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Convenience Stores - UK - April 2016

“Consumers are increasingly looking for convenience in all aspects of their grocery buying habits. That is why we have seen a shift to more fluid grocery shopping habits with consumers, particularly younger consumers, shopping on a more when-needed basis. This shift has fuelled the convenience market and the leading players continue to invest in the market to capitalise on this shift. However, this investment is creating an increasingly tough environment for the smaller players and we have seen consolidation in the market with many smaller players now seeking the protection of a symbol or buying group.”
– Nick Carroll, Retail Analyst

This report examines the following areas:

  • Getting food-to-go right
  • 7-Eleven and Postmates: A logical online grocery solution for c-store operators?
  • Consolidation in the market: a necessary evil?

The convenience sector is a diverse one in terms of both the retailers that operate within it and the consumers, and needs, that it can serve. However, it is clear that the recent growth is being driven by the younger Millennials generation, those aged 16-34. This age group shows the highest and most frequent c-store usage and is also most likely to use c-stores for a broader set of needs than older consumers. Within this age group there has been a shift to more top-up grocery shopping habits, particularly amongst those living in urban areas, and convenience stores are perhaps the best suited grocery format to satisfy these needs.

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.

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Table of contents

  1. Overview

    • What you need to know
      • Areas covered within this report
      • Executive Summary

          • The market
            • Multi-track growth
              • Figure 1: Convenience store sector sales and forecast (incl. VAT), 2010-20
            • Multiples account for over half the market
              • Figure 2: Estimated leading retailers’ share of the total market, by type of operation, (excluding VAT) 2011-15
            • Deflation: Holding back value
              • Figure 3: Annual percentage change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco, 2010-February 2016
            • Growth in other channels benefiting the convenience market
              • Figure 4: Market size for both online grocery retailing and grocery discounters, 2011-16
            • Leading retailers
              • Market shares: Tesco continues to gain
                • Figure 5: Leading convenience retailers’ estimated market shares, 2014 and 2015
              • The consumer
                • Convenience stores remain primarily a top-up destination
                  • Figure 6: Where people shop, by shopping behaviour, February 2016
                • Younger consumers driving the market
                  • Figure 7: Usage of convenience stores, by age and shopping behaviour, February 2016
                • Where they shop
                  • Figure 8: C-stores used, February 2016
                • What they buy
                  • Figure 9: Products bought in c-stores, February 2016
                • Driving footfall with services
                  • Figure 10: Services used in convenience stores, February 2016
                • Satisfaction with convenience stores
                  • Figure 11: Overall net satisfaction with last convenience store used, by criteria, February 2016
                • C-stores seen as a good option for food-to-go but variety is needed
                  • Figure 12: Attitudes towards food-to-go in convenience stores, February 2016
                • What we think
                • Issues and Insights

                  • Getting food-to-go right
                    • The facts
                      • The implications
                        • 7-Eleven and Postmates: A logical online grocery solution for c-store operators?
                          • The facts
                            • The implications
                              • Consolidation in the market: a necessary evil?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Market growth slows but continues ahead of the wider grocery sector
                                      • Food price deflation affecting the market
                                        • Growth in other channels benefiting the market
                                          • A move back to urban areas, and into rented accommodation, a driver
                                          • Market Size and Forecast

                                              • Figure 13: Convenience store sector sales and forecast (incl. VAT), 2010-20
                                              • Figure 14: Convenience store sector sales and forecast (incl. VAT), at current and constant prices, 2010-20
                                            • How the market is made up
                                              • Figure 15: Estimated leading retailers’ share of the total market, by type of operation, (excluding VAT) 2011-15
                                              • Figure 16: Store numbers of the leading convenience operators, by operation, 2011-15
                                          • Market Drivers

                                              • Figure 17: Annual percentage change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco, 2010-February 2016
                                            • Real wages rising
                                              • Figure 18: Real wages growth: Wages growth vs inflation, 2011-16
                                            • Growth in other channels benefiting the c-store market…
                                              • Figure 19: Market size for both online grocery retailing and grocery discounters, 2011-16
                                            • Rise in renting fuelling top-up shopping…
                                              • Figure 20: UK household tenure status, 2010-14
                                            • …particularly amongst younger consumers
                                              • Figure 21: UK household tenure status of 16-34-year-olds, 2010-14
                                            • Growth in larger household sizes
                                              • Figure 22: Household size as a percentage of total households, 2010 and 2015
                                          • The Consumer – What You Need to Know

