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The Future of Convenience Retail?

The Future of Convenience Retail?

With the convenience grocery landscape evolving quickly, symbol operators are investing more than ever to convert newsagent-style shops into full grocery stores, discount retailers such as Aldi and Lidl are piloting smaller format “local” stores, and disruptive new market entrants such as Amazon Go are on the horizon.

Earlier this month, we sent a team of auditors to take a closer look at the latest approach being adopted by one of the UK’s leading convenience grocers in response to these market changes.

Our teams focussed on busy urban areas where The Co-Operative are testing their new store formats and technology. By taking a closer look at the products and services on offer in these stores, we have built a picture of how Co-Op are seeking to stay ahead of the competition.

Co-Op On the Go (Manchester Piccadilly station approach)

Glass frontage, combined with wood and brick-effect surfaces throughout give this store, opened in Q4 2018, a modern and uncluttered feel, with plenty of open space for customers to navigate, even during busy rush-hour periods.

Lunchtime trade is a clear focus, with a number of different services offered to tempt customers to leave their packed lunch at home. Customer seating is provided, complete with charging points for mobile devices and access to free water-fountain refills. A range of traditional lunchtime sandwiches, salads and sushi is supplemented with hot drinks, milkshakes and slushies, providing a more comprehensive offer than rival convenience stores.

While a core range of convenience staples is still stocked, evening meal solutions form a greater part of the offer than in many Co-Op stores, replacing a greater choice of food-cupboard ingredients.

In fact, almost 100 Chilled Ready Meal products are available in store, more than double the range typically offered in Co-Op convenience stores.

Several evening meal deal promotions are advertised in store, including ‘£7 Curry Night’, ‘£8 Dinner for Two’, and a £9.25 linked promotion of two Co-Op main courses and a pack of Coors Light – tempting customers to spend more on all-in-one meal solutions.

Technology in store

Beyond the product offer, Co-Op’s bid to win over busy commuters also extends to the use of tech in store. In addition to the free charging points mentioned above, their ‘On-the-Go’ store features 10 express self-service check-outs, and only three staffed tills at the tobacco kiosk.

We were also able to try out Co-Op’s new ‘Pay in Aisle’ app, designed to leverage customers’ own devices to pay for their chosen items without visiting the tills. This approach is favoured by other leading UK retailers, with both M&S and Sainsbury’s offering a similar service in a limited number of locations.

While this solution is less headline-catching than Amazon’s use of cameras and sensors in the US to allow customers to simply pick up and walk out with products, it does offer a less investment-heavy way of improving the customer journey.

Our auditors found the app straightforward and easy to use, with no technical problems and a number of added benefits.

Once signed in with a Co-Op Membership account, shoppers ‘check in’ to store by scanning a QR code on the wall. They are then able to scan product barcodes on the way around store, keeping track of spend as they go.

Payment was quick and easy, and allowed our auditors to skip the queues and walk straight out of the store without visiting the tills.

The Co-Operative also offer customers the chance to earn rewards for every own label purchase made using the app; with 5% in customer rewards and a further 1% going to local charities.

How does Co-Op’s latest format stack up?

A sign of things to come?

The new On-the-Go store format represents a clear attempt by Co-Op to harness advancements in retail technology, while taking the opportunity to emphasise their heritage and links to local communities as a key point of difference from both existing and potential new rivals, such as Amazon.

By tailoring product range and services to match customer demand for pre-prepared lunchtime and evening meal solutions, The Co-Op have created a store format which has obvious appeal to urban commuters. However, it remains to be seen whether the increased costs associated with offering a wider selection of services in store, coupled with the reduction in overall product range, will outweigh the potential gains, let alone whether elements of this new format can be successfully rolled-out across the country.

For more information about in-store audits, and to access the data behind this article, please contact ESA Retail at contact.us@esa-retail.co.uk.

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