Three areas for investment, says IGD

IGD senior business analyst David Shukri has struck a warm note in his latest briefing on the convenience industry as regards the performance of independent shops.

Combing through the data, which is widely used by major packaged goods companies in planning their route to market in the UK, Mr Shukri observes that average sales per store increased across all segments of convenience in 2010 “showing that those who remain…are becoming more efficient and effective operators.”

For the first time, the non-affiliated retail sector gets a warm review, with the IGD noting that is still accounts for 20 per cent of sales (more than the multiples). However the stars are the symbol group operators, with sales up 9.2 per cent in the past year, which highlights “how compelling their offer is, both for unaffiliated independent retailers and the shoppers they serve.”

The impact of Waitrose and Morrisions will be a further emphasis on fresh food, suggests Mr Shukri.

Overall, the IGD sees three areas for investment:

• in store standards to match the multiples, with increasing emphasis on fresh foods
• better communication of the value proposition (promotions)
• better communication of the values you hold (local-sourcing, community-facing, environmentally friendly etc).

Altogether, room for optimism, especially if partnerships with the major packaged goods companies can be developed so independent retailers win back some marketing investment from the multiples.