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Retailers Go Small As ‘Immediate Needs’ Drive 61% Of Shopping Trips Featured

  • Written by  Glenn Taylor
Retailers Go Small As ‘Immediate Needs’ Drive 61% Of Shopping Trips

As traditional retailers continue to struggle with drawing in foot traffic, the industry’s largest brands are thinking small. Walmart, Target, Dollar General, Whole Foods Market and even Amazon are building smaller format stores to cater to a more mobile, urban, on-the-go consumer. In fact, small format retail categories — drug, dollar and convenience stores — outgrew larger format stores by almost 400% in 2015, and now make up a more than $1 trillion market.

The Rise of Small Format Retail report from Koupon Media attributed the decision to go small to three macro trends:

  • Demographic changes: nearly 85% of Americans live in or around urban areas;

  • The move to online shopping; and

  • Shifting consumer demands.

 

I Need It Now!

Immediate needs purchases — purchases with an urgent or instant need for a particular product — account for 61% of shopping trips and are often done at convenience, drug and dollar store formats, according to data from Nielsen.

“If consumers are looking for fresh foods, make sure you have that right assortment,” said Bill Ogle, CEO at Koupon Media in an interview with Retail TouchPoints. “At the end of the day, shoppers don’t want to have to walk through 13 aisles to find the product they want, but they’re still looking for higher quality food and beverage. You’re starting to see convenience stores such as WaWa and Sheetz becoming almost like fast-casual restaurants on the inside, with salads being made and baked goods served every morning.”

The average trip in a convenience store is under four minutes, which is 34 minutes less than consumers spend in larger format stores. One third of the shoppers at convenience stores are Millennials.

“There’s an importance in immediate consumption,” Ogle said. “Millennials are not shopping for 150 items once a week at a grocery store. They’re filling up their gas tank, grabbing three or four items and they’re going. The consumer is shifting the way they buy, and because of that the retailers are starting to wake up and realize the way they conduct their business isn’t going to work going forward. And guess what? A small format store is a lot cheaper to open than a big format store.”

While cost is a vital element in a  retailer’s decision to move to smaller stores, location plays a major factor in the consumer’s decision to shop there. More than half (51%) of Millennials say that a store’s location is most important when deciding where to make a purchase.

The Four Types Of Shopping Trips

The Koupon report cited Nielsen data identifying four types of shopping trips, each representing a different consumer objective, frequency and average transaction size:

  • Immediate Needs (61%);

  • Fill-In: The need to quickly purchase items forgotten or consumed since the last routine trip. These trips account for 21% of shopping trips and are done at convenience, drug and dollar formats;

  • Routine: Weekly higher value trips, often focused on food and perishable goods. These trips account for 12% of shopping trips and are done at grocery, mass and club formats; and

  • Stock-Up: Infrequent, large basket trips with large amounts of food and household items. These trips account for 6% of shopping trips and are done at mass and club formats.

As shopping trip types move more towards immediate gratification, mobile will have an even greater impact on the small format store experience. Mobile provides a marketing vehicle that makes it easy to discover, activate and redeem offers in a short time. And with more shoppers adopting one-click and pay mobile payments platforms such as Apple Pay and Android Pay, checkout times themselves can decrease.

“I can pay for my products without having to bring a credit card in,” Ogle said. “I can get faster checkouts by being able to pay differently, I can get savings by mobile offers, and I can find location data and nutritional information. All of those things perfectly fit into the convenience about speed and ability to consume it on the go.”

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