Across Asia, convenience retail channels are experiencing stable and record growth with a predicted 6.6% growth rate up to 2022, according to a forecast by IGD. In 2018, Nielsen reported that FMCG sales growth in Southeast Asian convenience stores reached 8.3%, and Mintel reported that sales through Chinese convenience stores hit US$19.78 billion with a CAGR of 24% over the past five years.
These gains made by such retail channels reflect changing consumer lifestyles influenced by the constant and rapid urbanisation of Asia’s developed and developing cities. Urbanisation across the globe has caused people’s lifestyles to evolve to be more mobile and time constrained. Concomitantly, these changes lead people to seek new communal spaces and a shift toward having smaller households and families. As such, convenience stores are beginning to adapt to these changes to become more integral to people’s daily lives. This also means emerging opportunities for producers of FMCG and F&B brands to tap into.
To become an essential part in people’s everyday lives, convenience stores have, and are, taking on new roles through innovation and experimentation in space management and retail strategy.
Busy and hectic lifestyles of consumers today have given rise to convenience stores providing one-stop service solutions. These solutions include bill payment, banking, postal and travel services, as well as online purchase collection, and even laundry dropoff.
For instance, ecommerce giants Zalora and Lazada in Hong Kong and Singapore have paired up with 7-Eleven stores across the cities that provide easily accessible and trusted locations for customers to pick up their parcels. Here, there is tremendous potential for ecommerce brands to expand their access through convenience stores in more remote or inaccessible areas. The accessibility of convenience stores also presents partnership opportunities for brands and companies offering these services to grow ever closer to consumers.
Quality and healthy food
Convenience stores are also starting to provide an extended selection of easy-to-eat meals that have moved beyond mere ‘quick fixes’. Easy-to-eat meals on offer in stores overlap convenience with attributes of quality, authenticity, and health to cater to consumer’s busy schedules without forgoing trends, taste, and dietary preferences. Some stores even offer air-conditioned seating areas for people to take their meals in an affordable and comfortable space.
Convenient third spaces
Hence, convenience retail channels are turning into alternative third spaces—new places for social engagement—as lifestyles and social interactions grow more and more fluid and mobile. With a wide range of food and beverage options coupled with free wifi and airconditioned seating areas, convenience stores are being redesigned to attract and retain consumers on-site.
Furthermore, it is not entirely uncommon these days to see stores such as 7-Eleven hosting events or musical performances, becoming sites and spaces of entertainment consumption. This presents partnership opportunities for brands to co-host events and invent both novel and practicable product formats for consumers spending more time in the store.
Thus, convenience stores are no longer just a space to buy basic and practical necessities. They are turning into experiential places, where customers can enjoy and discover things they like. Convenience stores today function as ideal discovery centres for both brands and consumers to experiment with new products in smaller, low-risk formats. Brands can use these stores as introductory and experimental test-grounds for new products and packages for consumers to try before full conversion.
Apart from product testing and brand discovery, convenience stores today also provide novel and experiential consumer retail experiences through creating or testing seamless purchase journeys. In this sense, cashless payments and unmanned kiosks open up opportunities for detailed consumer analytics. Brands can take advantage of this and partner with convenience stores to use data to create personalised marketing campaigns and build stronger customer engagements.
Tapping into the future of convenience retailing
The ongoing diversification of consumers’ needs overtime has made convenient stores more than just a convenient space to shop. Convenience is being redefined as this particular channel grows to become more of a cornerstone in people’s daily lives. To grow closer to customers, brands need to adapt to these changes in consumers’ lifestyles and make use of convenience retail channels in varied ways to:
- Provide accessibility to services and products
- Provide a wide range of food and beverage options to satisfy different dietary preferences
- Partner with such channels to host events
- Use these channels as a test bed for novel and innovative product formats
- Create personalised marketing campaigns from consumer generated data.
In order to capitalise on the growth and opportunities convenience stores present, FMCG and food and beverage brands need to map out areas of play in convenience retail channels to achieve success. This includes an understanding of formats and the market in CVS, along with a thorough comprehension of new developments and trends through general retail and category deep dives, as well as ensuring a design strategy exists for product categories to meet customers’ lifestyle needs.
RiAn Quek is a culture insights lead and Andrew Lee is a cultural intern at Quantum Consumer Solutions.