Crisis management has probably become a way of life for convenience retailers. We know the unprecedented challenges the pandemic brought to the sector and equally we know how impressively well the sector responded. The resilience that this created could be one of the most important, long-lasting and valuable legacies of the pandemic. Why? Because as we all know we now find ourselves in the midst of another crisis: the cost-of-living crisis.
The spike in inflation above 5% is just the most recent indicator of this. For retailers, one of the most serious aspects of this has been the severe rise in energy costs. At least one high-profile retailer in Scotland has already directly attributed this to the closure of one of his stores. The other less direct, but equally important, impact of this crisis is reduced consumer demand – household consumption is the largest element of expenditure across the UK economy, accounting for almost 60% of the total in 2020. Once again, retailers find themselves in the eye of a (far from) perfect storm.
How the sector responds to this will only become clear over the next few months. However, one thing we might be seeing is a new focus on value ranges and own-label products. These have become well established in c-stores and could become a much more important part of the overall mix. It could be that the pandemic has moulded c-stores into businesses that have the right mix of categories and ranges, the right balance between online and in-store shopping, and the right mix of brands and local products. Taken together, this could get us through. At least until the next crisis.
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