The iconic corner store and milk bar is under pressure and is likely to die out within a decade, according to research released today by BIS Foodservice.
The research found a persistent downward trend in corner store and milk bar numbers for many years, with a sharp drop in the past two years.
In 2010, there were an estimated 4,131 outlets but in 2012 the number dropped to just 2,725, a decline of 1,406 stores.
The average turnover per store also shrank from $985,000 to $750,000, with independent convenience stores now making up just 12% of the total market; in 2007, that number was 20%.
In contrast, the research found a marked rise in the supermarket servo.
Service stations with convenience stores increased from an estimated 3,162 outlets in 2010 to 3,450 estimated outlets in 2012, an increase of almost 10% since 2010.
The number of service stations without a convenience store fell from an estimated 3,471 stores in 2010 to 3,168 outlets in 2012, suggesting that most service stations are moving towards more food and beverage offerings.
Sissel Rosengren, head of BIS Foodservice, told SmartCompany the traditional corner store is struggling against the tide as service stations without convenience stores upgrade.
“We’ve seen the demise of the corner store for more than a decade in terms of store numbers going down and at the same time we have seen a rise in petrol stations with convenient stores,” she says.
“The corner store is squeezed between the two other food and beverage markets, the two supermarkets and the food service markets being restaurants, cafes and pubs.”
Rosengren says corner stores are under very heavy competition from Coles and Woolworths, which are staying open very late hours, and can offer cheaper prices through their buying power along with service station convenience stores which are tied to the supermarkets.
“Probably at one stage corner stores will disappear from the market, we would probably talk about in a decade, but I don’t know as I don’t have a crystal ball in that way,” Rosengren says.
“It is a very stagnant market, and there is not much development happening in terms of innovation and store innovation in Australia.”
Jeff Rogut, executive director, of the Australian Association of Convenience Stores, says to some extent he agrees that the corner store is in decline.
“The corner store or traditional milk bar has been under pressure for a number of years as they have not really reinvented their offer, they are an icon of suburbia, but as people’s lifestyles have changed they have not really changed,” he says.
Rogut says convenience stores such as the servos and 7-11s have evolved over the past couple of years to be in tune with what customers are looking for now and in the future.
“Upgrading stores, using social media and other promotional activity means our industry is thriving at the expense of the corner stores,” he says.
“The areas that have come under pressure have been milk and bread with very aggressive supermarket pricing.”
Rogut says there is still a place for convenience stores but it may be that the traditional corner store will fall by the wayside unless it can change its offering.
“The future is a one stop convenience centre with ATMS, parcel delivery services, gas bottle exchanges and ice, many of the things corner stores could have and should have been offering all along,” he says.
Cara Waters is the editor of SmartCompany. Cara was previously a senior reporter at the Financial Times website FT Adviser in London and has also worked for The Sunday Times.
