AACS: Convenience on right track

convenience storeIt’s more than halfway through the year of 2016 and it’s another solid performance for the convenience channel.

The Australasian Association of Convenience Stores (AACS) has released its State of the Industry report mid-year synopsis for 2016 to date and further growth is again evident.

AACS credits the growth to new innovations and the evolving trend to fresh, healthier food options.

 “The investment in innovation is having a pronounced impact and given convenience stores a new, modern relevance,” said AACS CEO Jeff Rogut.

“While our industry’s value proposition remains clear – we’re open around the clock to serve local communities – convenience stores are also attracting a new breed of customer looking for fresh, healthy, quality food and beverage options.

“This evolving perception combined with the year-on-year growth of the channel gives us plenty of reason for optimism.”

Results show food plays a vital role in profitability, with ready-to-drink beverages showing renewed strength. Tobacco again showed growth, albeit slowing, and the globally recognised paysafecard is a bright spot in general merchandise, as other communications categories decline.

A strong appetite for food

Comparatively stronger first half growth coming from food (6.2%) compared to non-food (3.1%) reinforces recent trends as retailers expand and innovate in the areas of on-the-go food (outstanding value growth of 16.2%) and snackfoods, the report suggests.

By share of value growth in the on-the-go food segment, sandwiches (22.8%), fresh cakes (19%) and hot pastry (10.2%) are in many ways driving the evolution of convenience stores, fuelling the growing perception that convenience stores are a viable alternative for healthy, fresh food options.

“Innovative operators have recognised the potential for fresh sandwiches and other On the Go Food offerings to contribute to profitability and these figures vindicate their efforts in this space,” Rogut said.

“With continued emphasis on fresh deliveries and healthy recipes, convenience stores are more and more likely to be visited by consumers looking for a quick but healthy bite to eat.”

Drink up

Ready-to-drink beverages have demonstrated solid growth (4.6%) this year to date, with hot drinks (26.2% growth) remaining the key driver, and soft drinks and water playing key roles.

In the take-home beverage category, sports drinks and water multipacks are an important contributor as consumers increasingly choose multipack options as opposed to single serves.

“Like the fresh food performance, the focus by some operators on fresh quality coffee is paying dividends and paving the way for convenience stores to be increasingly perceived as a viable alternative for a caffeine fix,” Rogut said.

Tobacco growth lays policy flaws bare

AACS figures show that growth in the year to date in the Tobacco segment (5.1%) is down on the FY 2015 result, accounting for the overall slowdown in P&C growth, although sub-value tobacco offerings continue to outperform as consumers react to additional excise increases simply by shifting to cheaper products.

“The tobacco example continues to highlight the lack of a clear link between increased taxes on certain products and improved health outcomes,” Rogut said.

“As excise is raised time and again on legal tobacco, more and more consumers are switching to cheaper alternatives, placing additional burdens on small businesses. Meanwhile the illegal tobacco market continues to flourish, with major health and safety consequences for the community.”

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