What has been happening in the convenience store sector?
Convenience stores have grown out of what used to be grocers or newsagents and, more recently, petrol filling station forecourt shops. Because nowadays many people do the bulk of their household shopping at the supermarket, the small 'corner shop' has had to adapt to survive.
In recent years there has been:
- a decline in the volume of grocery items purchased by many consumers as result of inflation and the costs of living crisis
- an increase in the size of the market (up 5.3% in 2023)
- an increase in the share of the market held by larger retailers via their c-stores (Tesco alone accounts for 30% of the c-store market share) driven by the continued spread of such c-stores
- 70% of stores are still run by independent retails either as part of a symbol group or unaffiliated
- significant investment by convenience retailers in their businesses (£646 million in 2023) specifically refrigeration (56%), shelving (39%), store signage (33%), in-store lighting (32%) and technology (29%)
- a quarter of customers live less than half a mile from the shop
- strong demand for convenience or 'top-up' lines rather than basic groceries
- an increase in demand for snacks, impulse and take-away food items, including fresh foods
- a trend towards longer opening hours
- the rapid growth of multiple c-store chains
- an improvement in the standard of convenience store premises and the product ranges they offer
- pressure on prices as a result of competition
- increased regulation of the food sector and the introduction of food legislation
- the impact smoking ban has seen a drop in the number of people smoking from 24.1% of the population to 14.4% (the government has announced plans to ban the sale of cigarettes the those born on or after 1 January 2009)
- a ban on selling alcohol in England and Wales below the combined cost of the duty and VAT
- the introduction of minimum unit pricing on alcohol in Scotland and Northern Ireland
- a steady increase in the number of people buying their groceries online
- a big increase in the number of people shopping in discounters like Aldi and Lidl
Although there is a demand for well-run neighbourhood shops, they face keen competition and many independents have joined symbol groups in order to improve their chances of survival.
You will have to decide whether:
- demand will be high enough in your area to support your proposed business. If you plan to locate in a rural area, there simply may not be enough customers
- your local economy is healthy - if your area has been unlucky enough to suffer from many business failures and factory closures recently, it is unlikely that local people will shop anywhere other than the cheapest supermarket
- you will be able to compete against other c-stores, discounters, supermarkets, newsagents and petrol filling stations, all of whom are looking to sell into the same market
Keeping up to date with the convenience store sector
Joining a trade association is an excellent way of staying up to date with developments in the trade.
The Association of Convenience Stores (ACS) represents convenience stores. The ACS produces an annual Local Shop Report which contains a great deal of material of interest to all those operating in this market. They also carry out regular crime surveys and produce advice guides covering many aspects of convenience retailing. Visit the ACS website for details. The Scottish Grocers Federation supports independent food retailers in Scotland and publishes a number of reports on the grocery sector. These are available on the Scottish Shop website. The Institute of Grocery Distribution (IGD) works with the grocery and food sectors to provide a wealth of information.
Retail NI was set up to protect and enhance the independent grocery retail sector in Northern Ireland. Visit the Retail NI website for further information.
Subscribing to a trade journal is another excellent way of staying up to date. The Convenience Store website publishes the latest news and features of interest to the sector. You could also subscribe to The Grocer.