Australia’s convenience industry has enjoyed another year of solid growth, according to the ‘AACS State of the Industry Report 2017’ and is now valued at $8.4 billion in annual sales. However, the report also revealed the channel’s rate of growth has slowed for the first time in five years.
Take-home food, on-the-go food and sub-value cigarettes lead the way by displaying healthy gains, while categories communications, printed materials and travel tickets saw an $88 million value decline in the convenience channel.
But despite the slightly slower rate of growth at just one per cent, AACS CEO Jeff Rogut could only see the positives when he commented on the report.
“The convenience channel recorded a positive result in 2017 amid challenging conditions where the impacts of several expected trends were felt more sharply,” he said.
“The importance of a quality food offer has been reinforced while the need for stores to offset declines in communications and travel ticket sales has long been anticipated. It puts the focus squarely on innovating to ensure convenience retailers and suppliers continue to provide an attractive value proposition and relevant product offers in the most convenient, customer-centric environment possible.”
Despite the decline in value of non-food categories, food and beverage showed its strength in the market. Take-home food sales were up 18 per cent in 2017, and the on-the-go food category showed an impressive 13.3 per cent growth over the course of the year with an extra $63 million in sales.
“These strong results in particular reinforce the need for the industry to continue to innovate in the food area to provide consumers with a broader range of high-quality, fresh and healthier options,” Mr Rogut said. “While we have become a solid destination for quality coffee, day parts such as breakfast and evening meals still offer us opportunity.”
The tobacco category showed 3.4 per cent growth in 2017, generating an additional $105 million in sales. Growth was driven by increased sales of sub-value cigarettes, showing that consumers continued to trade down against a backdrop of excise increases.
“The continued strong performance of the tobacco category should not only provide clear encouragement for the government to crack down on the illicit tobacco market and protect its cash cow, but also highlights the potential demand for products like e-cigarettes to provide safer alternatives for consumers who may be looking to quit smoking traditional tobacco,” Mr Rogut said.
Looking ahead to Convenience 2030
After a challenging year for the Australian convenience channel, the focus now turns to opportunities that could shape the industry. While there’s a consensus of the opportunities to be capitalised on, and threats to be managed, there’s equally a consensus that no one really knows where the industry will be by 2030.
The AACS commissioned Monash University to complete the ‘AACS Convenience 2030’ report not to provide a definitive answer to this question, but to provide a pathway to get there. The report will include the opinions of industry thought leaders that highlighted health and wellbeing, digital engagement, culinary culture and sustainability as key emerging trends to watch.
“The key question for us as an industry is, how do we tap into these trends?” Mr Rogut said. “New opportunities for the sector identified in ‘Convenience 2030’ include forming strategic partnerships, attracting new customer segments, reinforcing the true value of convenience, innovating cautiously and reframing threats as opportunities. How our industry takes advantage of these opportunities will determine the success or otherwise of convenience operators over the next 12 years.”