Discount loyalty card promotions are making it increasingly difficult for independent convenience stores to compete on price, new data shows.
According to recent research from TWC, in collaboration with The Federation of Wholesale Distributors (FWD), independent c-stores are aligned to the convenience multiples on base pricing.
Audits conducted by the data consultancy company show that prices have increase by 11% in independents, by 13% in Tesco Express and 17% in Tesco supermarkets in January 2023, versus November 2021.
However, as Big 4 grocer Tesco includes its ‘Clubcard’ loyalty scheme at its convenience formats, which offers disounts of up to 35%, independedent stores have found it harder to compete with multiples on pricing.
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To tackle this, interviews with 150 independent and symbol retailers, found that 93% are trying to offer superior customer service and 89% are supporting local charities and intiatives.
Many are also looking to compete on price, with 78% offering a wider range of cheaper products, 65% providing more own-label, and 39% are price matching its competition.
“Base pricing in our audit shows that PMPs are working to create a parity on price, however encouraging tactical promotional activity as well could be a big win for the retailers who are not already doing this,” TWC development director, Tom Fender said.
“Promotions can encourage a number of behaviours – from driving footfall; increasing spend once shoppers are in store; trialling categories they didn’t intend to purchase; and encouraging trade up to better and best tiers.
“Our research evidences who is shopping in the independent convenience channel and it is not necessarily driven by cheapest on display – the shopper is not lower affluence and therefore these stores do not need to be the cheapest all of the time.”
Fender said that cash-strapped customers might also be avoiding the convenience channel entirely to shop at the discounters.
He added: “We also know that households shopping at these stores are likely to be time pressed. We believe there must be a strong EDLP offer to drive loyalty and encourage shoppers to visit habitually, together with tactical promotions with clear objectives.”
