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A quick health check for New Zealand's convenience channel

  • News
  • July 26, 2018
  • Lance Dobson
A quick health check for New Zealand's convenience channel

Convenience retailers and Manufacturers have a huge opportunity to tap into the needs of time-poor, health conscious shoppers in New Zealand. To realise this opportunity, we need to know what these shoppers’ motivations are. Are they aspiring to be healthy, or are they truly healthy people? Are they willing to pay a price premium for healthier and more convenient products? What is the gap between who they are and who they perceive themselves to be?

Convenience growth drivers 

Globally, small format stores make up over one quarter of dollar market share and have seen a +13.6% growth year on year. This rapid growth is driven by 5 key factors being - smaller households, increasing percentage of women in the workforce, increasing urbanisation, the higher penetration of mobile devices, and the rise of eating out. This growth shows that this shopping format is suitable for the modern lifestyle, and the moment to leverage these trends is now.

Tobacco is the leading growth driver for New Zealand convenience stores (c-stores) with the category accounting for 102% of the net value year on year dollar growth. However, relying on a single category in spite of changing trends is risky, particularly as certain aspects of the convenience channel are being challenged by market disruption. With Uber and other car share schemes, fuel efficient cars, pay-in-car/pay at pump solutions, and food delivery all rising in popularity, as well as the rise in Vaping and increasing legislation around smoking, convenience stores and petrol stations must work proactively to remain relevant to shoppers’ needs and experience.

The experience, choice, price, and time equation

The convenience channel is well positioned to meet the needs of consumers looking to top up quickly. C-stores therefore need to focus on the reasons why shoppers come into their stores for these trips. By honing their offering to become the obvious choice every time someone needs milk, nappies, their morning coffee or a great snack for the road, c-stores will win the trip over other channels.

Providing a full-service offering with a great experience to a customer within a small store format can be challenging. Firstly, small format stores should continue to defend the areas that differentiate them from large format stores - their convenient location, good customer service and the quality and range of foods to ‘eat now’. Raising the bar on areas like a range to meet their customers’ needs, high quality fresh food, fast checkouts and ease to shop quickly are also ways to compete more closely with large format stores.

Championing 'health' and 'convenience' with the right consumers

Across the country, more than one-in-five Kiwis adhere to a low sugar diet, and shoppers are educating themselves more about food. This presents a great opportunity to assist shoppers in education and decision making by offering fresh healthy foods, low sugar options and wholesome snacks.

Retailers and manufacturers in the convenience channel can become a champion of health and convenience by truly understanding their consumers. While the majority of the population will use a petrol station to fill up on fuel, those who make purchases at a petrol station / convenience store can be different from the average Kiwi. Here are just four ways the New Zealand convenience consumer can be different:

  • They are younger: The convenience consumer is more likely to be between the ages of 15 and 44.
  • They are well connected: This means that they are heavier users of the internet, more likely to have the latest gadgets and believe that mobile technology makes their lives easier.
  • They aspire to ‘health’: While they are more likely to make an effort to eat ‘5+ a day’ (fruits and vegetables), choose lower calorie drinks and avoid unhealthy foods, they are also more likely to eat whatever they like and to eat on the run.
  • They choose ‘convenience’ over ‘price’: They are more likely to top-up throughout the week, visit dairies between supermarket shops, say they are too busy to shop around, buy takeaway food, dine out weekly and looking for ideas to make cooking meals easier.

Functional beverages that tout benefits like being probiotic, cold-pressed, coconut or protein-enriched are all increasing in popularity. Kombucha is the perfect example of a product which sits in the space where ‘health’ and ‘convenience’ come together.

In the United States, over the past year alone, the fermented, effervescent tea has grown by 44% dollar growth. Similarly, in New Zealand, Kombucha has won the hearts and minds of the public. In the grocery channel, Kombucha has enjoyed a massive +813% dollar growth compared to a year ago, with the category now being $8 million dollars in size. In Convenience stores, Kombucha is still in its infancy with the total category worth $15,000 in the last year. With other functional drinks like water and low/no calorie beverages seeing success in the channel, Kombucha is positioned to follow suit.

With dwindling time, and the increasing interest in health and wellness, convenience stores are well positioned to empower consumers to become their perceived selves and provide convenient, healthy options. By focusing on the needs of the convenience consumer, while staying true to the core offering of the channel, manufacturers and retailers in the convenience channel can not only maintain growth but flourish in a time of market disruption.

This article originated from Nielsen.

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