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The Long Read: How the impulse channel is altering the retail map

Published:  17 September, 2020

Angela Mount reports on the dramatic growth of wine and alcohol sales in both the impulse and Cash & Carry channels.

Much has been written about the colossal rise in off-trade and online sales, as consumers purchase for home use and go out less. But with the alteration in shopping habits to smaller, local, convenience stores, the impulse channel has also seen seismic growth, as have cash & carries (C&Cs), which supply much of the independent small stores and corner shops. This is a sector of the market that is frequently overlooked in terms of focus, given the dominance of supermarket retail, but also a sector that over the last six months has grown exponentially and altered the retail map.

Kantar data for the four weeks ending 4 July shows supermarket total grocery sales up 28.5%, while the convenience sector soared by 63%.

Within this, the breakdown indicates that symbol groups (branded fascia local stores) and the independent small retail sector has seen a massive 94.7% growth; this is largely due to a combination of increased penetration (customers switching from other retail sectors or brands), purchase frequency, increase in trip volume and also shoppers won from larger stores.

This trend is most prevalent in the north, with a growth in penetration of 19.2%, whilst empty nesters show the highest contribution to growth in this category, with a 26.1% increase.

The phenomenal boost in sales at the Co-Op, second only to Ocado in terms of the biggest winners, clearly manifests these trends. The acquisition of Nisa by the Co-Op in 2018 has continued this pattern, with Co-Op products now sold in Nisa stores, resulting in an increase in penetration of 40.5%.

Kantar data for the 12 weeks to 14 June shows clearly that customers are shopping increasingly in local small stores, with average price per item rising as they increase average basket shop, while purchasing less frequently.

Spar is the leading symbol group in the UK and continues to experience the overriding new shopping pattern. Penetration is up 34.4%, with average number of items purchased up 59.5%, along with average price, which has increased by 13%.

Matthew Fowkes, trading manager for wine and fortified wine at Spar, stated that key wine brands have seen strong growth and that within the private label sector, strong sales have been seen in its Regional selection, with recognisable styles such as Gavi, Malbec and Sauvignon Blanc.

“Consumers have been able to try wines from our stores that they would have usually seen and bought in restaurants,” he said.

“However, while consumers have opted to treat themselves and trade up a little on wines, our Taste and Alphabet varietal ranges have continued to grow as customers recognise the value for money that these products represent.”

The picture is even more dramatic at Costcutter, albeit from a smaller base, with a 66.7% surge in customer penetration.

C&Cs have also seen a massive boost to sales, particularly with increased purchasing from small independent stores. However, data on this sector is difficult to track and limited to individual company stats. The indications are that wine sales growth has been largely focussed on key, recognisable brands.

Patrick McGrath, managing director of Hatch Mansfield, which represents well-established brand Villa Maria, corroborates this: “We have seen great growth for Villa Maria in both cash & carrys and symbol groups, as consumers shop more locally and gravitate towards brands they recognise.”

Kim Wilson, managing director and joint founder of North South Wines, which represents well-recognised brands such as La Giosa Prosecco and Black Tower, knows more about this sector than most, with 20% of total business focussed on impulse, growing to 27% over the last four months.

“Buyers in this sector are some of the toughest negotiators, but also fiercely loyal and supportive once relationships are locked in,” she said.

“C&Cs are never an afterthought for us and our customers appreciate this, particularly with attention to availability of stock in the current situation.”

Arguably, one of the greatest successes in symbol groups and C&Cs has been I Heart, launched 10 years ago and now a major global wine brand with sales close on £30 million a year.

Robin Copestick, MD of I Heart owner Freixenet Murray, explained: “C&C and symbol groups have been very important to [our business] for many years. This is how we launched I Heart in 2011. The sectors are very dynamic and pro-active and a great way to get straight to the consumer.

When I Heart was launched by Copestick in 2011 some major grocers were not convinced but “the C&Cs and Symbol Groups immediately saw the opportunity. The buyers are often very open to ideas, and it is a great way to launch products”.

“We give a huge amount of attention to this sector,” he continued, adding, “I Heart has been a great example of what can be achieved”.

With regard to working in these sectors, Wilson explained that the strategy is very different.

“The range is very brand focussed and more limited – the first sight of a product for a retailer purchasing from a C&C is the outer case, so we have to invest in this. Advertising your product is key, featuring on retail clubs is crucial to drive distribution,” she said.

“Not all customers operate the same way. We have a bespoke plan for each customer, depending on their end consumer. The effort and energy that we have put into this channel is really paying back now, as the sector is showing unparalleled growth during the current crisis.”

Symbol groups and C&Cs are sectors which are often missed in mainstream off-trade statistical reporting, but are now becoming increasingly important. And this is something Wilson and Copestick realised early on, putting them well ahead of the game.