Why convenience stores have made it onto investors’ shopping lists
Throughout the lockdown period in Europe many shoppers avoided the queues and longer trips to supermarkets in favour of the convenience of neighbourhood stores. As a result, local food outlets and medium-sized supermarkets in urban areas have seen their footfall and revenues significantly increase, despite the concurrent rise of online shopping.
According to Kantar, sales at independents in the UK were up 63.1 per cent in the 12 weeks from the start of lockdown to mid-May. This is in sharp contrast to non-essential retail shops, cafés and restaurants, which were hit hard throughout the height of the pandemic.
Covid-19 has therefore demonstrated to the industry that local retailing is likely to prove more resilient to the impact and disruption of e-commerce than prime retail destinations. This follows the trend of the importance of community and convenience retailing that we’ve been reporting for some years now.
New research from YouGov suggests that over 70 per cent of British people will continue to shop locally to some extent. We therefore expect to witness the resurgence of retailer interest in neighbourhoods and towns with sizeable and growing residential stock, and consequentially anticipate an increase in investor demand for these assets across the continent.
In Paris, mayor Anne Hidalgo has built the cult of convenience into her re-election campaign with the ‘15-minute city plan’, an urban planning strategy with the purpose of creating self-sufficient communities with nearby amenities to cut pollution and reduce stress levels.
Institutional investors are already choosing to add supermarkets and local community centres to their portfolios, taking advantage of their defensive characteristics and stable income streams. Open-air retail formats focusing on value and essential goods and outlet centres, which offer bargains in spacious environments, may also benefit from this trend too.
Convenience stores can also offer opportunities for value enhancement. These retail formats, especially smaller independent stores, may have been busier than ever during the lockdown, but in order to remain relevant and attractive in the future they also need to invest and prepare for the evolving changes in consumer behaviour, the drop in consumer spending and the increasing competition from online shopping.
Contactless experiences, technology investment, enhanced in-store safety and hygiene standards are some strategies to better engage with the consumer and create confidence and loyalty.
In a post Covid-19 world, however, with many more people now opting to work from home two or three days a week, the future certainly does look bright for those smart local food stores offering convenience, value and safety.
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