                                            • Convenience stores remain primarily a top-up destination
                                              • Usage being driven by the young and affluent
                                                • Tesco Express comes out on top
                                                  • Fresh an important category
                                                    • New services can replace lost footfall
                                                      • Satisfaction with convenience stores
                                                        • Many see convenience stores as a viable alternative to foodservice outlets
                                                        • How They Shop

                                                              • Figure 23: Where people shop, by shopping behaviour, February 2016
                                                            • Where people do their top-up shopping
                                                              • Figure 24: Where main shoppers do top-up shopping, by grocery format used for a main shop, February 2016
                                                            • How grocery shopping habits are evolving
                                                              • Figure 25: Where people do their main shopping, 2014-16
                                                              • Figure 26: Where people do their top-up shopping, 2014-16
                                                          • Demographics and Frequency of Convenience Store Use

                                                            • Younger consumers driving the market
                                                                • Figure 27: Usage of convenience stores, by age and shopping behaviour, February 2016
                                                                • Figure 28: Convenience store usage, by socio-economic group and shopping behaviour, February 2016
                                                              • Urban areas: A key battlefield for c-store operators
                                                                • Figure 29: Usage of convenience stores, by type of area lived in and shopping behaviour, February 2016
                                                                • Figure 30: Usage of convenience stores, by region lived in, February 2016
                                                              • Frequency of convenience store usage
                                                                • Figure 31: Frequency of c-store visits by c-store shoppers, February 2016
                                                                • Figure 32: Profile of c-store shoppers, by frequency of use, February 2016
                                                            • Where Do They Shop?

                                                                • Figure 33: C-stores used, February 2016
                                                              • Symbols gaining shoppers
                                                                • Figure 34: Convenience store retailers used, 2014-16
                                                              • Co-op sitting outside the growth areas
                                                                • Figure 35: Profile of convenience stores, by any shoppers who have used them in the last three months, February 2016
                                                              • The focus on urban areas paying off for the multiples
                                                                • Figure 36: Convenience store retailers used, by area lived in, February 2016
                                                              • Store repertoire
                                                                • Figure 37: Store repertoire of convenience store users, February 2016
                                                            • Products Bought and Services Used in Convenience Stores

                                                                • Figure 38: Products bought in convenience stores, February 2016
                                                                • Figure 39: Profile of convenience store shoppers, by what products they buy, February 2016
                                                              • Multiples over-indexing on growth categories
                                                                • Figure 40: Products purchased in convenience stores, by convenience store retailer regularly used, February 2016
                                                              • Repertoire of products purchased
                                                                • Figure 41: Repertoire of products purchased in convenience stores, by age, February 2016
                                                              • Services – A traffic generator
                                                                • Figure 42: Convenience store services used, February 2016
                                                                • Figure 43: Profile of c-store shoppers, by services used, December 2015
                                                            • Satisfaction with Convenience Stores

                                                                  • Figure 44: Overall net satisfaction with last convenience store used, by criteria, February 2016
                                                                • Key driver analysis
                                                                    • Figure 45: Key drivers of overall satisfaction with convenience stores visited most often, February 2016
                                                                    • Figure 46: Overall satisfaction with convenience stores visited most often – Key driver output, February 2016
                                                                  • Overall satisfaction with retailers
                                                                    • Figure 47: Overall satisfaction with last convenience store used, by type of convenience store used most often, February 2016
                                                                  • How do the big three fare?
                                                                    • Figure 48: Overall satisfaction with last convenience store used, by retailer used most often, February 2016
                                                                  • Pricing, range, quality and availability
                                                                    • Figure 49: Satisfaction with factors relating to range, by retailer used most often, February 2016
                                                                    • Figure 50: Satisfaction with factors relating to availability, quality of fresh products and pricing, by retailer used most often, February 2016
                                                                  • The store experience
                                                                    • Figure 51: Satisfaction with factors relating to availability, quality of fresh products and pricing, by retailer used most often, February 2016
                                                                • Attitudes towards Convenience Stores

