- Consumer need for speed and price will drive faster growth in discount and convenience stores than other offline retail channels over the next five years, according to an analysis from Edge by Ascential.
- Growth for the non-food discount, food discount and convenience store segments will grow at an estimated rate of more than 5% annually, while other retailers (excluding membership club stores) will grow at an annual rate of 3% or less, the company said.
- Convenience stores are expected to have the highest growth at 5.4%, while food discount stores will have a substantial gain in overall share, increasing 9.7% by 2024, up from 8.8% today.
The analysis says a few factors are influencing the growth in these offline channels. First, the continued growth in urbanization drives more consumers to shop convenience stores. Additionally, as household sizes continue to decline, consumers are choosing smaller shopping trips on a more frequent basis.
People are staying single for much longer, with women waiting to marry on average until they are 27 and men until they are 29, compared to 21 and 23 respectively in 1968. When it comes to consumer spending, unemployment has maintained an all-time low but wages are relatively stagnant, meaning consumers feel secure with their incomes but aren’t seeing much growth in their individual spending power.
These factors position convenience stores and discounters as appealing options. Convenience stores are taking new forms including micro-groceries like The Market on Michigan Avenue. Others are morphing into more than just roadtrip pit stops, with foodservice accounting for 23% of convenience store sales, reflecting a 3% climb over the last five years. Some grocery retailers are experimenting with the c-store format, like Hy-Vee, which launched its Fast & Fresh concept in the Midwest earlier this year.
Discounters, in particular, appear to be gearing up for increased demand, with openings of discount grocery stores accounting for more than half of store openings so far in 2019. The stores have been gaining momentum particularly in rural areas where there aren’t as many grocery options and where major retailers like Amazon have been unable to penetrate the market.
Discount stores also appeal to lower-income neighborhoods and families in a way that mainstream retailers cannot. Consumers may value things like grab-and-go foods and in-store experiences like wine tastings or live music more than a good bargain these days, but should the economy take a downturn, consumer shopping habits will change as well. A recession is a real possibility, according to Bloomberg, which reported a 27% chance that one occurs within the next 12 months.