Convenience stores in Australia, a revolution and more evolution
Some say the typical Australian “milk bar” or “corner store” has all but disappeared. Yet, new formats for convenience food shopping in Australia are doing well.
There is a boom in “defined convenience stores” across inner city areas and the petrol station offerings further afield of Coles Express, Woolworths “plus petrol” and 7-Eleven continue to grow in number along Australia’s roads. The “defined convenience stores” are those stores that actually describe themselves as a “convenience” store in either the signage or in their specialty franchise marketing message.
The Australasian Association of Convenience Stores (AACS) represents some of the bigger convenience store brands.
The Convenience and Mixed Business Association (CAMBA) is a different organisation, that represents some of the independent food retailers, such as the classic milk bar or privately owned corner store.
New convenience stores proliferate in Australia’s inner city areas near public transport hubs, hotels and hospitals. Many new stores are family-owned or run by private franchises.
The number of “defined convenience stores” had reached almost 5700 Australian stores by late last year, 630 of which were Coles Express stores and 600 being 7-Eleven franchises. Many franchisees see their competition as being the 750 or so larger Coles supermarkets and nearly 900 Woolworths supermarkets Australia-wide. However, some of the better-run convenience stores have developed around food niches that have allowed them to thrive.
The 7-Eleven franchise in 2010 bought the convenience retail business of the 295 petrol stations of oil giant Exxon Mobil.
Meanwhile Woolworths has grown its convenience stores under either the Woolworths brand or as the “Woolworths plus petrol” brand – with some of these having been either acquired from, or joint ventured through, Caltex.
The numbers of traditional milk bar in Australia have significantly declined over the past 30 years. It is estimated that there were over 6000 milk bars in the State of Victoria alone, in the 1970s. During the 1980s the government approval of Sunday trading for larger grocery stores, when trading had previously been confined to milk bars and some convenience stores, had a negative effect of the milk bar businesses.
Milk bars were also impacted by competition from the new-style format of the convenience store adjunct to petrol stations. Worse still, a combination of the failure by milk bars to adapt to changing technologies plus over-reliance on tobacco products were also factors in the decline of many such businesses. Law changes have reduced the consumption of tobacco but have also increased tobacco tax and selling restrictions. The disappearance of pre-paid phone cards and public transport system cards are illustrative of further instances where the old milk bars were caught unprepared for the changes.
On the other hand, some old milk bars have become “gold mines” for those who have used their favourable close-to-home location to sell deli-fresh foods and ready-to-eat cooked meals.
A recent Department of Agriculture, Fisheries and Forestry (DAFF) report, that analysed Australian food distribution channels, found that there is significant opportunity for retailers to provide improved convenience with ready-made meal products for their customers. This development has also necessitated substantial investment in additional refrigeration.
Retailers in fresh food and convenience foodservice markets have the advantage of developing strong customer and neighbourhood relationships and appear to be successfully competing against the large supermarket retailers.
“Category movement away from grocery retail may be sustained through a continued focus on quality, convenience and access,” the DAFF report said.