Convenience stores move towards ‘fresh food’

Posted by AFN Staff Writers on 21st March 2013

Convenience stores globally are likely to move more towards stocking more ‘fresh food’, according to Supermarket Guru Phil Lempert.

In Australia, independent grocery and convenience store supplier Metcash, has proposed Australian convenience stores focus more on fresh food and new product lines, in order to compete with larger supermarket retailers.

In February 2013, Metcash launched ‘new concept’ in fruit, vegetable and fresh food retailing, opening three new stores in New South Wales under the Harvest Market brand. The stores provide consumers with the option of a ‘full shop’ or a top up shop’ on their way home from work, and stock fresh fruit and vegetables, delicatessen items, flowers, bulk foods and continental grocery items. Metcash said the new store concept addresses the “rapidly changing tastes and habits of grocery shoppers, who are seeking high quality fresh produce in their local area”.

“The independent, franchised outlets provide good value, pitched at the middle of the market and are extending their ranges from fruit and vegetables to include other fresh delicatessen and continental grocery products”, said Nick Pagett, General Manager Fresh Fruit of Metcash Food & Grocery.

The most recent research from Australian industry research group IBISWorld shows that the $32.4 billion petrol and convenience retailer sector in Australia will probably see a revenue drop of 7 per cent in 2012-13 because of volatile oil prices. The sector has seen a major restructure in the last five years, according to IBISWorld, with supermarket chains Coles and Woolworths now accounting for a substantial share of the sector’s activity.

Data from IBISWorld shows that 25 per cent of revenue for fuel retailers comes from sources other than fuel, such as milk, cigarettes and take away food. Australian Food News notes that the trend towards increased spending on ‘fresh food’ or ready-to-eat products could present opportunities for the fuel retail sector.

In other developments in the Australian ‘fresh food’ market, online shopping platform SOC Exchange, has launched a new feature called ‘Click and Collect’, which allows food businesses to have an online presence. Using the new feature, shoppers can select fresh produce from their local store, pay online, and collect the produce from the store at a time that suits them best.

“When it comes to fresh food, many consumers are loyal to their local retailer who they trust to provide quality produce at good prices. But with the explosion of online shopping, even customers that were once only loyal in-store are now shopping online. If local retailers don’t jump on-board now and claim their space, it won’t be long before a larger retailer takes their place,” said Franco Lagudi, ‘fresh food’ economist and SOC Exchange CEO.

In a report on convenience stores in the United States earlier this week, Lempert suggested that fresh food “will be the competitive differentiator of choice” for stores like 7-Eleven.

Australian Food News yesterday reported that global market researcher Nielsen had found ‘fresh food’ sales are growing around the world. Nielsen noted that value and convenience emerged as important considerations for consumers when buying ‘fresh foods’, and that ‘fresh food’ shoppers were a high traffic builder, which could present an opportunity for convenience stores.

“Fresh is becoming more complex with greater variety in products and package sizes, more private label/brand options and increased value-added products, such as diced vegetables or pre-marinated meats,” said Bruce Axtman, president of the Nielsen Perishables Group. He said that retailers needed to understand their shoppers’ “generational and health needs” so they could tailor store offerings to suit.

Although the grocery channel is the leader in fresh foods (accounting for two-thirds of the retail market), ‘fresh food’ is growing in non-grocery channels as retailers respond to consumer demands, according to Nielsen. “In fact, most store expansions since December 2005 have been outside the traditional food, drug and mass merchandise outlets, with the biggest growth occurring among warehouse clubs, supercenters, dollar stores and convenience stores,” the organisation said.