It seems like corner shops and convenience stores have been fixtures in our communities for a long time, open long hours and there whenever we need a quick purchase like a pint of milk. These stores have been serving us for decades and are becoming even more prevalent. Morrisons recently announced plans to open an additional 400 of its Daily convenience stores. Earlier this year, Asda launched 110 smaller Express stores, and both Sainsbury’s and Marks & Spencer, while moving at a slower pace, also aim to expand their convenience store chains.
The Co-operative Group currently operates around 2,300 convenience stores, yet they trail the market leader, Tesco, which, after acquiring One Stop and Booker, has established a convenience chain of over 3,000 locations. Across the UK, there are presently 49,388 convenience stores, employing 437,000 individuals and generating sales exceeding £47 billion. These stores are distributed throughout urban, suburban, and rural areas. Since 2018, the number of stores has increased by about 3,000 and employment has grown by 72,000. The Co-operative Group runs about 7% of the convenience stores, while major retailers like Tesco, Morrisons, and Asda manage 23%. Independent retailers affiliated with brands such as Spar, Londis, Premier, Costcutter, and Day-Today account for 31%. Lastly, independent stores and corner shops that trade under their own name constitute 39% of all stores. Tesco and the Co-operative Group together claim approximately half of the market sales.
The significance of convenience stores has grown due to several factors. First, the appeal of large, car-dependent supermarkets has waned. The market is saturated, sustainability and evolving consumer preferences challenge the format, and securing planning permission has become more difficult. While these larger stores still hold significant market share, they’re not the growth sector they once were. Second, the increase in online retailing, especially for groceries, has supported the trend of top-up shopping. The rise of online and mobile retailing has expanded into quick commerce, using convenience stores for on-demand deliveries. Third, the COVID pandemic, particularly during lockdowns, boosted online sales while making people cautious about visiting large stores and encouraging them to explore local alternatives, further increasing sales at convenience stores. While some routines have resumed as the economy recovers from COVID, working from home continues to sustain growth for local stores.
Retailers have taken note of these changing consumer trends, focusing less on out-of-town stores and more on locations that match customer lifestyles and travel patterns. Morrisons’ plan to open hundreds of new convenience stores, along with Asda’s introduction of over 100 new outlets earlier this year, are noteworthy developments. For Morrisons, recent openings have involved converting McColls stores, but their aim is now to expand both through these conversions and organically.
Morrisons and Asda have been losing market share in groceries. In September 2022, Morrisons was surpassed by Aldi for the fourth largest share in the British grocery market, highlighting the stiff competition from expanding discount chains like Aldi and Lidl, who continue to execute long-term store expansion strategies, including Aldi Local convenience stores. Shifting their focus to convenience stores helps Morrisons and Asda enhance their market presence and sales growth.
The space for convenience stores is diverse, ranging from locations at petrol stations and rural villages to high streets and transport hubs. They’ve expanded their service offerings significantly, with food-to-go and in-store prepared foods becoming lucrative areas. Smaller independent retailers have seen growth as communities recognize both the value of products and the social contributions of convenience stores, which often function as “social glue,” reminiscent of the local shopkeeper as a vital community member.
In Scotland, the Go Local initiative has built on a successful healthy living program, aiding retailers and producers in offering locally sourced goods in convenience stores. Focused on healthy products, early results have shown sustained increases in local sales, benefiting the community and businesses while reducing environmental impacts.
While the future looks promising for the convenience sector, aligned with consumer needs, there are potential challenges ahead. Some consumers still view local or convenience stores as having limited product variety and high prices, but this isn’t the reality in many cases. Retailing is currently tough due to high costs; some locations face challenges as consumer habits shift, demanding constant adaptation and new offerings to draw in different groups.
Retailers are really worried about new rules and restrictions coming in. Convenience stores could have a tough time because a lot of what they sell—like cigarettes, vapes, alcohol, and snacks—might get stricter rules from the government. Plus, things like recycling programs for drink containers and higher minimum wages could make it harder for smaller stores to keep up with big chain stores.
Another big issue for stores right now is the rise in theft since the pandemic, which has gotten worse as things get more expensive. Many store owners, especially in convenience stores, feel this is a serious problem and are hoping the government will step in to help.