UK supermarket group J Sainsbury has taken over the convenience store chain Jacksons. Convenience stores are one of the key growth areas in UK retailing at present, as the major retail chains aim to attract a greater share of those consumers wishing to shop locally. Increasingly though, the key to success in this channel is to offer quality service as well as convenience, something Sainsbury must remember as it takes on 114 Jacksons stores.
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In the UK superstore sector, Sainsbury has been suffering in the face of strong competition from rivals Asda, now owned by Wal-Mart, and Tesco, which is already the UK’s largest retailer. Tesco in particular has enjoyed considerable success in rolling out its Tesco Express convenience store format, and the Jacksons deal will help Sainsbury to make up some ground.
Convenience stores are one of the last remaining retail channels for the large retailers to buy-up as they attempt to gain further market share in the highly consolidated British retail landscape. It is also one of the fastest growing sectors, to a great extent driven by consumers’ increasingly time-pressured lifestyles. The UK is Europe’s most valuable market for convenience stores with food and drink sales worth £13bn (US$23.7bn) in 2003. There are currently 55,000 stores of this type on the UK.
There have been several mergers and acquisitions in this sector recently. Back in June Musgrave, the Irish company that owns the Budgens chain of stores, bought the Londis chain of 2,200 convenience stores in a deal worth £60m.
The expansion of the convenience channel reflects growing consumer demand for quality as well as convenience. Convenience stores are used to buy products for immediate use, often because consumers have forgotten to acquire certain items during their main grocery shopping trips. For many, “value for time” is replacing “value for money” when shopping in convenience stores, again supporting the idea that shoppers are no longer willing to compromise on quality in the convenience setting.
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By GlobalDataTo succeed in this segment, it is not enough for retailers to offer local shopping opportunities alone; the emphasis must be on attracting custom by replicating the high standards of service and product quality found in the major supermarkets. Sainsbury should bear this in mind as it commences its stewardship of the Jacksons chain.
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