Carry On At Your Convenience

06 August 2005 By db staff writer

“standfirst”>Sales are growing in the convenience sector, and wine brands in particular can capitalise on the C-factor through careful merchandising, says Patrick Schmitt

In one sense it’s one of those exclusively British terms slowly disappearing from common usage, and, in the other, it’s an expression becoming increasingly important to our everyday lives. Have you guessed what it is yet? It’s “convenience” – which, as a quick flick through the Concise Oxford will confirm, means “a public toilet” as well as “freedom from effort or difficulty.”

This double definition serves to illustrate two things: one, a potentially amusing pitfall for anyone learning English as a foreign language, and two, a link between convenience stores and your local latrine – you only visit either when you’re desperate. But increasingly that’s a little unfair, as the actual experience of trawling the aisles in your local convenience store has become more attractive.

After all, much of the recent growth in sales in the C-store sector is attributable to the somewhat aggressive entry by multiple grocers who have gutted existing local retailers and completely redesigned them with the customer in mind. These outlets have set a new standard for the industry, both in terms of display and the products themselves. “The demand for local neighbourhood shopping is growing faster than the grocery market as a whole,” says James Lowman, communications manager at the Association of Convenience Stores (ACS). This is despite the disappearance of nearly 2,000 independent retailers last year. In other words, sales through a shrinking base are rising, and consolidation seems to be benefiting the industry as a whole. Also helping are current consumer trends because people are increasingly, as the jargon goes, time-poor, but cash-rich, making the local shop a yet more appealing proposition.

Nevertheless, the key advantage of stores in this sector is, and probably always will be, convenience, ie, the fact they are near. For this reason these outlets are mostly used for top-up shopping or “distress” purchases, and hence the products must be ready for immediate consumption. This means if it’s white wine the bottle should be chilled. For instance, Sally Warmington, marketing controller at Allied Domecq, recalls “powerful sales growth” having encouraged local off-licences to put the company’s premium brands in chillers.

Chilling story

Furthermore, David Pickford, sales and marketing director for the chain of northeast England-based convenience stores, Mills, sees the chilled offering as so important the company is replacing its double-door fridges with open-deck chillers. These can hold the full 55 white wine skus the retailer currently stocks, and the three concept stores where the units are already in place “are certainly seeing an improvement in sales.” This type of merchandising must be the ultimate convenience, as not only are all the wines in the range cold, but you don’t even have to open a door to get to them, just reach into the chilled shelving unit. The open design also means each brand is clearly visible.

And it’s brands that are key to the convenience sector. This is because, as Claire Shelley, customer marketing manager for convenience and travel retail at Constellation, says, “Customers know they are paying more to shop in convenience stores so they want absolute confidence in the quality, so they go for brands.” Christine Sands, wine buyer at The Musgrave Group, points out that the prominence of major brands at the top of the sales charts has much to do with their “almost constant promotional activity, which generates significant volume”. Either way, the combination of a restricted range and the demand for brands means many C-store retailers have decided to block their wines by brand, with at least double facings of each. At the extreme, in the Thresher Group’s “The Local” range of outlets, there is a Jacob’s Creek section, a Hardy’s section and a section for Origin. This, it is believed, makes it easier for the busy shopper who knows what he wants – a brand he recalls – and doesn’t want to spend time searching for it. The only sad aspect of such a merchandising method is those wines without recognition never get the shelf space needed to acquire a decent level of brand recall. Getting a prominent place for your brand requires a rapid rate of sale, not forgetting an initial fee.

Other approaches involve blocking by price, or rather price point, while some are experimenting with organising wine by style. At its most basic, this latter approach simply involves putting all rosés in one area, sparkling in another, and then segregating whites and reds. But in some stores, like selected Thresher outlets, the wines are arranged by specific flavour-profile, ie fresh and fruity, or rich and full-bodied. However, it must be added that Thresher stores are really off-licences, while convenience stores, with their food offering, tend to have a much narrower range. Nevertheless, the advantage of displaying wine in flavour blocks is worth considering for any retailer as it effectively reduces the number of options for the shopper, though it also involves, as David Gill of Bottle Green says, “an enormous amount of managerial input and interface with the consumer”.

Merchandising mechanics

Lastly, the wines-by-country format, although tried and tested in specialist independents, most off-licences and multiple retailers, is rarely viable in C-stores where the range is so reduced. “This means you can’t just go in and say we have a fantastic Spanish wine because they don’t have a Spanish sector within the convenience store,” says Emma Biggs, offtrade sales director at United Wineries. “Instead, you have to go for a selection of reds that you know are going to sell, and a selection of whites that you know are going to sell.”

Both Biggs and Allied Domecq’s Warmington note that the most important aspect to understand when attempting to gain a listing in the convenience sector is the local consumer demographics. “And we will take our consumer knowledge and understanding and use it in ranging recommendations to our customers,” says Warmington.

