93: Attitudes, by brand, April 2020
Brand personality: Accessibility the key
Figure 94: Brand personality – macro image, April 2020
Spar basic, but Tesco reliable and responsive
Figure 95: Brand personality – micro image, April 2020
Brand analysis
M&S Simply Food still sets the standards in the sector
Figure 96: User profile of M&S Simply Food, April 2020
Sainsbury’s Local most improved c-store in 2019/20
Figure 97: User profile of Sainsbury’s Local, April 2020
Tesco Express – The market leader
Figure 98: User profile of Tesco Express, April 2020
Co-op Food – the ethical one
Figure 99: User profile of Co-op Food, April 2020
Spar the nearest competitor to Tesco and the Co-op among the voluntary groups
Figure 100: User profile of Spar, April 2020
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Data Sources
Financial definitions
Trade definitions
Sales per store, sales per square metre
Abbreviations
Consumer research methodology