A new study shows that despite growing inflation and the fallout from the pandemic, the convenience market in the UK has proved resilient.
The Lumina Intelligence Convenience & Wholesale Market Report states that the sector increased its total value by 4.0% last year to £45.2bn. The primary driver of this growth was the convenience multiples, which grew 6.8%. This surge was partly driven by the return of consumers to city centre and workplace locations post-pandemic, as well as a heightened focus on value credentials.
Whilst facing obstacles such as high energy costs, supply chain challenges and value-conscious shoppers, the market is projected to see further value growth in 2023, with an increase of 4.1% to £47.1bn.
The report notes that the resilience of the market is evident in its response to recent challenges, including enduring high inflation, strong innovation in own-label offerings, and the adaptation of store formats to maximise footfall.
Despite the positive growth, Lumina Intelligence highlights that convenience market penetration declined by 8 percentage points to 56% in May 2023. This downturn appears to be driven by older and less affluent shoppers (C2DE group), who have exited the channel due to rising prices.
Energy costs, inflation, and supply chain disruptions continue to be business concerns, posing challenges to retailers’ profitability. The report notes that to combat these challenges, wholesalers and suppliers are offering support to retailers through tailored category advice, product recommendations and strategic promotions.
Lumina Intelligence concludes that while challenges persist, the robust growth in the convenience market in 2022 and its projected growth in 2023 illustrate the sector’s adaptability and resilience in the face of an uncertain economic climate.
