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Convenience Stores - UK - April 2017

“The convenience retail sector has enjoyed a strong period of growth but for the first time in a number of years there are clouds on the horizon. Rising food inflation is likely to see greater scrutiny placed on the price premium often associated with convenience stores.”
– Nick Carroll, Senior Retail Analyst

This Report answers the following key questions:

  • What does rising inflation mean for the convenience sector? 
  • What does Booker and Tesco joining forces mean?
  • Is online turning from friend to foe?

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Table of contents

  1. Overview

    • What you need to know
      • Products covered in this Report
      • Executive Summary

          • The market
            • Convenience grows just ahead of the overall market
              • Figure 1: Convenience store market size, including VAT, 2011-21
            • Are tougher times ahead?
              • Figure 2: Average weekly earnings growth vs CPIH inflation, January 2014-March 2017
            • Companies and brands
              • Co-op leads the market
                • Figure 3: Leading convenience operators’ estimated market shares, 2016
              • Symbols give over more space to non-foods…
                • Figure 4: Convenience stores: space allocation estimates, March 2017
              • …which means a higher proportion of revenue comes from non-food
                • Figure 5: Leading convenience stores, estimated proportion of sales, by broad product category, 2016
              • The consumer
                • Top-ups still driving c-store use
                  • Figure 6: Where consumers shop, by how they shop, February 2017
                • Younger consumers the driver of the c-store market
                  • Figure 7: Convenience store shoppers, by type of shopping completed and age, February 2017
                • Tesco out in front
                  • Figure 8: Convenience retailers used regularly, February 2017
                • A third buy their lunch and a fifth their breakfast from c-stores
                  • Figure 9: Shopping missions regularly completed in convenience stores, February 2017
                • Over three quarters use non-retail services
                  • Figure 10: Non-retail services regularly used in convenience stores, February 2017
                • Users would most like to see improvements in price, availability and range of fresh produce
                  • Figure 11: What c-store shoppers would change about where they shop, any rank, February 2017
                • Will inflation hurt the sector?
                  • Figure 12: Attitudes towards shopping in convenience stores, February 2017
                • What we think
                • Issues and Insights

                  • What does rising inflation mean for the convenience sector?
                    • The facts
                      • The implications
                        • What does Booker and Tesco joining forces mean?
                          • The facts
                            • The implications
                              • Is online turning from friend to foe?
                                • The facts
                                  • The implications
                                  • The Market – What You Need to Know

                                    • Convenience grows just ahead of the overall market
                                      • Convenience stores account for a quarter of all grocery retail sales
                                        • Are tougher times ahead?
                                          • Renting remains high
                                          • Market Size and Forecast

                                            • The convenience store sector
                                              • Figure 13: Convenience store market size, including VAT, 2011-21
                                              • Figure 14: Total convenience store market size (including VAT), at current and constant (2016) prices, 2011-21
                                            • How the grocery sector breaks down
                                              • Figure 15: Estimated breakdown of sector sales, by channel, 2012-17
                                            • What is a ‘Convenience store’?
                                              • Superstores
                                                • The needs ‘convenience’ serves
                                                  • Discounters
                                                    • Who do the discounters compete against?
                                                      • Figure 16: Where consumers shop, by how they shop, February 2017
                                                    • Forecast methodology
                                                    • Market Drivers

                                                      • Food retailers underperforming
                                                          • Figure 17: Retail sales growth, all retail and food retail, value and volume, January 2015-February 2017
                                                        • A long period of deflation has ended
                                                          • Figure 18: Annual percentage change in the price of food and non-alcoholic beverages and alcoholic beverages and tobacco, January 2015-March 2017
                                                        • Real incomes set to be squeezed
                                                          • Figure 19: Average weekly earnings growth vs CPIH inflation, January 2014-March 2017
                                                        • Structural changes in the market – the move back into inner cities…
                                                          • Figure 20: UK households, by tenure, 2011-15
                                                        • …but renting remains historically high amongst younger consumers
                                                          • Figure 21: UK household tenure of those aged 16-34, 2011-15
                                                      • The Consumer – What You Need to Know

