As Dr Evil said to his clone: "Mini-Me, you complete me." And with the supermarkets increasingly moving into smaller formats, it seems they agree. Beth Phillips reports


Has the 'Mini-Me' mart finally come of age? Not so long ago the smaller supermarket model looked to be in serious trouble. Neither Safeway nor Somerfield could make it work and, although others were enjoying more success, it was seen as very much the poor relation to the all-singing and dancing out-of-town superstore and the convenient, if pricier, c-store. Few operators were actively seeking out smaller stores.

But that has changed with the demise of Woolworths and The Co-operative Group's obligatory sale of scores of Somerfield stores. Now, the format is enjoying something of a renaissance and a few hitherto doubters have joined the party. In May, Asda bought three stores it's smallest-ever at 10,000 sq ft to 17,000 sq ft from The Co-op Group; Morrisons has spent the year opening the 38 stores it acquired from The Co-op last November and Waitrose has taken its first step into convenience, opening three stores of between 5,000 sq ft and 7,000 sq ft.

They've got their work cut out, as a new and exclusive consumer survey conducted by Him! reveals.

Consumers enter smaller stores with a complex mindset that flits between convenience and hypermarket, according to the Small Supers Tracking Programme, which quizzed more than 4,000 shoppers as they entered and exited their local smaller stores.

Some 71% said they used the store because it was in a convenient location, rating product availability as their top priority (44%), followed by being quick and easy to shop (38%) and offering cheap prices (28%). Most visited the store on average 2.7 times a week, chiefly for the purpose of top-up shopping, rather than for distress purchases such as bread and milk. Only 20%, therefore, had used a trolley.

Surprisingly, 83% claimed they didn't use services such as cash machines or utility payments, a mainstay of c-stores.

But like their c-store counterparts, they did have particular purchases in mind, 81% claiming they had not made any impulse purchases. Interestingly, this makes them less price-sensitive than shoppers in larger stores, even though the range of products on offer is more akin to the latter's than a c-store's.

Where superstore shoppers are constantly on the lookout for deals, 66% of the shoppers surveyed claimed not to have noticed price-marked products and 70% said price-marked products would make no difference to their shop.

A further 65% said they hadn't noticed round price points, while 76% said round-pound pricing would not encourage them to buy a product. "Many have become immune to them because they're all over the place," says Tom Fender, director at Him!. "When we asked shoppers whether they thought rounded price points meant the product was cheaper or more expensive, 6% said cheaper and 23% said more expensive. In this environment, are shoppers starting to believe round pounds are a cynical marketing ploy?"

Whether they are or not, shoppers are not spending as much as they plan to when they visit smaller stores. The shoppers surveyed went into the store intending to spend on average £15.02 but actually came out having spent less, £14.79 on average.

This suggests retailers should be doing more to encourage impulse purchases, says Fender. Another opportunity retailers have not fully tapped is fresh produce. Of those surveyed, 39% said they had visited the store to buy fruit and vegetables more than the 37% who were there for bread. A further 68% said they had bought fruit and vegetables from the store in the past month, while 32% had bought meat and fish. However, shoppers judged the range and availability of meat as 'average', while only 57% rated the choice of fruit and vegetables as 'good'.

"Shoppers have said that they would visit stores less if bakeries, salad bars and butcheries were removed," says Fender. "Shoppers are buying these products and even when they don't, the ranges create a halo effect of improving the fresh image of the store, because fresh equals quality."

Some retailers have already taken action on the fresh front. Morrisons, for example, has created a smaller version of its fresh offer Market Street, complete with butchery and fish counters. This is probably why it scored highly in the report in terms of its fresh meat offering, with 64% of shoppers rating its fresh meat as excellent, second only to Asda's score of 71%.

Developing the format
Morrisons was right to bide its time by not jumping into smaller stores when it bought Safeway, instead choosing to sell off stores, says Gavin Rothwell, a senior business analyst at IGD, whose recent UK Grocery Outlook Report highlighted the growth of small-format stores.

"Morrisons had the opportunity to take on smaller stores when it acquired Safeway a few years ago," he says. "It had a lot on its plate, so it wasn't the right time. It has now taken a lot of time to develop the format and has moved across its key strengths, which has worked really well and has created a strong overall impression."

Morrisons claims it is pleased with customer response to the new stores and is expected to give a full update on its progress in March.

Asda, meanwhile, says that although it remains committed to opening full-size stores, smaller stores remain an important avenue for development. "We recognise the importance of not having a 'one-size-fits-all' approach to operating stores," says a spokesman. "Our three smaller former Co-op stores have demonstrated that our customers can still do a full weekly shop from a smaller-size store. We are pleased with their performance and the response from customers in those towns has been extremely positive."

Waitrose is also finding its feet in the sector. "Before launching our convenience format, we interviewed groups of shoppers across the country to understand their expectations," explains a spokeswoman. "This helped us to develop our convenience offer, which, unlike most other convenience stores, has a strong focus on specialist service counters and fresh produce. So far, the most successful products have included sandwiches, baguettes, salads and patisserie items."

Get the offer right and smaller stores stand to capitalise in a way they wouldn't have been able to not long ago, says Rothwell. "Shoppers are in a different place to where they were a couple of years ago," he says. "They claim they are shopping around more and there's a real interest in local and community shopping that small-format stores are tapping into. Retailers are therefore switching to multi-format strategies to cater for the convenience and top-up missions shoppers are demanding."

However, while retailers are already starting to meet consumer demand for more fresh produce, there are other areas they are still not delivering on.

The high percentage of shoppers not currently using a trolley is an example of where small changes to stores could reap benefits for retailers, believes Fender.

"Our report shows shoppers arrive intending to buy six items, but they actually buy eight," he says. "If you think you're on a smaller trip you tend to think you don't need a basket. This is where these stores need to start having baskets and trolleys around the store. A customer goes in planning to buy just a few items, but there aren't any baskets around the store, so this stops them from buying any more items on impulse."

The trend towards opening smaller supermarkets is expected to continue well into next year. According to property agents CB Richard Ellis, the grocery pipeline has increased to 36 million sq ft this year from 28 million sq ft in 2007. The small supers are driving this.

"New formats rolled out by Asda, Morrisons and Waitrose, as well as Booths and Haldanes, are contributing to the current demand for space," says Chris Keen, head of CB Richard Ellis's Supermarket Group. "In contrast, shopping centre construction is less than half the 2007 level."

It's not just retailers that will have to learn to adapt to a smaller format and the ever-changing demands of the consumer, either. Rothwell says with more retailers investing in smaller stores and greater volume through the channel, a detailed and well-executed strategy will be imperative for suppliers. "The requirements for Tesco will be very different from those of Waitrose and Morrisons in their smallest stores," he says.

And that's before we consider the vibrant independent scene, with newcomers Haldanes and Asco, as well as established players, such as Mills Group, entering the small supers market for the first time.

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