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Convenience retailing factsheet

- 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:

  1. Size: The store must be under 3,000 sq ft
  2. Opening hours: It must not be subject to restricted opening hours under the Sunday Trading Act
  3. Product categories: It should stock at least seven of the following core categories:
  • Alcohol
  • Bakery
  • Canned and packaged grocery
  • Chilled food
  • Confectionery
  • Frozen food
  • Fruit and vegetables
  • Health & beauty
  • Hot food-to-go
  • Household
  • National Lottery
  • Milk
  • Newspapers / magazines
  • Non-food items
  • Sandwiches
  • Savoury snacks
  • Soft drinks
  • Tobacco

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 stands at 47,294. This year we have seen a marginal increase in the number of convenience stores, up 1%. This increase is due to the continued slowdown in the decline of unaffiliated independents and the continued growth of multiples and symbol groups.

IGD research shows convenience multiples have seen the largest increase in store numbers, up 13.6% year-on-year. Although demonstrating the fastest growth, convenience multiples represent less than one in ten convenience stores (7.6%).

The chart below shows the number of convenience stores by type in the UK:

Convenience store numbers

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, 2014

What is the sector worth and how well is it performing?

In the 12 months to April 2014 the convenience market generated £37.4bn in sales. This represents a year-on-year increase of 5.2%.

Social and economic changes are still helping to deliver growth in the convenience market. Changes such as smaller household sizes, longer working hours, and reducing food waste are playing to the strengths of convenience stores as shoppers look to shop little and often.

Retailers are constantly evolving, looking for new ways to meet the needs of shoppers. Part of this is the continued move away from a ‘one size fits all’ approach. Stores are increasingly being adapted to meet the needs of local shoppers, offering product ranges which are best suited to the local population. This increased tailoring of the stores’ products and services, not only benefits the customer, but also creates a point of difference for the retailer.

The chart below breaks down the value of the UK convenience market by segment (in £billions):

Convenience sector value (£bn)

Convenience sector value

Source: IGD Research, 2014

 

What is happening in the convenience sector?

Co-operatives

Co-operatives have seen a small increase in store numbers YOY, up by 43 (5.4%). Sales have also increased in the past 12 months by 2.3% to £4.1bn.

Convenience forecourts

Based on IGD’s methodology for defining convenience stores, the decline in convenience forecourts has continued.

Sales at convenience forecourts are down -0.5% for the year ending April 2014. Retailers are continuing to place an increasing importance on the segment with the likes of Nisa, Costcutter and SPAR looking to develop their forecourt strategies.

Convenience multiples

The multiples continue to increase store numbers with an increase of 451 (+13.6%) YOY.

Building a portfolio of convenience stores remains a key area of focus for many multiples. This trend is likely to continue as convenience continues to play a key role in many retailers’ multichannel strategies. Although multiples are demonstrating strong growth, it is important to remember they still represent less than 10% of stores (7.6%) and less than one in every five pounds spent in convenience channel (19.4% market share)

Symbol groups

Symbol growth has slowed this year, with store numbers up by 2.8% YOY. However, symbol groups still represent over one third of stores (34.5%). The continued decline in the slowdown of unaffiliated independents leaving the market is making attracting new members to symbol groups more competitive. Symbol groups are also investing in their current estates, bringing stores up to the required standard before looking to open more stores.

Symbol groups are increasingly looking to increase their offers by tailoring their estates to better meet the needs of shoppers. We have also seen symbol groups looking to other channels for inspiration. A good example of this is Booker’s Family Shopper which has ‘blurred’ the lines between discount, high street discount, frozen food specialist and convenience.

Unaffiliated independents

The decline of unaffiliated independents has continued to slow, with store numbers down 1.0% for the 12 months to the end of April 2014. However, that this segment still accounts for 17.4% of sales and 37.6% of stores.

Although the market is becoming increasingly competitive, unaffiliated independents are continuing to look for new products and services to meet the changing needs of shoppers and help create a reason to visit.

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