                                                        • Top-ups still driving c-store use
                                                          • Younger consumers the driver of the c-store market
                                                            • Tesco out in front
                                                              • A third buy their lunch and a fifth their breakfast from c-stores
                                                                • Over three quarters use non-retail services
                                                                  • Users would most like to see improvements in price, availability and range of fresh
                                                                    • Will inflation hurt the sector?
                                                                    • How They Shop

                                                                      • Convenience stores remain primarily a secondary destination
                                                                        • Figure 22: Where consumers shop, by how they shop, February 2017
                                                                      • Frequency of grocery shopping
                                                                        • Figure 23: Frequency of grocery shopping, September 2016
                                                                        • Figure 24: Frequency of convenience store use, February 2016 and February 2017
                                                                      • Top-up shops on the rise across the grocery market
                                                                        • Figure 25: How top-up trends have developed, February 2014 -17
                                                                        • Figure 26: How main shop trends have developed, February 2014-17
                                                                      • Where grocery shoppers top up
                                                                        • Figure 27: Where main shoppers top up, February 2017
                                                                    • Demographics of Convenience Store Use

                                                                      • Younger consumers more likely to use convenience stores…
                                                                        • Figure 28: Convenience store shoppers, by type of shopping completed and age, February 2017
                                                                      • …and are also more likely to visit most frequently…
                                                                        • Figure 29: Frequency of convenience store use, by age, February 2017
                                                                      • …but are younger consumers moving away from c-stores?
                                                                        • Figure 30: Trend data: Convenience store shoppers, by type of shopping completed and age, 2015-17
                                                                        • Figure 31: Trend data: Convenience store shoppers, by type of shopping completed and age, February 2015-17
                                                                      • Big in the city
                                                                        • Figure 32: Convenience store shoppers, by type of shopping completed and type of area lived in, February 2017
                                                                        • Figure 33: Convenience store shoppers, by type of shopping completed and location lived in, February 2017
                                                                      • Pricing clearly a barrier to entry
                                                                        • Figure 34: Convenience store shoppers, by socio-economic group, February 2017
                                                                    • Retailers Used

                                                                        • Tesco attracts the most shoppers
                                                                          • Figure 35: Convenience retailers used regularly, February 2017
                                                                        • Trend data: Co-op continues to gain shoppers
                                                                          • Figure 36: Convenience retailers used regularly, February 2014-17
                                                                        • Customer profiles
                                                                          • Figure 37: C-stores most often used, February 2017
                                                                          • Figure 38: C-stores used regularly, February 2017
                                                                        • Number of shops used
                                                                          • Figure 39: C-stores – Number of different shops used, February 2017
                                                                          • Figure 40: Profile of c-store shoppers, by number of stores used, February 2017
                                                                        • Number of items bought
                                                                          • Figure 41: Number of items purchased, by retailer most used, February 2017
                                                                        • Number of services used
                                                                          • Figure 42: Number of services bought, by retailer most used, February 2017
                                                                      • Shopping Missions

                                                                        • Something for now, something for tonight
                                                                          • Figure 43: Shopping missions regularly completed in convenience stores, February 2017
                                                                        • Younger consumers far more likely to go for food-to-go
                                                                          • Figure 44: Shopping missions regularly completed in convenience stores, by age, February 2017
                                                                          • Figure 45: Shopping missions regularly completed in convenience stores, by age, February 2017
                                                                        • Mission repertoire
                                                                          • Figure 46: Shopping missions repertoire, February 2017
                                                                        • Services used
                                                                          • Figure 47: Non-retail services regularly used in convenience stores, February 2016 and February 2017
                                                                          • Figure 48: Non-retail services regularly used in convenience stores, by age, February 2017
                                                                        • Repertoire of services used
                                                                          • Figure 49: Repertoire of convenience services used, February 2017
                                                                      • What They Would Change About Shopping in Convenience Stores

