Convenience Store Numbers Up 20% In Five Years But Market Starting To Reach Saturation Point

A new report by The Local Data Company (LDC) has highlighted the rapid growth of the convenience sector over the last five years with store numbers up 21%. However, it also found that the number of convenience stores in the UK has reached saturation point in some areas with 228 towns seeing a decline in their number last year and 300 stores closing in total.

The LDC report analyses growth by fascia and by town and identifies where and which fascia have been changing. The research shows how competitive the convenience market has become with the total number of outlets increasing from 13,617 stores in 2010 to 16,426 stores at the end of 2015 – a 21% increase.

The CAGR (Compound Annual Growth Rate) of the ‘Big 4’ supermarkets convenience store formats over the last five years was 8.4%, which was faster than the growth of their larger store formats at 4.9%.

However, the convenience store market overall was the slowest growing segment in the food and groceries market with a CAGR of 3.2% over the last five years. This is lower than the CAGR for discount stores, at 7.2%, and supermarkets, at 4.9%, over the same period.

ldc-convenience1Number of stores across the different food retail store formats (Source: LDC)

Meanwhile, supermarkets were the only format to see a fall in its growth rate between 2013 and 2015, down from 5.3% to 1.6%. For example, Tesco’s growth has been focused on its Express c-store format, with an increase of 17 stores and One Stop, with an increase of 70 stores, while Tesco Metro showed a loss of -17 stores in 2015.

Of the fourteen convenience store fascias researched by LDC, five had a negative net change in stores, these included: Londis (-268); M Local (-132); Tesco Metro (-17); Mace (-13); and Budgens (-11). Some of these were rebrandings, rather than actual closures.

Independent convenience stores had a CAGR of +5.6% within the five year period increasing from 3,755 in 2011 to 4,707 in 2015.

ldc-convenience2Number of stores across GB for the main convenience store fascia 2014- 2015 (Source: LDC)

The town with the lowest ratio of people to stores was Inveraray in Scotland with three convenience stores and a population of 596 people – 199 people per store. Meanwhile, the fastest growing region for convenience stores is the West Midlands with a net change in 2015 of +66 stores across the 79 towns in the region analysed, giving an average of +0.84 new stores per town.

Matthew Hopkinson, Director at The Local Data Company commented: “The key point of note in this research is the relentless expansion of all food formats across Great Britain for the last five years. The way people shop has changed which has impacted the large superstores sales, which has been further impacted by convenience formats of the same supermarkets alongside the discounters and the symbol groups. Last week’s announcement of the launch of Amazon’s new grocery service will be an interesting one to watch as it has the potential to compete with not just the supermarkets, but the discounters and the convenience stores.

“The role and relevance of food shopping for consumers is changing profoundly. We have seen the physical impact but unlike other sectors we have yet to see the online impact. Perhaps Amazon will be the catalyst to change this and if it does then we will see some retailers under significant pressures over the next five years.”