Retailers missing £480 million convenience opportunity
Retailers can add £480 million to the convenience channel by improving their spirits ranges, according to First Drinks.
The spirits category is worth £729 million in the convenience channel but only enjoys 1.2% penetration (IGD 2012).
However the figures - part of a new First Drinks report called How Convenient - suggest 2% of shoppers go into a convenience store intending to purchase spirits, but 0.8% are put off by poor ranges and bottles kept behind tills.
Converting these customers would add £480 million.
John Moore, business unit director for convenience, said: “There’s a real opportunity if we break down these barriers to purchase.”
He added that if convenience retailers can achieve the double-digit penetration seen in supermarkets the opportunity could be huge.
The supplier has come up with five “growth drivers” – fractionals, versatility, seasonal events, gifting and premiumisation – to boost sales.
One in four spirits sales in convenience is now a 35cl bottle and this segment is seeing 5% growth year on year (IGD, November 2012).
“It’s about having a good range but also stocking under developed categories like malt and cognac,” said Moore. “You should stock 35cl bottles of these to encourage purchases.”
In terms of versatility, First Drinks said cocktails are in 10% growth year on year in the on-trade and we are seeing that demand move into the convenience channel.
It also revealed that week that follows Christmas and takes in New Year sees the highest level of spirits sales.
Moore said: “The importance of Christmas is well known and continues to represent a big opportunity for retailers but there is scope for development over the festive period.
“With supermarket opening hours changing, weather issues and most shoppers on a top-up shop, convenience retailers are perfectly poised to be the number one retail channel in the week leading up to New Year.
“The convenience channel also benefits from sales uplifts on other events such as Father’s Day, Valentine’s Day or Halloween with shoppers on impulse and top-up missions.
“There are also birthdays to consider which provide a year round opportunity and are the number one gift buying occasion.
“By understanding that gifting solutions for impulse shoppers will boost sales and footfall, First Drinks is offering a range of gifting solutions accessible across price points and categories throughout the rest of the year.”
Finally, the premium spirits market is now worth £219m (Nielsen MAT to March 2) – up by £25m over the last two years.