Cost of living impact on convenience stores

Since the beginning of the Cost of Living crisis, we know that shoppers have increasingly sought value, which has played out in a variety of ways. Shopping more at the Discounters, planning their shopping trips more carefully or trading down to Own Label from Brands are just some of the ways in which shoppers have recently looked to save money.

While Brands have been outperforming Own Label over the past few months*, the Cost of Living impact not gone away entirely. The proportion of shoppers claiming to be Severely or Moderately impacted by the Cost of Living crisis has increased from 51% in February to 55% in November** and is expected to grow in the coming months.

However, it shouldn’t all be cause for doom and gloom. History has told us that in times of economic hardship, shoppers prioritise little luxuries in what is known as ‘The Lipstick Effect’. Expensive items like holidays or house renovations and even less expensive outlays, like eating or drinking out, take a back seat. Small treats, like Biscuits, historically sell well, give people a boost and should be prioritised accordingly.

But what else can Convenience retailers do to mitigate this potential uptick in more cautious shopper sentiment?

1. When finances are squeezed, shoppers prioritise brands. Ensure you are stocking best sellers that shoppers know, trust, and are actively seeking out.
2. Promote value in store. This could be offering link deals between complementary categories like Crackers and Cheese, stocking a range of Price Marked Packs which reassure shoppers of value or highlight the week’s top deals with clear signage.
3. With ‘Treat’ shopping missions growing ahead of the market***, give proportionate space outside of the main fixtures to Impulse products such as Biscuits, Crisps & Snacks, and Confectionery.

Ultimately, the Biscuits category has proven incredibly resilient over the last few years' inflation, with sales in Convenience having grown by nearly +30% since the Cost of Living crisis began in 2022****, which should give confidence in backing the category.

Sources:

* Nielsen 12 week ending 28th December 2024

** Nielsen IQ Homescan November 2024

*** Nielsen IQ Homescan November YTD 30th November 2024

**** Nielsen Total Market FY 2024 week ending 28th December 2024