Growing UK convenience market

Date : 30 June 2014

The UK convenience market is set to be worth £49bn by 2019, according to the latest IGD Retail Analysis forecasts. This represents an increase of over 30% from its current value of £37bn.

Shoppers in the UK are spreading more of their spending across a variety of grocery 'channels', such as hypermarkets, online etc. Our latest ShopperVista research shows that nearly all shoppers (95%) use at least two channels. Seven out of ten of them use a supermarket and convenience store in any given month.

Convenience stores are well placed to benefit from changing shopping habits, acting as a key pillar of this 'multichannel' experience.

Our senior retail analyst James Harries explores this in more detail.

Store numbers show small growth

The UK convenience market is going through a period of transition.

Our latest research shows that overall store numbers in the convenience market are up 1.3%. This growth is due to the rise of multiple operators, such as Tesco Express, Sainsbury's Local etc, and fewer unaffiliated independents and convenience forecourts leaving the market.

Although convenience multiples have grown at the fastest rate, increasing store numbers by 13.6% in the year to April 2014, they still represent less than one in ten convenience stores.

The largest share of stores is still held by unaffiliated independents and symbol groups, such as SPAR or Londis, which represent almost two-thirds of total store numbers.

Store numbers

convenience store numbers

Note: Includes 2,285 joint ventures which are accounted for in several segments.

Source: IGD Retail Analysis and William Reed Business Media

Sales continue to grow

Symbol groups have by far the largest share of the convenience market, accounting for over 40% of the total value spent in the sector. If you combine the market shares of the symbol groups and unaffiliated independents, they account for almost 60% of the overall total.

Multiples are the fastest growing segment, growing by 16.3% for the 12 months to April 2014. However, this is from a low base, as multiples account for less than one in every five pounds spent in the channel.

Convenience sector value (£)

convenience sector value

Source: IGD Retail Analysis

Evolving market

Convenience stores are continuing to evolve, with the bar rising in terms of standards and innovation.

There is a continued move across the sector from a 'one size fits all' approach to more tailored solutions depending on the local area. It is not just the multiple retailers that are doing this, as we are seeing examples from across the market.

New approaches are continuing to offer inspiration to shoppers, as well as offering new opportunities for suppliers.

The Co-operative in Old Street is a good example of this forward thinking - challenging the traditional layout of the store and instead offering customers a 'mission based' solution depending on their reason for shopping.

The store is split into three areas:

  • Food-for-now
  • Food-for-tonight and
  • Food-for-later

convenience

Source: IGD Research

This offers a truly convenient shopping experience.

Blurring of channels

Convenience, discount and online represent the three biggest growth channels in UK grocery. These channels are now starting to blur, as the boundaries between these are now less clear.

An example of this would be Family Shopper. This is a new format introduced by the wholesaler Booker which blends elements of high street discounters, discounters and frozen food specialists in to a convenience store. This is unique to the market, offering a real point of difference.

convenience

Source: IGD Research

Conclusions

The continued shift towards a multichannel environment places an increased emphasis on convenience stores. The channel offers an unparalleled ability for retailers and suppliers to fulfil customer missions.

This is an incredibly exciting time to be involved in the convenience sector, with nearly £12 billion in extra sales forecast between now and 2019. And to sustain this momentum, convenience store operators need to stay close to shoppers changing needs and keep innovating.

For more on convenience

Visit the convenience channel page to keep up with our latest research and analysis.