Convenience Stores - UK - April 2013
“Investment by major retailers in the extension of their convenience store portfolios and improvements in the proposition are factors in bringing consumers into convenience shopping. Further consolidation will hit weaker retailers, notably independents, but it looks likely to have a positive impact for the consumer and the sector.”
– John Mercer, European Retail Analyst
Some questions answered in this report include:
- How fast is convenience growing?
- How is convenience changing?
- Which demographic groups are most important?
- How is consolidation playing out?
The convenience store sector is among the most dynamic in grocery retailing. Sector growth is nowhere near as strong as that being seen in online grocery retailing, but it is currently above that for grocery retailing as a whole. For major grocers, the convenience sector is proving particularly appealing – but this is not so much due to major underlying growth as it is untapped opportunities: the convenience sector is one of the last to see competition from the major grocery multiples.
The symbol groups are responding with improved offers including new fascia, better fresh food ranges and new own-brands. And we are seeing some signs of consolidation, with a new tie-up between symbol group Costcutter and wholesaler Palmer & Harvey.
This report looks at sector growth and prospects, examines the major operators in detail including in our proprietary research on brand perceptions, and includes detailed consumer research. This year we asked consumers which convenience stores they had shopped at, how often they shop at c-stores, whether they now shop more or less at convenience stores and their reasons for shopping more or less.
A convenience store (c-store) is a small-store grocery-focused retail format which in effect is complementary to a supermarket. 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 (confectionery, tobacco, news) 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. For this reason, Tesco Metro falls outside this report; however, Tesco Express is included. Some Co-operative Food and M&S Simply Food stores are larger than 3,000 sq ft, but these retailers are predominantly top-up shopping destinations, justifying their inclusion as c-store operators.
The scale and offer of a convenience store is 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, Sainsbury’s and The Co-operative, but also of symbol groups such as Spar, Nisa and Londis.
At the other, smaller stores serving more limited catchments can be more akin to a super-CTN. One Stop, Premier Express 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 – these are in competition with the superstores and are not convenience stores.
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