                                                                    • Figure 52: Attitudes towards food-to-go in convenience stores, February 2015
                                                                    • Figure 53: Agreement with statements regarding food-to-go in convenience stores, February 2016
                                                                  • Convenience stores and loyalty schemes
                                                                      • Figure 54: Agreement with the statement ‘Loyalty schemes would encourage me to shop at particular convenience stores’, February 2016
                                                                    • Opening hours and free time
                                                                        • Figure 55: Agreement with statements regarding free time on the impact of convenience store use, February 2016
                                                                        • Figure 56: Agreement with statements regarding free time on the impact of convenience store use, by age and socio-economic group, February 2016
                                                                      • Sunday trading hours
                                                                        • Figure 57: Attitudes towards a potential change in Sunday trading regulations, February 2016
                                                                    • Key Players – What You Need to Know

                                                                      • Multiples continue to gain share
                                                                        • Competitive strategies
                                                                          • Multiples give over more space to fresh
                                                                            • Spar and the Co-op struggle in the brand perception stakes
                                                                            • Leading Retailers – Key Metrics and Market Shares

                                                                                • Figure 58: Leading convenience retailers’ estimated market shares, 2014 and 2015
                                                                              • Sales
                                                                                  • Figure 59: Leading convenience retailers’ net revenues, 2011-15
                                                                                • Outlets
                                                                                  • Figure 60: Leading convenience retailers’ outlet numbers, 2011-15
                                                                                • Sales per outlet
                                                                                  • Figure 61: Leading convenience retailers’ annual sales per outlet, 2011-15
                                                                                • Detailed market shares
                                                                                  • Figure 62: Leading convenience retailers’ estimated shares of sector sales, 2011-15
                                                                              • Competitive Strategies

                                                                                  • Multiples
                                                                                    • Figure 63: Major grocery multiples, key sector metrics, 2011-15
                                                                                  • Tesco Express: Consolidating a commanding lead
                                                                                    • M&S Simply Food: Appealing to the affluent Millennials and branching out in food-to-go
                                                                                      • The Co-op: Expansion into urban areas crucial
                                                                                        • Sainsbury’s Local: Rapid expansion fuelling growth
                                                                                          • Little Waitrose: A smaller presence but growing quickly
                                                                                            • M Local: A cautionary tale
                                                                                              • Symbol and buying groups
                                                                                                  • Figure 64: Leading symbol, buying and retail groups, key sector metrics, 2011-15
                                                                                                • Booker: Now the leading symbol operator
                                                                                                  • Spar: Continues to perform well but the brand may need a refresh
                                                                                                    • Costcutter Supermarkets Group: A diverse range of operations
                                                                                                      • Nisa: Looking to modernise its approach
                                                                                                        • Lifestyle Express: Member numbers falling
                                                                                                          • Best-One: Continuing to attract members
                                                                                                            • Leading forecourt operators
                                                                                                              • Figure 65: Leading forecourt operators, key sector metrics, 2011-15
                                                                                                          • Space Allocation Summary

                                                                                                              • Space allocation overview
                                                                                                                • Figure 66: Convenience stores: Summary space allocation, by percentage share of in-store shelf space, April 2016
                                                                                                              • In-store food mix largely dictated by space and refrigeration capacity
                                                                                                                • Figure 67: Convenience stores: Fresh food and other food mix, by percentage share of in-store shelf space, April 2016
                                                                                                              • In-store bakery an integral part of the c-store destination appeal
                                                                                                                • Figure 68: M&S Simply Food, Notting Hill Gate, London: In-store bakery
                                                                                                              • Detailed space allocation
                                                                                                                • Figure 69: Little Waitrose, West Hampstead, in-store seating area
                                                                                                                • Figure 70: Convenience stores: Detailed space allocation, April 2016
                                                                                                                • Figure 71: Convenience stores: Detailed space allocation, April 2016
                                                                                                            • Retail Product Mix

