The convenience sector represents 20 per cent of the total UK food and grocery market and with the sector enjoying a value of £29.1 billion last year (according to IGD research), fresh produce companies say that there are ripe opportunities available as consumers rethink the way they shop.
If consumers are happy to top up their shopping by relying on convenience stores, these outlets are more than likely to have a good fresh produce offer, says James Lowman, chief executive of the Association of Convenience Stores. “If these stores have invested properly in fresh produce, they should find that demand grows,” he explains. “Generally, the bigger the store, the better fresh produce is likely to be. Also, in that big store, it’s more likely to include fresh meat and groceries, and fresh produce ties in well with this offering.”
The challenging economic climate has impacted on shopping patterns and Lowman says some people are more inclined to shop locally, especially if they have sold their car. “Consumers are also more conscious about waste; they would rather buy smaller volumes and top up locally and regularly,” he tells FPJ.
The poor weather in January and February also meant that some consumers could not get to their supermarket and so relied more on local shops. “The challenge is [to ensure] customers return on a regular basis,” Lowman says.
A number of stores are enticing customers by improving their fresh produce offer and some are targeting their customers with a wide range to meet community needs. “If there is a large ethnic population, it may be that these stores offer more exotic fruit and vegetables,” Lowman says.
But offering a localised range can also be beneficial. However, stores need to be careful and not carry too large an offer, as if it does not sell quickly, this will inevitably mean more fresh produce to manage and waste.
Del Monte aims to draw in a wider audience of convenience shoppers with the recent launch of its Naked Fruit range. James Harvey, managing director at Del Monte UK, is proud of this first for the convenience sector. “This prepared fruit range includes the hero product Naked Orange - the first pre-peeled orange to be launched into the convenience sector, which is really leading the way and includes a wet wipe to make sure it is as convenient as possible for our consumers,” he says.
Capespan recognises convenience as a growth opportunity and is evaluating and prioritising the opportunities available in the sector, says commercial director Jacqui Green. Grapes, soft citrus and tomatoes represent its most popular sellers in the convenience sector. “Consumers are less inclined to accept poorer standards in a convenience store than the supermarket, where they do a weekly shop,” she says.
Over the last 12 months, QV Foods has expanded its convenience range from prepared potatoes to encompass root vegetables. “We concentrate on using innovative flavours to create a point of difference for the consumer,” says Simon Martin, QV Foods director. “Our aim has always been to produce simple, good-quality and good-value products and this continues to pay dividends as our products have, in the main, exceeded our expectations in terms of sales and also longevity on shelf, where turnover of products can be very aggressive.”
QV Foods’ Inspire wedges are its best seller and have found favour with both the convenience sector and major multiples. The producer has exciting plans in store for this year and QV Foods will be introducing a number of new concepts. “We will continue to develop our range of added-value, fresh root vegetable lines with new flavours and mixes,” Martin reveals.
QV Foods is also looking at extending into other prepared vegetables, as well as fresh prepared fruit and maybe herbs. The firm is also to launch a new range of fresh vegetables called Gregg’s Fresh Approach to Produce, a new concept of fresh, convenient, daily-use products endorsed by MasterChef presenter Gregg Wallace.
As fresh produce companies hone their strategies, they acknowledge that shelf life, order size and space are key issues when supplying the convenience sector.
“In convenience stores, there are fewer economies of scale versus the multiples and in many instances this involves low volumes, higher distribution costs and smaller pack sizes,” says Green.
She adds that there is also less compliance on shelf with promotional activity and range, due to much of the sector still being largely voluntary chain and/or franchise-based.
“The sector is looking to earn more out of fresh produce at a time when many other supply chain costs are rising, and that’s not easy to square,” explains Green.
Shelf life is also a priority and drives both wastage and product quality. “We deal in fresh prepared vegetables so our shelf life is naturally very short and we have to ensure that we give convenience stores as much time as possible to sell product,” Martin says. “As a grower-owned company, QV Foods can prepare product daily, ensuring that our customers get as much shelf life as possible on any product.”