                                                                        • Price the biggest concern
                                                                          • Figure 50: What c-store shoppers would change about where they shop, any rank, February 2017
                                                                          • Figure 51: What c-store shoppers would change about where they shop, by rank of importance, February 2017
                                                                        • Those younger are more concerned with food-to-go options
                                                                          • Figure 52: What c-store shoppers would change about where they shop, any rank by age, February 2017
                                                                          • Figure 53: What c-store shoppers would change about where they shop, any rank by age, February 2017
                                                                        • Improvements by retailer
                                                                          • What would customers like to see improved?
                                                                            • Figure 54: What c-store shoppers would change about where they shop, any rank by retailer used most often, February 2017
                                                                            • Figure 55: What c-store shoppers would change about where they shop, any rank by retailer used most often, February 2017
                                                                          • Thoughts of the focus group
                                                                          • Attitudes towards Shopping in Convenience Stores

                                                                            • Threats and the future of convenience grocery retailing
                                                                                • Figure 56: Attitudes towards pricing and fuel prices and convenience stores, February 2017
                                                                              • Is online about to turn from friend to foe?
                                                                                • Figure 57: Attitudes towards online and convenience stores, February 2017
                                                                                • Figure 58: Agreement with statements regarding online and convenience stores, by where consumers do grocery shopping, February 2017
                                                                              • Attitudes towards foodservice
                                                                                  • Figure 59: Attitudes towards food-to-go in convenience stores, February 2017
                                                                                  • Figure 60: Agreement with statements around food-to-go in convenience stores, by age, February 2017
                                                                                • Almost half agree too many payment options is confusing…
                                                                                  • Figure 61: Attitudes towards payment options within convenience stores, February 2017
                                                                                • …so are they ready for a store without any?
                                                                                    • Figure 62: Attitudes towards an Amazon Go-type convenience format, February 2017
                                                                                • Leading Retailers – What You Need to Know

                                                                                  • Co-op leads the market
                                                                                    • Booker the largest of the symbol operators
                                                                                      • Symbols give over more space to non-foods…
                                                                                        • …which means a higher proportion of revenue comes from non-food
                                                                                          • Amazon aims to revolutionise the convenience format
                                                                                          • Competitive Strategies

                                                                                              • High-footfall stores
                                                                                                • Figure 63: Leading c-store operators, outlets and space, 2016/17
                                                                                              • The Co-op – Where does it stand in the market?
                                                                                                • Symbol groups
                                                                                                  • Other businesses
                                                                                                    • Petrol forecourts
                                                                                                        • Figure 64: Total number of, and breakdown in ownership of UK forecourts, 2006-2016
                                                                                                    • Leading Retailers – Key Metrics

                                                                                                        • Sales
                                                                                                          • Figure 65: Leading c-stores, sales, 2012/13-2016/17
                                                                                                        • Outlets
                                                                                                          • Figure 66: Leading c-stores, outlets, 2012/13-2016/17
                                                                                                        • Sales per outlet
                                                                                                          • Figure 67: Leading c-stores, sales per outlet, 2012/13-2016/17
                                                                                                        • Market shares
                                                                                                            • Figure 68: Leading convenience stores, share of all c-store sales, 2012/13-2016/17
                                                                                                        • Space Allocation Summary

                                                                                                            • Space allocation overview
                                                                                                              • Figure 69: Convenience stores: space allocation estimates, March 2017
                                                                                                            • Fresh food more prevalent in multiple-owned convenience stores
                                                                                                              • Figure 70: Convenience stores: Fresh food and other food mix, by percentage share of total in-store space allocated to food, March 2017
                                                                                                            • Food-to-go
                                                                                                              • Figure 71: Spar, Camden Town, Food-to-go counter, March 2017
                                                                                                            • Detailed space allocation estimates
                                                                                                              • Figure 72: Convenience stores: Detailed space allocation estimates, March 2017
                                                                                                              • Figure 73: Convenience stores: Detailed space allocation estimates, March 2017
                                                                                                          • Retail Product Mix

