What you need to know
The convenience store sector is estimated to have returned to stronger growth in 2018 with sales advancing 3.4%, compared to growth of 2.8% in 2017, to reach £43.0 billion (including VAT). Inflation is still playing its part in driving value sales, but the sector grew, albeit marginally, ahead of the wider grocery sector (+3.2%) in 2018, meaning its share of all grocery retail sales advanced to 24.5%.
Clearly not all in the sector are benefiting equally from this growth, highlighted by the fact that there was a significant drop in the number of c-stores within the UK in 2018. In part this was due to the disruption caused by the collapse of P&H, but also because whilst the leading players in the sector are growing strongly, this is not being equally felt by smaller operators that are not able to keep pace with the level of innovation needed to appeal to the increasing number of small-basket shoppers.
There is still, albeit in many cases a necessary, price premium to be paid by convenience shoppers and this remains a key barrier for the sector to capture a greater share of shoppers and of grocery baskets – with 56% of c-store shoppers saying such stores are less appealing when money is tight. In part the convenience of shopping in such stores offsets this, with a third (33%) agreeing that higher prices are worth the trade-off for convenience, but there seem to be particular opportunities for c-stores to further offset this by strengthening their ties with local communities. Already 27% of consumers see c-stores as a grocery format that supports the local area, compared to 20% for supermarkets and 13% for the discounters, and given that consumers are increasingly scrutinising businesses; social and ethical credentials, putting this front and centre of a retailer’s message could drive strong results, as we have seen it do for the likes of the Co-op in recent years.
Products covered in this Report
This Report combines both market and consumer data along with key retailer metrics to give an overview of the UK convenience market.
Broadly speaking a convenience store (c-store) is a small-store grocery-focused retail format which is in effect complementary to grocery formats more geared towards large weekly shops, such as supermarkets and online channels. Conventionally, it offers a convenience service for people needing to undertake top-up shopping or make distress purchases. With the entrance of major grocers into the sector in recent years, with higher standards of fresh and chilled foods and trusted own-brands, the sector has become increasingly prominent in consumers’ last-minute meal shopping.
In practice, c-stores should:
Be open seven days a week and have extended hours of opening
Sell a range of groceries beyond simply CTN categories
Usually trade from a unit of less than 3,000 sq ft (280 sq m). Stores above this size cannot trade all day on a Sunday. Due to its larger size, Tesco Metro falls outside this Report; however, Tesco Express is included. Although some M&S Simply Food stores are larger than 3,000 sq ft, the retailer is predominantly a top-up shopping destination and is therefore included as a c-store operator.
The scale and offer of a convenience store are dictated by its location and the amount of business it can attract.
At one end of the spectrum, a c-store can come close to fulfilling the primary shopping needs for a particular location. This is particularly true of the c-stores of the major grocers such as Tesco and Sainsbury’s, but also of symbol groups such as Spar and Nisa.
At the other end, smaller stores serving more limited catchments can be more akin to a super-CTN. One Stop, Mace and Best-One are examples of these smaller c-stores.
The following are excluded:
All food specialists, from bakers and greengrocers to off-licences and tobacconists.
Hard discounters and Iceland.
