Sales in the convenience retail sector is forecast to grow 17% by 2020, according to grocery research group IGD.
More people than ever before are reportedly top-up shopping to fit in with their busy lifestyles, and 63% of all shoppers visiting c-stores conduct this type of shop. IGD's research – conducted in association with William Reed publishing – shows the the multiples continue to grow but traditional market representatives are being challenged by a greater move by the larger grocers and the value supermarkets to serve this type of consumer.
Highlighting the dynamism of the sector at a recent industry event, Co-op commercial director Michael Fletcher said the growing sophistication of the convenience retailing world and the increasing importance it plays in modern shopping journeys with its food-to-go and fresh food offer means suppliers are going to require new tactics to ensure their products trade well and gain traction.
"If you're a manufacturer out there, if we're being honest with ourselves, back in the 90s where you were going to play your [Lionel] Messi within your team was probably in one of the big four, rather than the convenience players," he told delegates at IGD's Big Debate earlier this month.
"I actually think today the game your teams are going to have to play over the next three or four years is much more complicated in convenience than it is in large stores. Ultimately I'd encourage you to put your really good people on to convenience accounts and really have the conversation about right store, right range."
Against the backdrop of an emerging convenience sector, where the larger grocers are seeing significant growth and the market trends point to smaller shopping baskets but more frequent visits, businesses operating in the space will need to be looking at how technology can make shoppers' lives easier and how new systems can support the next stage of their evolution.
From security improvements to ramping up marketing efforts, Essential Retail has picked out five ways convenience players are investing in retail technology.
1. Co-op cutting crime with SmartWater tech
Co-op has teamed up with forensic technology company, SmartWater, to roll-out a new deterrent linking criminals back to the scene of a crime.
SmartWater has adapted its dispersal technology to ensure that if an ATM situated on Co-op premises is attacked, the criminals and the stolen cash will be marked. Starting in the south-west of England and Wales, the manufacturer's systems will be installed at hundreds of cash dispensers located at Co-op Food stores, complete with a unique forensic signature at each ATM that should help authorities better track down criminals following a theft.
Invisible to the naked eye, an amount of the gel the size of a speck of dust emitted from the machines can provide scientists with the information that can help police with identification. The forensic signature is guaranteed to last five years.
Chris Whitfield, Co-op's director of retail & logistics, commented: "The technology is at the forefront of combating ATM crime which not only impacts on retailers but can affect communities and customers too.
"Teaming-up with SmartWater, whose proprietary technology has a proven track record in being a powerful deterrent, will utilise the latest ATM security capabilities and innovations to benefit local communities and potentially reduce crime."
2. Big deals at Nisa, Londis, OneStop and more
Select Nisa, Londis and One Stop stores, as well as a plethora of independents, are among the 792 retailers in the UK utilising the Big Deals Local (BigDL) mobile app, which provides users with a single view of discounts and offers from across the high street.
Participating convenience stores are equipped with BigDL's mobile coupon and beacon technology which is integrated with the corresponding app. The technology enables local customers to redeem exclusive BigDL coupons in store and to be alerted to in store offers via beacon alerts when in close proximity.
The company behind BigDL, Interactive Access Technologies, says a key aim of the app is to drive footfall and sales for partner retailers, and this month the organisation has ramped up its operations following an official launch in 2014.
The app was updated to include better personalisation of deals, as well as simplified navigation, search and filter options. The changes are said to ensure users can easily find local deals relevant to them, and this includes exclusive BigDL coupons which can be redeemed in convenience stores and are funded by major participating brands.
Users can also play the in-app game, The Big Deal Wheel, which allows them to take a free spin of a wheel to win a guaranteed daily prize, including cash, scratch cards, gadgets, prize draw entries and more. This feature saw around half a million spins in the last quarter and is proving to be a key engagement tool within the platform.
Matt Norbury, CEO and founder of BigDL, said: "The in-app game, The Big Deal Wheel, is a key influencer for encouraging customers to use the app on a daily basis.
"To build on this, we listened to customer feedback which highlighted the strong desire from customers to have the option to gain extra wheel spins. Introducing the refer-a-friend option on the wheel is the ideal solution: it provides users with the chance to gain extra spins and prizes, while expanding the user base of the app and subsequently the reach of retailer offers."
BigDL has increased its marketing activities since August 2016 and as a result has seen app downloads increase by up to 20% month on month. The company recently rolled out extensive advertising around the Scotland v Lithuania football World Cup qualifying match, taking spots on Sky Sports and at the match venue itself to spread the BigDL message to a wide audience.
3. Nisa's mobile payments and loyalty
In November, eight Nisa stores in the Peterborough area will be in proof of concept mode with new technology that allows customers to pay via mobile app and scanning QR codes at the point of sale.
The tech from Zapper will be integrated with the retailer's in-house infrastructure and EPoS provider MSP Systems. While customers are able to pay with their mobiles and link up their loyalty programmes in the process, retailers are able to gain access to new data allowing them to better understand their customers purchasing habits. This data can be used to form marketing campaigns such as targeted promotions to consumers' app.
Gerry Hooper, CEO of Zapper, argues that the service will serve the wider convenience sector because it solves multiple issues for consumers, who are looking for deals and want to be in and out of shops quickly, and for retailers and brands which both want more information about their customers.
"All eight stores will launch on the same day, and then we roll out after that," he told Essential Retail.
"Buses of people are coming down to view the store and see it live. Off the back of that we intend to explode throughout the sector, supported by people like TRDP [the EPoS provider to Booker/Premier]."
Zapper has been active in the restaurant space for a number of years, allowing diners to pay for their meals in app, but having made ground with one of the largest convenience retail players in Nisa – and having secured a partnership with Alipay that takes the technology into the broader retail environment – the business is confident the service will gain further momentum.
"Everything that happens with Zapper [in retail] will be launched post proof of concept with Nisa Peterborough," Hooper added. "We've always been in restaurants but now retail convenience or retail general will be huge for us."
4. Cash management matters for Costcutter
Despite this week's Mastercard research suggesting the convenience of contactless card payments is negating the need for cash in the UK – with 47% of the 2,000 respondents surveyed saying they typically carry less than £5 in cash on them at any one time – around half of all transactions in the UK are still conducted with notes and coins.
And dealing with traditional cash flow is still a big operational issue for convenience retailers.
UK-based high street grocery group, Costcutter, is implementing new cash management facilities that automatically count notes and coins and provide full reports for retailers, including figures associated with rolling floats values, change needed, top-up values, pick-up values and sales values.
APG/Cash Bases, an organisation formed following the merger of two separate cash management solution manufacturers in 2015, is providing Costcutter with its SMARTtill Intelligent Cash Drawer in a number of stores. Assuming both parties are happy with the arrangement, this technology will be rolled out across 2,500 shops in due course.
5. McColl's integrates analytics, loyalty and point of sale data
Convenience store chain McColl's has invested in new technology and the company will be looking to use it to boost customer loyalty via its integrated analytics, loyalty and point of sale data capability.
Working alongside market and consumer intelligence firm IRI, the retailer is hoping to gain a better understanding of its customers' behaviour to create more tailored marketing opportunities. The project will be conducted through McColl's Loyalty Plus Gateway solution, which is part of the IRI Holistic Retail Solution suite, and the retailer and its suppliers will have 24/7 access to relevant sales and customer information via an online portal that encourages joint business planning initiatives.