Del Monte is investing in developments to help overcome the issue and has high hopes for its Controlled Ripening Technology (CRT) banana range. The company uses patented new technology and innovative packaging that keeps bananas fresh for six days, giving colour, freshness and appeal for longer. It is also exploring other packaging technologies that are able to extend shelf life.
Waste is another big issue and sources say both distribution and packaging need to be explored further. “Del Monte uses smaller pack formats for the convenience sector, recognising the need to keep waste to a minimum,” Harvey says.
As major retailers extend into convenience, Del Monte is confident of the opportunities. “We are currently working to extend distribution, increase availability, minimise waste and intensify consumer choice to take advantage of the growth in this sector,” Harvey tells FPJ.
Total Produce supplies Spar, Nisa-Today’s, Londis and Premier, in addition to many independent stores. Royal Gala apples, tomatoes, mushrooms and potatoes are all popular in the convenience sector.
Drew Reynolds, technical and business development director for Total Produce, says that demand for fresh produce from the convenience sector is growing slowly and that many customers are looking for a range of produce available to more stores. “We already supply more than 100 lines and can offer anything from a mango to Brussels sprouts, but we are constantly reviewing the range offered to individual symbol customers in order to provide promotions and points of difference,” Reynolds explains.
As the sector grows, Reynolds argues that convenience retailers are clearly looking at business in a similar way to the multiples. “They certainly benchmark their products and prices against the multiple retailers,” he says. “Convenience consumers now want the same products and prices they see available in the major multiples.
“Total Produce is working closely with our convenience customers to provide them with the quality, price and service they require. They receive the same account management and focus as would be provided to a multiple retailer.”
The challenges when servicing the convenience sector are meeting price, quality and service expectations. “We are constantly looking at logistics and the supply chain to make sure we are as cost effective as possible,” Reynolds says.
Strong brands are incredibly important to the convenience retailer, says Harvey. “Del Monte adds significant value to the convenience sector as a recognised and trusted brand name, whereas multiple retailers, in comparison, do well from their own-label propositions,” he adds.
Harvey argues that availability and quality are paramount and must remain constant in order to retain consumer confidence, which is strongly driven by brand names and innovations. “If the brand is in store one day and not the next, consumer confidence will dip, if not disappear altogether,” he says. “This is about supplying smaller amounts to reduce waste, but supplying products more often to keep the availability up.”
In terms of opportunities, Harvey says that convenience stores are “more keen than ever” to see chilled features established in store and that grab bags still tend to do extremely well, particularly grapes and fruit medley packs.
The food-to-go sector, with its potentially stronger margins, is also seen as a growth area.
The whole supply chain is becoming more responsive to the demands of the convenience sector, but there is no easy solution, Lowman warns.
However, he says there is a thirst for local shopping and footfall is rising. With more fluidity in family lifestyles, the convenience sector is undoubtedly responding to the changes in the way consumers shop.
Lowman says that convenience stores must also work hard to get their fresh produce offer right. “Stores have to hit the standards that the multiples achieve,” he says. “There are higher margins on fresh produce than on other products such as tobacco and there is also more risk and waste, but the prize is there.”
Lowman sees more opportunities for the use of Change4Life branding in convenience stores. Following a successful pilot in the North East, corner shops across England can join Change4Life and display Change4Life posters and signs.
Green says a truly “convenient” store needs to offer parking, fresh food and decent standards. She adds: “Consumers want to be in and out quickly. It can be the case that consumers may pass a superstore on their way home but, knowing that it will take them longer to walk in from the big car park, take them longer to walk around the store to collect the two or three items they need and then get back to the car again, will opt instead to shop at a truly convenient store where they can pop in and out again in moments.”
According to Martin, the convenience store is now very much part of the fabric of the UK retail sector. “Developing offers that suit these store formats has been critical to take advantage of the potential opportunity,” he says.
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