                                                                                                                • Figure 74: Leading convenience stores, estimated sales by broad product category, 2016
                                                                                                                • Figure 75: Leading convenience stores, estimated proportion of sales by broad product category, 2016
                                                                                                            • Brand Research

                                                                                                                • Brand map
                                                                                                                  • Figure 76: Attitudes towards and usage of selected brands, October 2016 and February 2017
                                                                                                                • Key brand metrics
                                                                                                                  • Figure 77: Key metrics for selected brands, October 2016 and February 2017
                                                                                                                • Brand attitudes: the Co-op’s ethical credentials are recognised
                                                                                                                  • Figure 78: Attitudes, by brand, October 2016 and February 2017
                                                                                                                • Brand personality: Sainsbury’s and Tesco picked out as fun and engaging
                                                                                                                  • Figure 79: Brand personality – Macro image, October 2016 and February 2017
                                                                                                                • M&S thought of as expensive but hits the right aspirational tones
                                                                                                                  • Figure 80: Brand personality – Micro image, October 2016 and February 2017
                                                                                                                • Brand analysis
                                                                                                                  • Sainsbury’s scores well on trust and recommendation but usage lags behind rivals
                                                                                                                    • Figure 81: User profile of Sainsbury’s Local, February 2017
                                                                                                                  • Tesco Express shows market leading awareness, usage and trust
                                                                                                                    • Figure 82: User profile of Tesco Express, February 2017
                                                                                                                  • M&S Simply Food singled out as expensive but a third this cost is justified
                                                                                                                    • Figure 83: User profile of M&S Simply Food, October 2016
                                                                                                                  • Spar lags behinds its rivals although there are positives
                                                                                                                    • Figure 84: User profile of Spar, February 2017
                                                                                                                  • The Co-operative showing that it takes time to change brand perceptions
                                                                                                                    • Figure 85: User profile of The Co-operative, October 2016
                                                                                                                • Innovation and Launch Activity

                                                                                                                  • Checkout-free stores
                                                                                                                    • New supermarket convenience store formats
                                                                                                                      • Figure 86: Carrefour Express “Urban Life” store Milan, pizza counter
                                                                                                                    • Ancillary goods and services give more reasons to visit
                                                                                                                      • Apps
                                                                                                                        • Ultra-luxury convenience store
                                                                                                                          • 7-Eleven makeover
                                                                                                                          • Advertising and Marketing Activity

                                                                                                                            • Supermarket and c-store advertising spend down 6.9% year on year in 2016
                                                                                                                              • Figure 87: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and convenience store operators, 2012-16
                                                                                                                            • Leading convenience store advertisers
                                                                                                                                • Figure 88: Leading UK supermarket and convenience store operators: Recorded above-the-line, online display and direct mail total advertising expenditure, 2012-16
                                                                                                                              • Majority of advertising spend channelled through TV and press
                                                                                                                                • Figure 89: Recorded above-the-line, online display and direct mail total advertising expenditure by UK supermarket and convenience store operators, by media type, 2016
                                                                                                                              • Nielsen Ad Intel coverage
                                                                                                                              • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                • Data sources:
                                                                                                                                  • Financial definitions:
                                                                                                                                    • Abbreviations
                                                                                                                                      • Trade definitions
                                                                                                                                        • VAT
                                                                                                                                          • Consumer research methodology
                                                                                                                                          • Appendix – Market Size and Forecast

                                                                                                                                            • Forecast methodology

                                                                                                                                            Companies Covered

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

                                                                                                                                            Convenience Stores - UK - April 2017

                                                                                                                                            US $2,672.70 (Excl.Tax)