In 2018, Nielsen had reported that FMCG sales growth in Southeast Asian convenience stores reached 8.3% and Mintel published that sales through Chinese convenience stores hit US$19.78billion with a CAGR of 24% over the past 5 years.
These gains made by such retail channels reflect changing consumer lifestyles influenced by the constant and rapid urbanization of Asia’s developed and developing cities. Urbanization across the globe has caused people’s lifestyles to evolve to be more mobile and time-constrained. Concomitantly, these changes lead people to seek new communal spaces and a shift toward having smaller households and families. As such, convenience stores are beginning to adapt to these changes to become more integral to people’s daily lives. This also means emerging opportunities for producers of FMCG and F&B brands to tap into.
To become an essential part of people’s every day, convenience stores have, and are, taking on new roles through innovation and experimentation in space management and retail strategy. The busy and hectic lifestyles of consumers today have given rise to convenience stores providing one-stop service solutions. These solutions range from bill payment, banking, postal and travel services, online purchase collection points, and even laundry drop off points.
For instance, e-commerce giants Zalora and Lazada in Hong Kong and Singapore have paired up with 7-11 stores across the city that provide easily accessible and trusted locations to pick up their parcels if they had missed their home deliveries. Here, there is tremendous potential for e-commerce brands to expand their access through convenience stores in more remote or inaccessible areas. Accessibility of convenience stores also presents partnership opportunities for brands and companies offering these services to grow ever closer to consumers. Convenience stores are also starting to provide an extended selection of easy-to-eat meals that have moved beyond mere ‘quick fixes’. Easy-to-eat meals on offer in stores overlap convenience with attributes of quality, authenticity, and health to cater to consumer’s busy schedules without forgoing trends, taste, and dietary preferences. Stores also offer air-conditioned seating areas to take their meals in an affordable and comfortable space. Hence, convenience retail channels are turning into alternative third spaces – new places for social engagement – as lifestyles and social interactions grow more and more fluid and mobile.
With a wide range of food and beverage options coupled with free wifi and air-conditioned seating areas, convenience stores are being redesigned to attract and retain consumers on-site.
Furthermore, it is not entirely uncommon these days to see stores such as 7-11 hosting events or musical performances, becoming sites and spaces of entertainment consumption. This presents partnership opportunities for brands to co-host events and invent both novel and practicable product formats for consumers spending more time in the store.
Thus, convenience stores are no longer just a space to buy basic and practical necessities. It has turned into an experiential place where customers can enjoy and discover things they like. Convenience stores today function as ideal discovery centers for both brands and consumers to experiment with new products in smaller low-risk formats. Brands can use these stores as introductory and experimental test-grounds for new products and packages for consumers to try before full conversion.
Apart from product testing and brand discovery, convenience stores today also provide novel and experiential consumer retail experiences through creating or testing seamless purchase journeys. In this sense, cashless payments and unmanned kiosks open up opportunities for detailed consumer analytics. Brands can take advantage of this and partner with convenience stores to use data to create personalized marketing campaigns and build stronger customer engagements.
Tapping into the future of convenience retailing
The ongoing diversification of consumers’ needs overtime has made convenient stores more than just a convenient space to shop. Convenience is being redefined as this particular channel grows to become more of a cornerstone in people’s daily lives. To grow closer to customers, brands need to adapt to these changes in consumers’ lifestyles and make use of convenience retail channels in varied ways to:
1) provide access to services and products
2) provide a wide range of food and beverage options to satisfy different dietary preferences
3) partner with such channels to host events
4) use these channels as a testbed for novel and innovative product formats
5) create personalized marketing campaigns from consumer-generated data
In order to capitalize on the growth and opportunities convenience stores present, FMCG, and food & beverage brands need to map out areas of play in convenience retail channels to achieve success. This includes an understanding of formats and the market in CVS, along with a thorough comprehension of new developments and trends through general retail and category deep dives, as well as ensuring a design strategy exists for product categories to meet customers’ lifestyle needs.