After an acclaimed presentation on, "High Returns: Adding World Class
Convenience Food", at last year's National Association of Convenience Stores
Show held in Las Vegas 15-18 November 2005, Bob Price, FDF Chief Economist,
caught
up with Scott Annan, Director of scrg, and interviewed him about how he saw the future of convenience retailing.
scrg is the recognised market leader in convenience retail strategy
development and delivery. Scott Annan has worked in retail since 1978, having worked
previously for Mars, Nabisco and PepsiCo. He joined scrg in 1992 and specialises
in
convenience retail strategy and organisation. He regularly writes and speaks
on
convenience industry issues and has recently joined the NACS International
Advisory committee.
Bob Price:
Scott what do you see as the key future drivers for convenience store
operators, and where does foodservice come into the picture?
Scott Annan:
Our demand for convenience is forecasted to grow 'double digit' for the
foreseeable future if our shopping trips, the analysts and big retailers are to be
believed. Did our demand for easy shopping drive better retailers or did better
shops and offers allow us to shop daily? Our traditional convenience store was
either grocery or CTN – what does this mean? based and catered well for our
shopping missions of Top Up, Regular Needs and Snacking. Good foodservice was
available
but it was the exception rather than the norm. Jokes still go around
about the
10,000 mile hotdog in the forecourt or the self service coffee vending
machines
offering something akin to ditchwater.
We have always had a huge choice of takeaway restaurants or supermarket ready
meals so we could shrug our shoulders in our local convenience store or CTN and
move on. Our industry sat cosily outside of foodservice and we came because
they
were there. Traditionally, we looked to the USA and Japan for trends as the
two
giants of convenience. USA and Japanese C-retailers grew fat on fuel (USA),
cigarettes, soda and snacks but both hit a wall in 2002 when the flow of
customers
to Supermarkets, Drug Stores, Quick Casual Restaurants and Department
Stores
(Japan) became a flood.
We saw one of the big reasons in 2003 when Tesco, the Coop and Marks &
Spencer seriously entered UK convenience. Around this time lifestyle coffee
retailers established a major presence in many of our high streets. We loved their
expensive coffee and fruit teas and they then sold us expensive muffins,
sandwiches,
paninis, juices and waters. We spent billions in convenient supermarkets
and
cafes that were not convenience stores!
Convenience is now about making it easy to shop for what we want, when we want
it. Two of our biggest convenience missions are Food & Drink for Now and
Food & Drink for Later and they are worth £16.5 billion and have been
satisfied
by supermarkets, quick food, takeaway restaurants and making it at home.
Supermarkets and food specialists have brought trust, brand, service and fresh
food
to
convenience and we like it.
Bob Price:
What has caught your attention about something that has been done well in the
convenience/foodservice fusion?
Scott Annan:
I smile every time I sit in the BP Connect in Hammersmith eating Marks &
Spencer sushi with a Wild Bean coffee. Everyday hundreds of shoppers fill up on
fuel and fresh food and drink: sandwiches, salads, meals, wine and even wild
Pacific salmon. All in a UK petrol forecourt!
One hour's flight west is Dublin's thriving convenience market built around
foodservice. Centra, Spar, Londis, Donneybrook Fair, Statoil, and Esso On The Run
all have impressive and relevant foodservice. Dublin has to sit at the top table
with New York; Tokyo; London, and Altoona, Pennsylvania as the convenience
foodservice capitals of the world.
The manager in the Daimaru department store in Kyoto, Japan told me that they
will sell '10,000' lunches and dinners 'to go' that Thursday as I stood open
mouthed in his food hall. Bento boxes; rice parcels; sushi; salads; noodles; soups
and cakes: over 80 regional cuisines, perfectly packaged and always served with
bow and 'domo arigato'. The nearby Takishimiya department store's food to go
was
equally magnificent and the Shinkansen bullet train platform kiosks' food
looked
and tasted great. Three hours away near Tokyo Station is an outpost of
New
York's finest deli convenience store Dean & Delucca. The store is
jammed,
the
food and coffee is great and the service is 'Have a nice day, domo
arigato,
with
a
bow'.
Junji Ueda, President of Family Mart, Japan's second largest convenience
retailer recognised in their 2005 annual report that there is a need to clearly
differentiate their stores as they had lost customers to other channels. His
strategy
is "high quality: highly fresh, ready to eat food and high quality
hospitality (service)". Family Marts 'Famima!!' stores in Los Angeles are
centred
on ready to eat foods and not the usual c-store subjects. New York deli
C-stores
are pretty unique but strong regional retailers such as Wawa and
Sheetz
are now
profiting from building food brands that shoppers trust. They are
yet to
break
into Food & Drink for Later. This mission remains dominated
by quick
service
restaurants but quick-casual restaurants such as Trader
Joe's
200
stores in
20
states offering 'one of a kind' convenience foods and
Panera
Breads 825
stores in
35 states are making big inroads. The Wall
Street
Journal scored
Panera
Bread as
the highest level of customer loyalty
among
quick-casual
restaurants
and
Nation's Restaurant News voted them
number one spot in
118 competitors.
Bob Price:
How would you sum up the situation?
Scott Annan:
Behind these successful Food & Drink for Now and Food & Drink for
Later retailers lies a dedication to convenience. Our demand for these missions
will only grow and USA and Japanese convenience retailers are showing that
traditional operators can successfully compete with supermarkets and specialists and
make foodservice a destination to their stores and central to profitability.
Cigarettes and petrol will always be important but are not in our gift to control
them. Convenience foodservice is already massive and if we chose to continue to
sit
on our hands, the big supermarkets and service driven specialists will take
all
the knives and forks and then the market.
Bob Price:
Thanks Scott that was really interesting. How can people interested in these
developments keep up?
Scott Annan:
srcg more than any other company brings the latest thinking in convenience to
both retailers and suppliers. One of our publications is the acclaimed 'The
Shape of Convenience™' studies contain leading commentary on the current and
future
state of the sector from top retailers, manufacturers and industry experts.
top
Last reviewed: 24 Mar 2006
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