Sainsbury’s has laid down the gauntlet to suppliers to meet the challenges of an evolving £37.4bn convenience sector that will see stockrooms shrink and shelf-ready products become the norm.
The retailer’s convenience director, Simon Twigger, cited Hong Kong - where rents are at least three times as high as in the UK - as an illustration of a convenience market that frowned on non-retail space in stores. “They don’t want back offices. They deliver four or five times a day to the store,” he told an audience at the IGD’s Convenience Retailing conference in London last week.
Twigger said the smaller the back rooms, the more retailers could open stores “in really convenient places for customers.” This required product to be delivered packaged specifically for convenience outlets. “What we need is stuff that comes in and goes straight on the shelf. If you go into one of my shops and you find a lot of stock in the back because they say they’ve already filled the shelves up … it means the shop’s not running properly.”
Every SKU must play its role for a particular shop and earn its keep, Twigger added.
He also stressed the importance of data specific to convenience rather than general grocery, telling suppliers: “I would challenge whether you know how much of your volume ends up in my Locals and how much in supermarkets, and what the trends are.”
The data was available, he added. “You just have to do a bit of work to get to it.”
Twigger said the convenience market was forecast to grow by £12bn over the next five years,and nearly one pound in four in the grocery market would be spent in c-stores. “If you are not focused on this, you are going to miss out on the biggest growth number in the industry at the moment.”
He also said convenience retailing was no longer defined by a 3,000 sq ft space. “Today we wouldn’t be seen to be tied to a size of shop…now we think about convenience in terms of what do our customers need in this catchment to be a convenience shop.”
Sainsbury’s, for example, stretched its Local format from 1,100 sq ft of shop space to 9,000 sq ft, Twigger explained .”In fact, we have supermarkets that are smaller than my largest convenience stores. That is the type of thinking that is moving us on.”
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