- 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 stands at 46,161 (June 2015). This year we have seen a marginal increase in the number of convenience stores, up 0.9%. This increase is due to the continued growth of convenience multiples in particular, as well as an increase in the number of symbols and co-operatives. In addition, the number of unaffiliated independents and forecourts, which have been in long term decline, have stabilised in the last few years.
IGD research shows convenience multiples have seen the largest increase in store numbers, up 10.6% year-on-year. Although demonstrating the fastest growth, convenience multiples represent less than one in ten convenience stores (8.6%).
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, 2015
What is the sector worth and how well is it performing?
In the 12 months to April 2015 the convenience market generated £37.7bn in sales. This represents a year-on-year increase of 5.1%.
Social and economic changes are still helping to drive the convenience channel. 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 'for tonight' or for the next couple of days.
The convenience sector continues to evolve in a number of ways:
- Continued focus on shopper missions and inspiring shoppers with suggestions and solutions
- More 'blurring' of channels is occurring as retailers think differently about convenience and include elements of other channels such as discount, online and foodservice/food-to-go
- Franchising is emerging as an increasingly popular ownership model, offering fast and less capital intense growth, but with strong compliance
- We are seeing greater use of technology to engage with shoppers, both in-store (display screen and digital shelf edge labels) and outside of the store via apps which provide store information targeted promotions
The chart below breaks down the value of the UK convenience market by segment (in £billions):
Convenience sector value (£bn)
Source: IGD Research, 2015
What is happening in the convenience sector?
Co-operatives have seen a small increase in store numbers YOY, up by 85 (3.2%). Sales have also increased in the past 12 months by 7.3% to £4.4bn.
Based on IGD’s methodology for defining convenience stores, the number of convenience forecourts has stabilised. There have however been some interesting changes beneath the surface, with the oil companies progressively off-loading their sites, giving rise to an increase in the number of sites for dealer multiples who have taken the opportunity to boost their portfolios.
Sales at convenience forecourts are flat (+0.1%) for the year ending April 2015.
The multiples continue to grow store numbers with an increase of 401 (+16.6%) YOY. It is however important to remember they still represent less than 10% of stores (8.6%) and approximately one in every five pounds spent in convenience channel (21.8% £ market share). In addition this increase in store numbers represents a slowdown vs. the previous year when 451 stores were added.
Franchising as an ownership model has been the driver of much of the growth in the convenience multiples sector in the last 12 months, most notably from One Stop and M&S Simply Food.
The symbol groups added an additional 250 stores to their portfolios over the last 12 months, a modest increase of +1.6%. However, symbol groups still represent nearly one third of stores (31.8% share).
There were mixed fortunes in the sector and we can expect further change following the announcement that Booker will acquire Musgrave UK, thereby adding the Londis and Budgens brands to their portfolio.
The decline of unaffiliated independents has continued to slow, with store numbers down -0.7% for the 12 months to the end of April 2015. However unaffiliated independents remain the largest segment of convenience in terms of store numbers, accounting for 38.1% of all stores and still proving resilient, despite the intensifying competition across the channel.