- What is a convenience store?
- Who operates convenience stores?
- How many convenience stores are there?
- What is the sector worth and how well is it performing?
- What is happening in the convenience sector?
What is a convenience store?
For a store to be defined as a convenience store it must satisfy three criteria:
- Size: The store must be under 3,000 sq ft
- Opening hours: It must not be subject to restricted opening hours under the Sunday Trading Act
- Product categories: It should stock at least seven of the following core categories:
- Canned and packaged grocery
- Chilled food
- Frozen food
- Fruit and vegetables
- Health & beauty
- Hot food-to-go
- National Lottery
- Newspapers / magazines
- Non-food items
- Savoury snacks
- Soft drinks
Who operates convenience stores?
The convenience sector is divided into five segments according to the type of ownership:
- Co-operatives (eg The Co-operative Group, The Southern Co-operative)
- Convenience forecourts
- Convenience multiples (convenience specialists and some supermarket based chains, eg Tesco Express, Sainsbury’s Local and McColls)
- Symbol groups (eg SPAR, Londis, Premier)
- Non-affiliated independents
How many convenience stores are there?
The total number of convenience stores in the UK stands at 47,090. This shows a marginal increase of 0.1% on 2012 explained by the slow down in the rate of contraction of unaffiliated independents and the forecourt sector beginning to stabilise.
IGD research shows convenience multiples have seen the largest increase in store numbers, up 9.6% year-on-year. Although this growth highlights the importance operators are placing on their small store formats, convenience multiples only represent 6.7% of total store numbers.
The chart below shows the number of convenience stores by type in the UK:
Convenience store numbers
N.B. Forecourt joint ventures are sites operated jointly by an oil company and a retailer.
These are subtracted from the total to avoid double counting
Source: IGD Research and William Reed Business Media, 2013
What is the sector worth and how well is it performing?
The convenience market generated total sales of £35.6bn in the 12 months to April 2013. This equates to a 4.9% year on year increase.
Many of the factors that have fuelled growth in the sector in recent years continue to play a role. These include structural changes, such as smaller households and longer working hours, which are altering shopper habits and helping drive convenience sales. Many shoppers now favour a ‘little and often’ approach to grocery shopping, which is also increasing the appeal of convenience stores.
The challenges which the channel has been working to address remain relevant today. Operators are continuing to focus on building their value credentials, improving store standards, and developing ranges to meet the changing needs of consumers. Stores are also looking towards additional services such as ‘click and collect’ and parcel pickup to attract shoppers.
The chart below breaks down the value of the UK convenience market by segment (in £billions):
Convenience sector value (£bn)
Source: IGD Research, 2013
What is happening in the convenience sector?
Last year was a solid year for the Co-operative movement as a whole with store numbers up by 75 (2.9%). Sales across the movement are up 2.3% and passed the £4bn mark.
Based on IGD’s methodology for defining convenience stores, the decline in convenience forecourts has continued.
Sales at convenience forecourts are down 3.7% for the year ending April 2013. This follows a decrease of -2.4% for the same period last year.
The multiples continue to increase store numbers with an increase of 291 (+9.6%).
Multiples are set to continue investing in smaller stores as they look to expand their convenience estates. Growth is expected to continue over the coming years as the likes of Morrisons and Sainsbury’s look to open one or two new stores per week.
The symbol groups reported more subdued growth this year, with store numbers up 3.2%. The continued decline in the slowdown of unaffiliated independents leaving the market is making attracting new members to symbol groups more competitive. There is a general feeling that the symbol groups are investing in their current estates, bringing stores up to the required standard before looking to grow numbers.
Over the past year the symbol groups have been placing more emphasis on their retail businesses, encouraging suppliers to have a strategy to support this side of the business as well as the wholesale side. The challenge for the future is to continue to build on the reputations for fresh and value to help compete against a more competitive channel.
The decline of unaffiliated independents has continued to slow, with store numbers down 2.1% for the 12 months to the end of April 2013. It is important to note however, that this segment still accounts for 18.4% of sales and 38.3% of stores.
Independent retailers are facing continued pressure from a rapidly evolving convenience sector. Retailers are however continually looking for new products and services to continue to meet the changing need of the customer. An example of this is the rise in parcel pickup services at convenience stores.