Convenience stores vs small format supermarkets
Revisiting some Woolworths small format supermarkets and express formats as well as some convenience stores such as Ezymart this week got me thinking: what is a supermarket versus a convenience store? And, does it actually matter from the shopper point of view?
In research GfK regularly runs with shoppers, they tell us ‘convenience’ can mean a number of things that aren’t specific to one channel:
- Long opening hours: Okay it’s in the 7Eleven name, but many supermarkets are now open until 10pm or even midnight such as the new Woolworths Central at Surry Hills, Sydney
- Close to me: Mostly to home or work or on the way between the two. This is about location and equally applies to corner stores, supermarkets, and pharmacies as to convenience stores
- Can get in and out quick: This is a function of adequate parking as well as being able to find the desired products quickly and easily instore
- Has the brands and products I buy: This one is about range, according to the trip type the shopper is on, and it is on this count that many ‘convenience’ stores may not be an equal footing with the new ‘small format supermarkets’.
In May 2014, I compared some of the then new small and medium format Woolworths stores (Southern Cross, Erskineville, Woolloomooloo). Note that Coles didn’t have a small format supermarket then and still don’t at time of writing now, although in October last year it was reported they were ‘looking into it’. (Coles’ recent innovation strength has been the delicatessen and bakery sections of its new format full line supermarkets, which I have previously written about).
This week, I looked specifically at Woolworths Central in Sydney’s Surry Hills, the latest in its small format line (along with Swanston St and Flinders St in Melbourne), and for comparison I checked out the Ezymart in Surry Hills since Ezymart is one of the faster growing convenience store chains.
Here’s what I found.
The template: Woolworths,Woolloomooloo, May 2014
Because ‘W’mooloo’ is being used by Woolworths as the template for its other small format stores, here’s a quick refresher on what I noted in it (as at May 2014).
“What’s really noticeable and admirable about this store is its relentless focus on ready meals and dinner tonight (and breakfast and lunch today on-the-go). It reminded me of a similar, and similarly impressive, store – the Walgreens at Union Square in San Francisco.
The W’mooloo store demonstrates an impressive understanding of the local area demographics and needs. The coffee station and flowers are on the left of the entry, and there is an absolute dominance of single serves and small portions, such as of nuts.
But what’s different here is an instore café, and large deli, bakery, and salad/sushi stations as well as a number of islands specialising in ready made meals and meal deals.A larger fresh area details the types and uses of the different types of produce. The store is also a Big W click & collect point, according to a sign under the coffee station.
In this store the traditional ‘centre store’ aisles are much more about food, such as a substantial international foods aisle, and less about household or health & beauty products (haircare was only two bays, for instance).
This store would almost certainly major in dinner tonight and through-the-home (ie at work) meal trips. Given its small range of non-food products, stockup trips are unlikely, as may be top up and destination trips, although the range is large enough to qualify for emergency trips.”
Fast forward: Woolworths Central, Surry Hills, July 2015
Woolworths Central – which is almost bang opposite Central Station – retains the absolute focus on meals for now, whether they be breakfast, lunch, or dinner as they cater to all three. But because the store footprint is smaller than W’mooloo, it loses out on range a bit so is less impressive.
The café is smaller. I couldn’t see a sushi bar, maybe I missed it. The entrance is a bit cramped; shoppers had to fight for space with each other and with the staff topping up the small bakery with fresh baked bread rolls. What has been retained is the hot soup bar, chillers with meal deals, and a specific gondola end for breakfast on the go.
From a navigation point of view low profile aisles enabled easy visibility across the whole store, albeit with slightly too small category header signs. A line of self-serve checkouts for quick in and out was preceded by the confectionery aisle running against a wall, nearly the length of the store.
Unlike the average convenience store and Woolworths Southern Cross Station (a ‘medium line format’), noodles and salty snacks weren’t overfaced but there was an entire chiller of yoghurt single serves. What was particularly noticeable in this store was the ‘healthy’ options – quinoa everything – chips, salad, snack pots.
Likely shopping trip types for this store would be predominantly dinner tonight trips, small top up shop, or destination specific category emergency trips. When I visited on a Monday at 1500 most of the punters in a very busy store were clutching three to four items in their hands (only a few with baskets), predominantly hot beverage items like tea bags and dinner tonight items like pasta sauce.
All in all, whilst underfaced in a couple of categories and overfaced in others, this store ticks all the ‘convenience’ offer boxes: long hours, on my way home/to work, has the brands and products I buy for the major occasion I’m here: meals now.
Ezymart, Surry Hills, July 2015
I wandered into this tardis-style store (bigger on the inside than looked from the outside) to sense check the differences between a small format supermarket and a convenience store. It was a bright, well stocked, and very tidy store with a non-food range, such as health and beauty, pretty similar in size to that of Woolworths Central.
The owner told me he had to downsize his range to keep everything looking tidy. While it was neat, there was little or no category navigation signage. But the flow and adjacencies made navigation reasonably easy despite the lack of signage; all of the ‘sin categories’ were ranged at the front and the non- food emergency categories toward the back in a very long, skinny store footprint.
Because of its location opposite a large pub, confectionery, salty snacks and noodles were all overfaced. The owner told me this was because one of his busiest times was late at night when pub punters had the munchies.
The big difference here versus Woolworths Central was that there was only one chiller of fresh food and dairy, due to space. But at least this owner knew his clientele and store’s limits, and hadn’t gone down the IGA Walsh Bay path of a lacklustre fruit and veg offering (when I visited that IGA in May 2014).
So what’s the difference between a small format supermarket and a convenience store? At this point, the fresh and chilled meals offering, and café, in the supermarkets. The convenience stores are still more about the ‘sin’ categories, albeit with a non-food range that is just about on par.
Small format supermarkets and other types of expanded corner-store and delicatessen offerings are potentially eating into the traditional ‘convenience’ store share of trips because they offer the key components of convenience and trip type coverage plus an expanded range. And they have thought about what their local constituents need. This thought informs the range based on the kinds of trips their shoppers are likely to make.
However, small format supermarkets will only work in certain types of locations. I’ll be fascinated to see what Coles do with the Walker St North Sydney site opening early 2016, which would be a prime candidate for a meals-now dominant offer, given the number of corporate shoppers packing the North Sydney Aldi at lunchtime to buy tinned tuna and fresh baked bread. Likewise Woolworths in Crows Nest.
To stay in the game, non-fuel convenience needs to define what convenience means – for itself, by individual location based on the shoppers’ needs in that area, and execute accordingly.
Norrelle Goldring is head of shopper experience and retail performance at global retail research house GfK. Norrelle can be contacted on 0437 335 686 or email email@example.com