Small supermarkets are improving their service to consumers leading to steady growth in terms of value, store numbers and shopper satisfaction, according to new research from shopper insight specialist Him. The small supermarket sector now accounts for 22% of UK food & grocery spend, with a total value in line with the convenience sector (21%), and a growth forecast of 12% in the next five years.
Him says the small supermarkets – of which there are now 7,300 – attract predominantly female shoppers and the biggest shopping mission is ‘top up’, featuring six to seven items, and are increasingly satisfying shoppers.
They are 3,000-25,000 sq ft and are often located on a high street. Shoppers use them for big top-up shops or small regular shops. They are bigger than convenience stores (under 3,000 sq ft) and attract a bigger basket size, but they are smaller than superstores (25,000+ sq ft.)
The research revealed that:
• Shoppers would increasingly recommend these small supermarkets to their friends / family – 48% are ‘promoters’ (rated 9 or 10/ 10 for how likely you would be to recommend this store) vs 41% in 2011.
* But failed purchases are still costing the industry dearly - estimated at £295k per store, per year.
• 8% of shoppers fail to purchase something they arrived intending to buy – something that EPOS and loyalty card data can never show. Fruit and vegetables are suffering most.
However unplanned purchasing is at a three-year high (24% vs 18% in 2009).
• The top three drivers of unplanned purchases are 1) promotions, 2) packaging, 3) display. At supermarket c-stores promotions are still the number one driver of unplanned purchases, but packaging and display have a lot more impact in small supermarkets.
• Budgens and Asda have the highest proportion of shoppers making unplanned purchases (31%)
• Chilled food, confectionery and fruit and veg are the categories most bought ‘unplanned’. This is very different to a supermarket convenience store environment, where the top categories bought ‘unplanned’ are, 1) confectionery (by some distance), 2) cakes/biscuits, 3) fruit and veg.
• At home mums and women in general are much more likely to make unplanned purchases, so retailers and suppliers should tailor relevant communications towards them.
Him reports that promotions are back doing what they’re meant to be doing – growing incremental sales.
• Promotions as a driver of store choice remains stable (17% vs 17% in 2010), and overall promotional penetration remains steady (32% of shoppers bought on promotion in 2012 vs 32% in 2011 and 37% in 2010.
• But despite no significant growth in shoppers buying on promotion, the promotions on offer are increasingly driving incremental sales (the proportion of shoppers who hadn’t intended to buy the promotional product on entering store has risen to 31% vs 24% in 2010.)
• Promotions are also increasingly impacting brand choice. The proportion of promotional purchases which influenced brand choice ie promo shoppers who said they had already intended to buy product type but the fact it was on promotion influenced their specific brand choice has risen from 41% to 33% in 2010.
Retailers and suppliers need to focus on satisfying different needs in different retail formats, according to Him. Shopper needs differ at different store formats. A shopper’s needs in a small supermarket is different to the same shopper’s needs in a convenience store. Retailers and suppliers need to flex their range, promotional mix, POS, marketing and layout accordingly.
• Convenient location remains the number one driver to store at small supermarkets and convenience stores, but value for money and range of fresh are much more important at small supermarkets. Retailers & suppliers should flex their focus & communications accordingly
• The importance of value for money differs across retail formats – obviously it’s absolutely key in discounters, significant in small supers and one of many important factors in convenience stores.
• A much higher proportion of shoppers buy something ‘unplanned’ in small supermarkets vs supermarket convenience stores (24% vs 18%).
• Obviously basket size is smaller (3.1 vs 6.1 items in basket) and visit freq differs (3.6 at supermarket c-stores vs 2.8 times per week at small supers)
• Shoppers are much more likely to be looking for promotions at small supermarkets and are more likely to make unplanned purchases.
• Small supermarkets attract a much higher proportion of women (68% vs 59% at supermarket convenience stores.)
• Almost double the proportions of shoppers buy fresh fruit & veg and chilled foods at small supermarkets vs. supermarket convenience stores.
• Simply replicating what is done in larger stores will not lead to success in these smaller supermarket stores, just as convenience format stores need a different offer. The shoppers may be the same people across these retail formats, but their needs are very different.”