Confidence in Convenience

Time to refocus?
Jeff Rogut
Chief Executive Officer
Australasian Association of Convenience Stores Limited
An interesting editorial appeared last week in the UK Guardian and an extract is as follows:
“Yesterday it was Morrison’s turn to come clean about becoming a basket case. After reporting £176m in losses for last year, it revised down expected profits for the next and effectively conceded that margins were going to be squeezed into the indefinite future, as a result, not of a passing cyclical dip, but owing to what the chief executive, Dalton Philips, called “a paradigm shift”. Aided by booming bottom-end retailers, such as Aldi and Lidl who have come from nowhere to snatch a combined market share of a substantial 7%, customers ground down by austerity are hunting out value like never before, establishing what Mr Philips calls “a new price norm”.
This environment has had grave implications for Tesco, too, whose market share is now at its lowest in a decade. Sainsbury’s might well be struggling in the same way, had it not been so slovenly in investing in the giant out-of-town hyperstores, where bubble-time shoppers would totter along with trolleys that bulged, not only with groceries but also with espresso machines and DVD players. Not so long ago these hyperstores seemed like the future, but – as convenience stores proliferate and ever-more retail moves online – they are rapidly being consigned to the past.”
In recent years convenience stores in Australia have seen suppliers shift their attention to the major supermarkets and take their collective eye off the convenience ball in the grab for quick volume.
The ‘organised’ convenience store industry has remained resilient despite all the aggressive moves by the major supermarkets be it in milk and bread or even petrol discounting. The industry has had to adapt in the face of uncaring government regulation and continued to seek out new opportunities.
Yet despite all of the efforts by the industry many suppliers have reduced investment in the channel, be it innovative new products, account management teams and even promotional activity.
Certainty there are those very supportive supply partners who have continued to invest in the channel with dedicated teams, but for those who have sought the pot of gold at the end of the supermarket rainbow, perhaps the UK experience may be something to heed.
We have seen new investment in the fuel industry by overseas companies suggesting that there is a strong and profitable future to be had in the convenience business. AACS will release our annual ‘State of the Industry’ report in May when we will fully review 2013, but signs give cause for optimism.
I strongly encourage those suppliers who have diluted their convenience channel efforts to refocus, to reengage and to reenergise. Our Members comprise stable, long terms businesses with strong brands, systems and proven managers not just seeking the quick win but innovatively developing their businesses. We value long term partnerships and the development of collaborative relationships for mutual benefit….and importantly that of our Customers..
It really is time to reflect on the convenience of convenience stores, and how all parties can strive for an even brighter future to meet ever changing and growing customer needs. Putting all your energies into one [or two] major baskets may not be the wisest strategy in the long term.