As quick one-stop shops, convenience stores have the potential to thrive in the COVID-19 era and beyond if they adapt to new retail consumer habits.
In some respects convenience stores are ideally suited to pandemic conditions. They offer a wide variety of necessities and other items. They keep long hours, often staying open 24 hours, and are generally conveniently located. Shoppers can drop in, get what they need, and retreat to the safety of their homes or cars within minutes. These small shops also provide services, such as accepting payments for utilities or online purchases. This is a must for unbanked populations, and adds value for cautious consumers wanting to limit their forays into the outside world.
Prior to the pandemic, many convenience stores benefitted from being aligned with consumers’ busier lifestyles, as well as older populations and smaller households which do not require large shopping hauls. In South Korea, they were the only category of brick-and-mortar retail to see sales growth in 2019. Mexican convenience store chain OXXO, operating about 20,000 shops in Latin America, reported a 10% rise in sales. Minimarts have been expanding in China, India and Thailand.
In other markets convenience stores have been struggling despite opportunities presented by the pandemic. Japan’s Seven & i Holdings, which owns 7-Eleven Japan and accounts for a third of the industry’s global revenues, has persistent problems that pre-date COVID-19. The Economist reports that the company’s share price has dropped by about 30% over the past two years. The sales of local rivals FamilyMart and Lawson are also sluggish, due at least in part to market saturation.
Worldwide, convenience stores are contending with supermarkets rolling out convenience store offerings of their own, such as British supermarket retailer Asda’s newly launched Asda on the Move, or Tesco Express and Sainsbury’s Local. These put convenience stores in direct competition with larger rivals. And while some pandemic shopping habits work in favour of convenience stores, others pose new challenges – notably the widespread use of delivery apps, which have essentially redefined convenience.
To compete, stores must evolve with consumers’ changing ideas of convenience, says Amanda Bourlier of research firm Euromonitor International. American convenience store chain Wawa started building standalone drive-through-only stores this summer. Another American chain, Casey’s, has successfully shifted to digital sales. South Korean and Japanese convenience stores are increasing automation. Seven & i Holdings’ 7-Eleven stores in the U.S., of which it owns about 9,000, now deliver to homes and open-air public places like parks, meeting consumers where they are.