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In the Face of Many Challenges, the Convenience Sector Continues to Thrive

The Guardian recently reported on the many challenges facing the still thriving Convenience Store sector.

It’s part of the furniture of British life. The shop on the corner of the street that seems to sell everything: booze, fags, scratchcards, sweets, pet food and hummus. Those crisps you like – Lay’s, not Walkers – in obscure flavours you usually only find on holiday. You might traipse there in your pyjamas when you’ve run out of milk in the morning, or when you’re desperately seeking a sugar hit to ease your hangover. These shops are in the thick of the drama on TV soaps like Coronation Street and Hollyoaks. Back in the real world, there are 49,388 convenience stores across the UK, each with its own story.

The decline of convenience stores like Londis has been forecast for decades, as online shopping has grown alongside the major supermarkets opening smaller stores like Tesco Express and Sainsbury’s Local. But, so far, the sector has defied these predictions, with sales surging during the Covid-19 pandemic. When supermarkets ran out of toilet tissue, convenience stores were among the pandemic’s quiet heroes. Now, the cost-of-living crisis has changed the dynamic again. With inflation driving up prices, these shops face the tough reality that many customers are being forced to prioritise value over convenience. With energy prices rising too, can the great British corner shop survive?

James Lowman, chief executive of the Association of Convenience Stores (ACS), says he has heard many stories where there are queues around the block for freshly baked samosas and specially prepared Turkish, Lebanese or Polish deli food. It’s a triumph of multiculturalism, he thinks, but also a sign that convenience stores are more relevant than ever. “The convenience store sector has consistently grown faster than the grocery market as a whole,” he says.

The number of convenience stores in the UK increased by almost 1,000 over the last 12 months. These range from newsagents and franchises like Londis, to independent greengrocers. The Grocer reports that the total share of food sales in convenience stores rose by one percentage point to 23.4% in 2022, “pinching sales directly from the supermarket sector”. One of the reasons was convenience’s ability to limit “till shock” (where customers accidentally spend much more than expected because they are buying more items and haven’t kept track of the price) and reduce waste. These stores would be an expensive place to do a large weekly shop, but buying little and often can help people be more efficient with what they buy.

Even in challenging economic times, Lowman thinks people still need the affordable treats that their local shop provides. Customers might not be going out for dinner as much, but they still treat themselves to little luxuries, like fancy drinks and premium chocolate.

Quality is an area where convenience stores can be more competitive with supermarkets. Their fruit and vegetables are often locally sourced and fresh. They’re a place where customers can buy premium products that supermarkets don’t always stock, such as vegan alternatives and international foods like baklava.

What does the future look like for Britain’s convenience stores? Grocery delivery apps were touted as a major threat to the sector, but after a series of mergers with Weezy and Gorillas, rapid grocery delivery company Getir announced plans to lay off 2,500 staff, while its smaller rival, Jiffy, ceased deliveries last year. By comparison, convenience stores have managed to stay relevant by offering a wide range of services, from dry-cleaning and key-cutting to energy bill payments, parcel collection and postal services. “They reinvent themselves all the time,” Sharma says. “It’s like the cat that’s got nine lives.”

Now, these shops face another challenge: surging energy costs. Last winter, the UK government provided an energy support scheme for small businesses after the ACS warned that the “emergency” of rising costs would force thousands of corner shops to close. Government support decreased in March ahead of the warmer months, but Lowman says this presents specific difficulties for convenience stores, because they are often “high energy intensive” throughout the year in order to keep fresh produce and refreshments cool in summer. With many shops now paying double what they were before energy prices sharply rose, some may decide that their business model is no longer profitable enough to justify the long hours.

In cities, small local shops are fighting against the slow march of urban gentrification. Ali, who works in Beatles News on Victoria Street in Liverpool, says that inflation has affected footfall in the shop, while rent in the city centre continues to rise. McCall says that his premises are under threat from developers, who want to buy the land from the council to build blocks of flats. “We know we’re not going to be able to stop it,” he says. “Once we’re gone, there will be no other shop like us in central Manchester – and you don’t know what you’ve got till it’s gone.”

If these shops were to become more of a rarity, what would we lose? The average convenience shop customer visits 2.7 times a week and 36% say they know the people who work in their local shop quite well. “There is a real relationship there between businesses and their customers,” Lowman says. “I hear stories about people who come in every day then, if they don’t come in, their relatives are called and it turns out they’ve had a fall or something.”

With thanks - The full article by Louis Staples appeared in The Guardian on Tuesday 17th October 2023.