The Co-op: Creating in-store excitement

It is no longer unusual to see queues at convenience stores across Britain and the pandemic has driven people to shop locally and less often, supplemented with online delivery orders.

The Co-op, with 2,600 stores across the country, has had to deal with all these consumer trends, while also trying to keep staff and customers safe, including vulnerable and elderly shoppers.

And with the on-trade closed or limited in customer numbers for most of this year, the BWS section in Co-op stores has been put under more pressure than ever before.

Drinks Retailing caught up with the company’s head of drinks, Simon Cairns, to find out more.

Cairns says one of the interesting changes the Co-op has had to deal with is a drop in the frequency of each customer’s visits, a factor that has always been the lifeblood of its stores in the past.

He says: “The frequency has actually been down as people limited the number of shopping trips, but the basket spend has gone up considerably, and with that we have seen greater demand for some of those larger packs that perhaps haven’t been as significant in our convenience offer historically.”

For BWS this has meant a surge in sales of large packs of beer and cider, and also bag-in-box wines, all of which have seen volume grow exponentially. In order to deal with this the Co-op has had a fantastic level of support from the supply chain, he explains, and this has been particularly important when you consider that small stores can’t carry a huge amount of stock.

He says: “We had to make sure we could keep stores stocked up and this was even to the extent that we worked with the likes of Matthew Clark, which is very much an on-trade delivery service, but because its wagons were underutilised we were able to use them, particularly for the Budweiser lines. It has been interesting looking at opportunities like this.

“I think we are guilty sometimes in the off-trade of treating it as a very segregated sector of the industry and I think with everything that’s happened we should consider whether there are opportunities within the on-trade channel when we look at how we serve customers.

“The on and off-trade are intrinsically linked and trying to segregate them completely is just not reality. There are many businesses out there that need both elements of our industry to succeed.”

Another important channel for the Co-op in recent months has been its online ordering and delivery service.

Cairns says: “Sales for online have more than quadrupled during lockdown, either through Deliveroo or from the Co-op ecommerce app, and it has played a really significant part in helping customers remain connected to our offer. Also it has attracted new customers.

“I think via Deliveroo over a third of those shoppers had never shopped with the Co-op before.

“It’s interesting in that it has provided us with a broader reach of customers than we would have expected.”

PRODUCT MIX

With new customers discovering the Co-op and loyal fans shopping in different ways, keeping track of what is selling well is more important than ever.

Cairns points to spirits as the most consistent category in terms of its positive like-for-like sales, particularly rum, which has performed ahead of gin for many weeks now.

Within gin it has been the flavoured sector that has been growing quicker than the rest of the spirits category, although the company has also seen a return to classic London Dry styles.

He says: “With rum it is mainly spiced where we are seeing growth, but we are starting to introduce new flavours and this is a category ripe for further expansion. It will be interesting to see how well it performs through the winter months, because it has done so well for us over the summer.”

Beer and cider sales have been strong, he notes, although these categories are less consistent because they are very weather specific.

Throughout the pandemic the wave of NPD from the drinks sector barely slowed, and this was important, Cairns says, because it created a point of excitement.

“When you are stuck at home then what you pick up and what you consume can break up quite a routine or mundane experience. It is important now more than ever to introduce this excitement just to keep consumers engaged.”

For Christmas, Cairns and his team are introducing crémant, which has not been in the range for a few years.

He says: “We are starting to see that growth of what I call the midtier between Cava or Prosecco and Champagne.

“Also, for Christmas we have lighter styles of red, things like Beaujolais, that typical fruit-forward style that was traditionally a summer drink, but it seems to be a trend that is growing.”

He expects to see increased caution with spending going forwards, but a continued trend towards luxury spend directed at grocery shopping.

He says: “Certainly I think that’s our mindset when we look ahead to Christmas. We want to be able to offer a bit more enjoyment and a bit more intrigue to customers.

We don’t know what kind of Christmas is ahead but it won’t be big groups socialising, and it’s likely to be more at-home than out-of-home, and that will suit our style of thought and our offer, particularly at the time of year when people want some indulgence and a little bit more of a treat.

“For us it’s about having a really clear tiered offer. So yes, this will include a value offer, similar to what we have done in the past and we will have really attractive prices. Last year we had a lot of success around the £7 price point.

“We had lots of classics: port, Malbec, New Zealand Sauvignon Blanc, Prosecco, and those all did really well, but do we believe we can go further? Yes.

“I think you could drive yourself slowly insane trying to plan ahead for this Christmas. Yes, people are shopping less frequently and they are shopping more locally but I think we can stick to the basic principles that consumers are still wanting to consume. They still want good value and good quality products.

“I think we can put even more of a premium offer in there as long as it is an attractive price and does encourage people to think they can treat themselves and that’s what you will see more of this year.”

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