Convenience Retail, as an industry, has catapulted by leaps and bounds in the wake of the COVID-19 pandemic. Earlier, considered a stepchild of the retail industry, convenience retail has mushroomed in many parts of the country, owing to the customers’ need to get everyday essentials (and more), without queuing up and getting exposed to infection at a brick and mortar store as they typically do at big and crowded stores or malls.
In 2019, US convenience stores alone had sales of $648 billion. Some of the most popular global convenience store chains are 7Eleven, Circle K, Casey’s, Wawa, Tesco Express, Indomaret, FamilyMart and Lawson, all of which have annual revenues of over $10 billion per annum.
Ryuichi Isaka, President of 7Eleven Holdings (the largest Convenience store chain in the world), stated in the Q3 2021 Earnings Call that, “From 2019 to 2020, 7Eleven’s income increased by over 6 percent from $835 million to $888 million.” This is mainly because customers began stocking up in bulk, with increased cart sizes and higher spending. Everyone wanted to get their hands on what they considered “essentials”, in a standardised and organised format; where they could quickly find everything they needed; without being inconvenienced.
Convenience shopping, way forward
What makes convenience commerce so highly valued? Why is convenience retail the future of shopping? Let’s now understand what actually falls under the ‘Convenience Retail’ category.
A part of modern trade, Convenience Retail is often confused with the kirana shops in India. However, they are definitely more complex than a local vendor shop around your block.
Convenience stores are meant for customers who are always on the go. The stores are always within walking distance of consumers who wish to make short trips to the store, to buy a handful of items of convenience, such as prepackaged and fresh food items, fast moving consumer goods (FMCG), bottled and fountain beverages, household staples, other services such as money transfer, car wash, gas refueling; and quick deliveries.
These stores are usually small in size (600-1000 sq ft), are open for extended hours (usually 24/7) and are staffed by a relatively small team of cashiers, stock workers, and managers. They generally do not have wheeled shopping carts, because the intention of a convenience store is to provide items quickly. The intent of a grocery store is for a customer to enjoy it as a destination, wherein they can choose from among a thousand brands and spend hours in the aisles. These stores are present at high traffic locations such as neighbourhoods, mass transit hubs, commercial complexes and or educational institutions.
Rise of quick commerce in India
‘Quick commerce’ as it is popularly known today, is actually why convenience retail came into being. Historically, as countries such as the USA, China, Japan, Indonesia started building higher working populations, time became a scarce resource and shopping trips to crowded and far away supermarkets and grocery stores became inconvenient. As a result, local neigbourhood convenience stores came into being, that were within the walking distance of consumers, acting as quick fills destinations, with fast checkouts and also providing rapid home deliveries. Back then, these deliveries were carried out through phone orders, then website based orders and now through mobile apps.
It is picking up in India. According to Benglauru-based market research firm, RedSeer the total addressable market for quick commerce in India stands at $45 billion, and urban areas are driving this market on the back of mid-high-income households.
All convenience retail stores evolved and went digital. For example: Tesco Express pioneered quick commerce in the 2000s, and now 7Eleven has an app of their own. Now, pretty much all the players in the market have a quick delivery mobile app which promises doorstep deliveries within 30-45 mins.
Going forward, the purchasing behaviour of the consumer will remain inclined towards convenience shopping, since the value of convenience has never been higher. Consequently, all the big players are trying to get in on the increasing demand for convenience stores, case in point AmazonGo.
(Aastha Almast is Co-Founder, The New Shop-a 24/7- a convenience commerce platform)