Covid-19 can’t keep us down – the effect and the recovery
The Petrol & Convenience channel has been significantly impacted by the restrictions imposed due to Covid-19. However, it’s not all doom and gloom as we start to see signs of early recovery in specific categories and states.
Working from home’s impact on the convenience channel
Consumers are reacting and adapting, and like all retail, the Petrol & Convenience (P&C) channel has been significantly impacted by the restrictions imposed due to Covid-19. The P&C channel (Food and Non-Food) is worth $5billion in Australia, and despite the tumultuous past six months with the bushfires, and now the seemingly unending “coronacoaster” the channel has had a modest 0.4 per cent value growth (Source: IRI Convenience Scan June 14) compared to the same period last year.
However, not all categories saw growth, with 68 per cent of Australians forced to work from home, more than 10.5 million Australians’ daily routines had changing, impacting Automotive, down 18 per cent, Snack foods, down 12.2 per cent, Confectionery down 9.5 per cent, and Ready to Drink Beverages down 7.6 per cent compared to the same quarter last year.
The ‘Covid Effect’ generated growth in convenience
However as expected certain categories have seen significant increases as the channel became a destination for consumers wanting to avoid the disappointment of out of stocks at traditional supermarkets, as well escape large crowds.
In the quarter to June 14, total household products were up 12 per cent while total grocery categories were up 14 per cent compared to the same quarter a year ago. As traditional supermarket consumers would have directed their spend towards convenience stores to stock up on cleaning essentials. Such as Household Cleaners up 173 per cent, Household Disinfectant up 253 per cent and Bleach up 132 per cent in the quarter to June 14 versus same time last year.
As expected the channel performance is significantly different by state. Looking at the same quarter compared to last year Western Australia is up 8.5 per cent, South Australia by 5.4 per cent and Queensland by a modest 2.9 per cent. However, as expected, Victoria declined by 6.9 per cent, NSW by 2.5 per cent, and Tasmania by 2.7 per cent.
Whilst there is hope, there is still a tough road to recovery
The glimmer of hope for all retailers has been the lightning fast adoption of online shopping which saw e-commerce gain 80 per cent increase over the eight weeks to May 15, compared to last year. It will be fascinating to see whether or not the consumers forced into online shopping remain there when physical stores reopen.
While certain categories were less impacted and some states are showing early signs of recovery, it is still very unclear what the road to recovery looks like for the convenience channel.
- About the author: Justin Nel is Lead Consultant at IRI
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