Convenience beats price for British shoppers

- Last updated on GMT

Related tags: Shoppers, Mintel, Loyalty program

Britain's leading supermarket groups have been moving rapidly into
the convenience store sector in the last two years, seeing real
opportunities for growth by bringing their low price offer closer
to their customer base. Yet a new report suggests that it is the
convenience - and not the low prices - which really attracts
shoppers, reports Chris Jones.

New research from market analysts Mintel​ shows that location, and not price or range, is the number one factor for most British shoppers when it comes to choosing which store to frequent. Indeed, shoppers are twice as likely to opt for a store which is 'the easiest to get to' than be swayed by the prices, according to Mintel.

While 50 per cent of those questioned by Mintel said they picked the closest store for their shopping, just 26 per cent said they looked to purchase their groceries from a store which is cheapest to shop at, while just 22 per cent said they opted for a store which offers the best range of produce.

"Although price is of some importance, location is crucial in the battle to win shoppers' trade,"​ said Neil Mason, senior retail analyst at Mintel. "The high emphasis placed on the store being close to home shows that it is actually quite hard for grocers to break established shopping patterns."

Sweeping price cuts by Tesco, Asda and Morrisons have pushed the cost of British grocery shopping to all time lows in recent months - and indeed have left traditionally higher-cost operators such as Sainsbury and Marks & Spencer struggling to keep up. But companies also need to invest in new store developments, covering as broad a base as possible to ensure that the demands of all their shoppers are being met.

"There is so much that can be done with the price, products and overall shopping experience, but it is significantly harder to change the location of a shop. Retailers need to be aware of the importance of accessibility, by considering a variety of store formats, such as local convenience stores, high street shops or out of town supermarkets, to make shopping increasingly convenient for consumers,"​ he said.

The relative lack of interest in low prices in the UK market is also reflected in the low acceptance of discount stores. While Mintel's research shows that some 53 per cent of British adults shop at discounters, just 2 per cent use them for their main shop.

"Although our research shows that discounters are becoming less popular for regular shopping trips, they are clearly becoming increasingly popular for the occasional purchase. There has been a move towards cherry picking, as the canny shopper simply heads to the discounter for a few selected good value favourites. Ironically it is the more affluent consumers who are most likely to opt for this way of shopping,"​ said Mason.

Nonetheless, as the shopping habits of UK consumers are heavily convenience-oriented, many simply cannot be bothered to make a separate trip to a discounter to get part of their weekly food shop. The temptation of exceptional offers on non-foods as well as very low prices on basic foodstuffs has not radically altered the purchasing patterns of the majority of UK consumers, Mintel suggests in the report, entitled Customer Loyalty and Discounting in Retailing​.

"The issue is how discounters can leverage buying strength to attract more shoppers and win a bigger market share. Spending more on marketing communications is essential if they are to convince potential shoppers that the shopping experience can be a positive one, as well as save them money,"​ commented Mason.

British retailers have also been among the most prominent in developing loyalty card schemes, offering a range of offers and services to customers who regularly frequent their stores. But the jury has been out for some time on whether such schemes really do entice shoppers back into stores on a regular basis, and Mintel's data does little to clarify the matter.

While 65 per cent of consumers claim to regularly use at least one loyalty card, with the big three schemes (Tesco Clubcard, Nectar and Boots Advantage card) amassing some 11 million regular users in 2004, Mintel's report shows that almost half (49 per cent of adults would still prefer to "have lower prices than points or incentives"​, up from just 34% in 1999.

It is perhaps not surprising, then, that 40 per cent of those participating in loyalty schemes take the rewards as a cash discount each time they shop.

"The loyalty card, and the rewards offered, are likely to be viewed as an integral part of a retailer's offer. The reason why many participants simply redeem the points for a cash discount is because they have no emotional attachment to the scheme. Shoppers often dispassionately collect what is offered and redeem it when they have an opportunity,"​ said Mason.

"Retailers' use of loyalty cards has increased, which shows that retailers in general are 'pro' loyalty cards, but they must be aware that clear and simple schemes work best, and need to keep in mind that most people will take rewards as a discount."

Indeed, the main benefit to the retailers of loyalty card schemes is not necessarily the regular custom from cardholder but rather the information the card contains about each shopper's purchasing habits.

"Retailers need to be aware that it is the information gained from tracking consumer spending and shopping behaviour that is the key to the added-value facet of loyalty cards. To get optimum value from these schemes, retailers have to use this information intelligently,"​ Mason said.

Related topics: Market Trends

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