By Chris Blasinsky
LONDON—In the latest Global Convenience Store Focus episode of Shop Talk LIVE, “Convenience in Australia,” host Dan Munford was joined by NACS Regional Representative Brett Barclay, director at Convenience Measures and the Australasian Association of Convenience Stores, for insights on the innovative and fast-growing Australian convenience retail market.
Australia has successfully managed the COVID-19 crisis, although the country is not quite back to normal. For retailers like 7-Eleven Australia and Bowser Bean, the pandemic hasn’t slowed innovation and meeting customer needs at the local level.
Barclay noted that convenience retail in Australia during 2020 exploded: Sales totaled more than $9 billion from more than 7,000 stores, and the average transaction was $9.69 (excluding fuel). For fuel-only transactions, 40% of customers in 2020 frequented a store to fill up, down from 50% in 2010. The decline in fuel-only traffic signals that convenience stores are shifting from a gas-only mindset to driving more customers inside the store with relevant food and beverage offers. These 10-year investments came to fruition during the pandemic as more consumers relied on their local convenience store for food and beverages and fuel.
The pandemic also revealed changes in shopper behaviors. Sales of in-store merchandise—notably snacks, bread, coffee, cigarettes and milk—increased from March 2020 to May 2020. Like stores around the world, Australian c-stores also saw an uptick in sales for paper goods and grocery items and food to-go.
Moving forward post-pandemic, will these behaviors stick? Categories like grocery are holding on. Also, consumers signal growing trust shopping the convenience store channel (51% of consumers) compared to small grocers (43%), the milk bar/local store (39%), big box retailers (41%) and large supermarkets (43%). This sentiment was not born overnight, Barclay said, suggesting that retailer investments in building consumer confidence has been a long-term process that COVID-19 brought to the surface.
“People are shopping more locally than they ever had, and I think that’s going to say around for a while,” said Barclay.
Australian c-stores were quick to implement safety measures like Plexiglass, distancing cues and cleaning/sanitizing protocols that added to their consumer confidence. “It would have been diabolical for this channel 10 years ago if they had the same foot traffic drop-off,” Barclay said, noting that some retailers experienced a 60% drop in fuel volume when the pandemic hit.
Angus McKay, CEO of 7-Eleven Australia, said that the pandemic accelerated five years of digital development in 12 months. “We had to move rapidly” to continued focusing on customers, employees and the franchisees. “Up front we had a moment of shock to see if you could stay in business, but it was a short shock,” he said.
Also, the customer’s digital journey accelerated in a short period of time, said McKay, which coincided with the retailer’s journey to meet customer needs as they shifted into the digital space. In 2019, 7-Eleven Australia won the NACS Asian Convenience Retail Technology Award for its innovative 7-Eleven Fuel App that allowed users to lock in the best local fuel price at one of the 520-plus 7-Eleven fuel stores throughout the country. Today, through the My 7-Eleven app, users can access the same feature.
The company is also testing a mobile payment feature that allows customers to scan and pay for items through the My 7-Eleven app. “Like many convenience stores, the queue can be your enemy,” McKay said, adding that most people spend about 90 seconds inside a 7-Eleven store. “We’re giving people the option to pay on the app and completely bypass the queue.”
Lastly, store format innovation has not slowed for 7-Eleven Australia. The company operates a 65-square-meter cashierless store in an office building that caters to food occasions for workplace environments.
“Coffee is king in our stores with office workers,” McKay said. Another cashierless store located in Brisbane on the 23rd floor of a skyscraper exclusively serves “office-bound” call center operators who occupy three floors of the building.
“We still believe that in the midst of a pandemic we should be opening stores,” said McKay.
But First, Coffee
Haydn Tierney, managing director of Bowser Bean Café—Vantage Fuels, was inspired by Melbourne’s unique café scene to create a service-station format that appeals to coffee customers.
The retailer operates Bowser Bean concepts in 31 bp- and Shell-branded stations in Southeast Australia. The sites have traditional Australian food and coffee offers located in smaller towns. “We haven’t had to compete with the larger QSR brands,” Tierney said, which helped the company establish its food offer of burgers, sandwiches and slushies in these markets.
“Australia has a booming coffee culture. We take our coffee seriously and it’s a very diverse and well-developed café market,” Tierney said, adding that Starbucks is gaining a strong foothold in the Australian market, which is dominated by local and small cafés. “To communicate to our customer that we take our coffee very seriously, we fit out [design] our service station as if they were premium cafés,” featuring ample and comfortable seating, washing stations and free Wi-Fi, he said.
In the next episode of Shop Talk LIVE, “SPAR International–A Global Perspective,” SPAR International’s Managing Director Tobias Wasmuht and Head of Brand Gary Harris will take attendees on a tour of SPAR stores around the world. Register today for the March 19 webinar.
For more on convenience retailing in Australia, be sure to read “Convenience Down Under” and “Life After Lockdown” in NACS Magazine.
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Chris Blasinsky is the NACS content communications strategist at NACS.