The generation game: how convenience stores can win young and old money

One is an experience-led mobile phone junkie. The other is a quality-focused newspaper loyalist. Millennials and retirees may not share many interests, but they have one thing in common: they represent a missed opportunity for convenience stores. Neither are spending as much as they could be at their local stores, according to findings from the Convenience Tracking Programme by Him!, out this week.

Its 20,000 interviews in UK convenience stores from February to April this year found both groups are frequent visitors to c-stores but low spenders. And, as the national living wage and auto-enrolment pensions force retailers to tighten their belts, the untapped potential of these groups is too valuable to ignore. So how can shopkeepers play to their needs?

The last of the millennials

If it isn’t Instagrammable, it’s not worth doing. So goes the mantra of the aesthetics-obsessed 16 to 24-year-old age group, who place a strong emphasis on experiences. Their shopping habits reflect this ethos. Millennials have plenty of disposable income - half still live with their parents - but would prefer to spend it on experiences they can showcase online than on material things.

True to form, this generation typically spends just £5 on a shopping trip to a convenience store, the lowest of any demographic. They are nevertheless valuable customers: 83% of the older section of the demographic, the 18 to 24-year-olds, shopped at one within the past seven days - the highest frequency of any age range.

To get more out of this age group, retailers need to cater for their focus on aesthetics and experience.

Millennials expect extremely high standards. Top of the shopping list are availability, cleanliness of store and ease of shop. Guiding this group through the aisles with clear signage and floor graphics goes a long way to reaching their high expectations, as independent franchise Simply Fresh has found. “That age group is bothered about how the environment looks,” says MD Kash Khera.

“With apps like Snapchat, so many images are available to kids and visually the levels of excitement have been heightened. They’re looking at the store environment and you have to be on your game,” he adds.

Khera can speak with confidence: student unions have voted for Simply Fresh to open new stores on university and college campuses (the exact number is not yet known). The franchise has also proven a success on social media, with a mighty 6,700 Twitter followers on its central account alone, despite having far fewer stores than many of its competitors.

Khera believes social media is important for genuinely engaging with the younger customer base, a goal many retailers fail to achieve. “I don’t think anyone in the convenience sector is doing social media exactly right,” he says. “A lot of them think they’re doing it right but they end up just making noise because they’re not doing it from a store perspective. The intention is good, to engage with the younger demographic, but they turn it into more of an industry thing rather than just connecting with the community.”

Another key to connecting with millennials is stocking the products they want. They are high purchasers of certain categories - though perhaps not the ones you would associate with an age group that includes young, wild and free students. The standout category for today’s 18 to 24-year-olds isn’t beer - it’s soup. Fresh soup hits millennials’ baskets five times more frequently than it does the average shopper’s.

“This age group claims to drink less alcohol,” says Him! MD Jill Livesey. “This could be down to spending their impressionable developing years alongside nine years of recession. Many of those who do drink tell us they try and avoid drinking during the week.”

The retired ‘greys’

Making daily visits to buy newspapers, milk and bread, the over-65s are core to convenience store success. The high discretionary spending power of this large and growing population - nearly one in four people in the UK will be aged 65 or over by 2040 - represents a perfect opportunity for retailers.

But their spend in convenience stores remains low. On average, retired ‘greys’ spend just £1 more in convenience stores than millennials, with an average basket of £6. This is despite the fact that, in a typical week, 17% won’t visit any supermarket other than their local shop. And retirees are almost 10% more likely to do a planned top-up shop than the average consumer. So how can retailers push up spend from these loyal shoppers?

A strong news and magazine sector is one vital factor for this group. The newsagent mission has broad appeal - accounting for £1.5bn worth of trips to stores - but is particularly important among greys. Almost half this generation buy newspapers, far above the 18% average across all demographics.

Catering for the single lifestyle is also important, as 36% of retirees live alone. And the single, retired 75-plus segment of this group (see graphic) are most likely of any age to make a top-up shop in their local convenience store. James Convenience Retail has taken this into account when gearing certain stores towards the needs of older people. “We do a lot of meals for one,” says chairman Jonathan James. “Many also like fine goods and are very loyal to local products.”

This generation puts a high value on quality across a number of categories, including fresh produce, meat, baked goods and dairy products. “They want to treat themselves,” says Him!’s Livesey. “They deserve it and may have more time on their hands to plan, shop and cook meals.”

But retirees’ commitment to quality will depend heavily on what they have in their pockets. Affluent over-65s will pay to follow a healthy, varied diet, with 44% rating healthy options of the utmost importance. Conversely, retirees on a tighter pension want to see value options on shelves and appreciate the good, better, best value tiers across household and grocery essentials, as well as attractively priced own-label products.

And, like millennials, one thing they won’t tolerate is a convenience store that fails to cater for their needs. It’s the difference between winning and losing the generation game.