Operators have reviewed product ranges and prices to offer consumers value for money to offset tough industry conditions.
Melbourne, Australia (PRWEB) October 04, 2014
Players in the Convenience Stores industry in Australia have operated in a rapidly changing environment over the past five years. Falling consumer sentiment, fluctuating income growth and continued competition from small-format grocery stores, supermarkets and fuel retailers have posed challenges for industry operators. Industry sales are expected to fall by an annualised 3.4% over the five years through 2014-15. Despite the tough retail landscape, operators have remained up-beat by reviewing product ranges and prices to offer consumers value for money. According to IBISWorld industry analyst Lauren Magner, “the performance of operators has been mixed throughout the industry.” The Lucky 7 network, which has the most stores, has grown rapidly as independent convenience store owners seek marketing support and the benefits of a group buyer. Industry players have failed to match the rapid growth of convenience stores that retail fuel (which are not included in the industry), especially those backed by retail giants Coles and Woolworths.
Convenience Stores industry will continue to face tough retail conditions in 2014-15. Industry revenue is forecast to fall by 1.7% over the year to $4.4 billion. Concerns regarding the increasing cost of living and the end of the resources boom are weighing on consumers. “Additionally, convenience store operators continue to face stiff competition from major grocery chains,” says Magner. Large supermarkets such as Woolworths and Coles are able to use their size and economies of scale to source products at a discount, enabling them to pass on cost savings in the form of lower prices. This has shifted consumer demand away from convenience stores over the past five years. The industry has a low level of market share concentration. Major players include Metcash Limited and 7-Eleven Stores Pty Ltd.
Retail demand will benefit from improved conditions across the domestic economy in the short term, including a rise in discretionary incomes and higher employment. However, strong competition from external retailers will affect profitability, with product margins expected to be reviewed further in a bid to match prices at supermarkets. Sales will be influenced by the flow-on effects of plain packaging on cigarette products, which was introduced in December 2012.
For more information, visit IBISWorld’s Convenience Stores industry in Australia report page.
Convenience stores sell a range of products including cigarettes, beverages, confectionery, snack foods, ready-to-eat foods, communication goods, magazines, newspapers and general merchandise. This includes milk bars and corner stores, and excludes businesses that primarily operate as supermarkets, sell specialised foods (fruit, bread, deli goods) or generate the majority of their sales via fuel retailing.
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