                                                                                                                  • Figure 72: Leading convenience stores: key operating statistics, 2014/15
                                                                                                                  • Figure 73: Leading convenience stores: estimated sales, by broad product category, 2014/15
                                                                                                                  • Figure 74: Leading convenience retailers’ sales mix, 2014/15
                                                                                                              • Innovation and Launch Activity

                                                                                                                • Drive-thru convenience store
                                                                                                                  • On-demand delivery
                                                                                                                    • Targeting ‘Transumers’
                                                                                                                      • New value-driven c-store formats
                                                                                                                        • New supermarket convenience store formats
                                                                                                                          • ‘Black Friday’ comes to the c-store sector
                                                                                                                            • Smartphone app loaded with special offers and benefits
                                                                                                                              • Medical centres
                                                                                                                                • Unmanned 24 hours a day convenience store
                                                                                                                                  • Meeting on-the-go consumers’ service needs
                                                                                                                                  • Brand Research

                                                                                                                                      • What you need to know
                                                                                                                                        • Brand map
                                                                                                                                          • Figure 75: Attitudes towards and usage of selected brands, August 2015 and January 2016
                                                                                                                                        • Key brand metrics
                                                                                                                                          • Figure 76: Key metrics for selected convenience store brands, August 2015 and January 2016
                                                                                                                                        • Brand attitudes: The Co-op hits the ethical mark
                                                                                                                                          • Figure 77: Attitudes, by convenience store brand, August 2015 and January 2016
                                                                                                                                        • Brand personality: M&S Simply Food stands exclusively on its own
                                                                                                                                          • Figure 78: Brand personality – Macro image, August 2015 and January 2016
                                                                                                                                        • Sainsbury’s and Tesco seen as being reliable but Spar disappoints
                                                                                                                                          • Figure 79: Brand personality – Micro image, August 2015 and January 2016
                                                                                                                                        • Brand analysis
                                                                                                                                          • Sainsbury’s Local: scoring well with the key demographics
                                                                                                                                            • Figure 80: User profile of Sainsbury’s Local, January 2016
                                                                                                                                          • Tesco Express: High trust despite some negatives
                                                                                                                                            • Figure 81: User profile of Tesco Express, January 2016
                                                                                                                                          • M&S Simply Food: High prices and high earners
                                                                                                                                            • Figure 82: User profile of M&S Simply Food, August 2015
                                                                                                                                          • Spar: An outdated image
                                                                                                                                            • Figure 83: User profile of Spar, January 2016
                                                                                                                                          • The Co-operative: Getting the message across in the right way
                                                                                                                                            • Figure 84: User profile of The Co-operative, August 2015
                                                                                                                                        • Advertising and Marketing Activity

                                                                                                                                          • Total advertising spend down 3.7% in 2015
                                                                                                                                            • Figure 85: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and convenience store operators, 2011-15
                                                                                                                                          • Biggest c-store brand advertiser spenders in 2015
                                                                                                                                            • Figure 86: Leading UK supermarket and convenience store operators: Recorded above-the-line, online display and direct mail total advertising expenditure, 2011-15
                                                                                                                                          • Press and TV dominate
                                                                                                                                            • Figure 87: Leading UK supermarket and convenience store operators: Recorded above-the-line, online display and direct mail total advertising expenditure, by media type, 2015
                                                                                                                                          • Nielsen Media Research coverage
                                                                                                                                          • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                            • Data sources:
                                                                                                                                              • Financial definitions:
                                                                                                                                                • Abbreviations
                                                                                                                                                  • Trade definitions
                                                                                                                                                    • VAT
                                                                                                                                                      • Consumer research methodology
                                                                                                                                                        • Key driver analysis: Methodology
                                                                                                                                                          • Interpretation of results
                                                                                                                                                            • Figure 88: Overall satisfaction with convenience stores visited most often – Key driver output, February 2016
                                                                                                                                                            • Figure 89: Satisfaction with convenience stores visited most often, February 2016
                                                                                                                                                          • Market size and forecast: Forecast methodology
                                                                                                                                                            • Space allocation methodology

                                                                                                                                                            Companies Covered

                                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                                            Convenience Stores - UK - April 2016

                                                                                                                                                            £1,995.00 (Excl.Tax)