There are also emerging techniques to encourage shoppers in C-stores to pick up a bottle despite the fact they may have had no intention of buying wine when they entered the shop. Warmington, for instance, says, “Allied is looking at an initiative with a customer involving linksaves – multi-siting a certain product with food, for instance strawberries in summer. This adds value to an occasion rather than just price. As many of the consumers who shop in these formats are less price sensitive, they do expect to pay a 10%-15% price premium.” Similarly, Shelley from Constellation mentions deals with beer, crisps and chocolate as “all possibilities when it comes to joint merchandising”. Focusing on the beer and wine link for a minute, she adds, “Not meaning to be stereotyping, but generally the bloke goes in for the four-pack of beer and picks up a bottle of wine for his girlfriend. That’s where the link comes in and so we are looking at that as an idea for exposing both wine and beer to a bigger audience.”

As for increasing sales per customer, this is one of the hardest aspects for the convenience retailer as most use these outlets for top-up shopping. The tricky task is to get shoppers to buy more than one bottle, without simply mimicking the offers in the major multiples, who, in any case, have superior buying power. Pickford at Mills recalls in particular the success of a three for £9.99 on branded wines, while, of course, there’s always the Thresher model as an example of how to drive volume, with its three-for-two offer on all wines. The aim of this approach is to break the customer’s habit of using the off-licence chain to buy only one bottle, as well as encouraging shoppers to move up the price ladder. Also, as all the wines are included in the promotion, the customer still has freedom of choice; they aren’t always buying those wines that are most commonly found on promotion.

Beyond price promotion and clearly sited brands there are other techniques to encourage customers to go for a particular wine, or hopefully two. These can involve the likes of “wine of the month”, managerial recommendations and the inclusion of any journalist’s comments, should one of the wines in the range be mentioned in the press. It is felt by many that the convenience sector could make more of these techniques. After all, according to United Wineries’ Biggs, an onshelf press quote tends to result in a 30% increase in sales. When it comes to purely premium wines, on the other hand, it might be worth blocking these and supplying more on-shelf information. Thresher even has an agreement with Lay & Wheeler in a handful of its stores where a stand of highquality wines selected by the specialist importer is branded and sited separately from the rest of the stock.

When it does come to the likes of shelf barkers, collarettes and so on, be wary of too much clutter on the shelves, as the effect can be lost. As Raisin Social’s Barry Hampton states, “Tidiness and clear wine descriptions on shelf-talkers are the main factors for small independent stores,” while the “obvious problem is the lack of shelf/display space”. Bottle Green’s Gill highlights other difficulties, in particular, when it comes to the larger symbol groups and attempts at in-store merchandising. “If you’ve got lots of franchises there might be some who will frankly fly the flag but not really belong to the army – there are those who are zealous and do everything that’s required but they are in the minority. It’s a function of poor retail wages, which means not always getting good people.”

Green also draws attention to problems of supplying the convenience sector, which doesn’t generally have the turnover to ship full container loads. This means the issue for an agent/importer like Bottle Green “is to provide them with wine in a smaller volume way without massively penalising them on price”. For the C-store store it’s a frustrating dilemma – the business tends to be low turnover and low margin, whereas most other retail formats are either high margin and low turnover or low margin and high turnover. Nevertheless, as Hampton says, “The convenience sector is becoming ever more important and is growing quickly as many consumer demands are continually met. Brands and heavyweight promotions are driving this growth.”

 Despite the often narrow ranges in many C-stores, brand owners are still scrambling for a share of the shelf, quite simply because, according to Gill, “For anybody wanting to build a brand or sell a product you need to get as wide a distribution as possible, and clearly if you’re getting into the convenience sector with 1,000s and 1,000s of small shops, you have the opportunity to sell more wine.” 

Key points

 • The convenience sector is experiencing sales growth due to consolidation and changing consumer lifestyles

 • C-stores suffer from limited space and often limited buyer power

• C-store customers are prepared to pay a premium for “distress” purchases

• Key to C-stores’ wine offerings are branded wines and chilled whites

 • C-stores are beginning to benefit from cross-merchandising wine with other consumer goods

 • According to a recent HIM survey, 55% of C-store shoppers are female; 25% are aged 28-34

 • 2,000 independent C-store retailers left the market last year

 • The Symbol groups number of C-stores increased by 300 last year

 • Tesco is the biggest single multiple player with 6% of the market, but fewer than 2,000 stores

 • The Association of Convenience Stores (ACS) defines a C-store as under 3,000sq ft, dealing in a wide range of categories (at least six from a list)

 • The UK impluse sector accounted for just under 24.5m cases (9l) MAT to w/e 11.06.05, down 1% on the same time last year (ACNielsen)

• UK multiple grocers accounted for just over 61m cases (9L) MAT to w/e 11.06.05, up 8% on the same time last year (ACNielsen)

• 52% of wines sales in the impulse sector are white (ACNielsen MAT to w/e 22.01.05)

 • 47.4% of wine sales in multiple grocers are white (ACNielsen MAT to w/e 22.01.05)

• The US is the leading country in the impulse sector with a 19.8% volume share (ACNielsen MAT to w/e 22.01.05)

 • Average price per 75cl in the impulse sector is £4.29 (ACNielsen MAT to w/e 22.01.05)

 • The impluse sector accounts for 27.4% of the UK off-trade, the multiple grocers, 72.6% (ACNielsen MAT to w/e 22.01.05)