Here at The Strategy Distillery we will be watching Philip Green’s (p.38, Grocer 7th June 2014) foray into grocery convenience under the BHS brand with fascination. Of course it’s surprising news, and yes there is already plenty of excitement going on with the shake up in Grocery heralded by Aldi & Lidl’s successes. But we think it’s a good bet, as he appears to embrace three major UK trends to develop this grocery innovation proposition:
- Urban Population Growth figures suggest that in the UK, by 2030 around 92.2% of the population will live in the city (up from 79% in 1950). And that its big cities are growing faster than ever: The Economist quotes that: “Manchester’s population grew by 19% in the ten years to March 2011”…handy then that BHS’ store locations are largely central/located on high streets.
- Smaller, less frequent shops Kevin Barrett Sainsbury’s Director of Space and Formats sums this up talking to ‘Just Food’: “Convenience sales are underpinned by demographic drivers such as urbanisation as well as changing shopper habits, Barrett says. According to his assessment, consumers are tackling issues such as food waste by making more frequent shopping trips with smaller basket sizes” – which BHS’ high street and city outlets are poised to deliver.
- Ageing population: It’s probably fair to assume that BHS’ primary target is largely comprised over over 65’s. This is one of the UK’s largest growing demographics as cited in Age UK’s latest fact sheet: “The number of people aged 65+ is projected to rise by nearly 50% (48.7%) in the next 20 years to over 16 million”
What will he do next?
Aldi and Lidl’s rapidly gaining share indicate that consumers have an appetite for discounted quality. But these retailers are often not geographically positioned to capitalise on the growing need for grocery convenience (especially urban). So a smart move by PG might be to grow the BHS association with it using a tertiary product supply, as he appears to be: “Booker Wholesale is the sole supplier and its mid-tier (Happy Shopper) and basic (EuroShopper) ranges are plastered around the store…it’s the closest thing BHS has to own label”* Once he has proven the model, he could sell the opportunity to the likes of Lidl or Aldi or even BHS’ old friend Iceland?
What ever is really behind the move – it looks like a true grocery innovation. And it only adds to the chain of events that will force both the grocery and high street giants to be more innovative to compete.
* Grocer magazine, June 7th p.38