No1 priority for convenience retail: retaining new customers
There is no shortage of predictions, advice, insights about what the ‘new normal’ or ‘life post lockdown’ might look like. At KAM we’ve had some absolutely fascinating interviews with a range of convenience experts over the last few weeks, as part of the Convenience Talks series. Many have focussed on the importance of retaining new customers that the industry has gained. But this week was the first time I heard anyone really mention ‘price.’
“There is a massive price war coming because the nationals will want to keep their market share and new customers, and they’ve got a war chest now” according to Scott Annan, from Blue Ananta and founder of the Independent Retailer Owners Forum.
Retaining new customers in a price war
So, what will this mean for convenience? As an industry we’ve gained many new customers, visiting regularly and buying into a wider range of categories. We’ve developed relationships with new suppliers and embraced new technologies to keep our staff and customers safe and happy.
Focussing on offering the cheapest prices obviously isn’t the answer for convenience retail.
Annan thinks the way to retain our new customers is to offer even better service, wherever the customers wants it. As always, with convenience, service is king, but never more so than now. “Where-ever and whenever” should be a key focus, with many industry experts predicting that home delivery from convenience retail will be the “new norm”.
Introducing the cautious consumer
There is, however, no ignoring the fact that we now have a much more ‘cautious consumer’ on our hands. Cautious because they’re still scared of this virus (quite rightly) and this is affecting where and how they spend their money.
Jonathan James of James Retail told us that “customers are coming back to where they think they are safe. We’re seeing a lot of people come to us because they feel safer in smaller shops.”
“It’s not until people feel safe that they’re going to shop anywhere near how they were before this virus.”
The number one priority for retailers, at least in the medium term, needs to be ensuring that customer’s trust that a store is a safe place for them to be. They’re not going to risk a small price saving on the safety of themselves and their family.
Convenience retail should do what it does best
But there is no denying that this ‘cautious consumer’ will also be more cautious with how they spend their money and we’ll likely see a rise in the importance again of delivering ‘perceived value’.
The supermarkets may well engage in an almighty price war. But both Annan and James agree that the biggest opportunity for convenience retail is retaining the new customer base that they’ve gained during lockdown, and retaining these customers is certainly not about offering the very cheapest prices.
In order to grow their spend and loyalty, we need to deliver against their specific and changing needs. We need to learn about them, gain their trust and react fast to their demands by delivering outstanding service wherever and whenever they require it.
Events like this happen once in a lifetime (I hope!) It is unlikely that we will ever get this kind of opportunity again to test our weaknesses, experiment with our business and adapt.
Staying close to what our customers want, need and feel is going to be even more instrumental than ever in helping prepare for the next phase.
Consumer Talks is a series of 10-minute interviews with convenience industry thought-leaders, focusing on how to survive and thrive post-lockdown. You can listen here.