UK Convenience Retailing Market Overview
Feb 11 2009
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British organisation IGD’s has conducted research into the UK convenience market and it defines a convenience store according to three criteria: 

• Size and Opening hours: The store must be under 3,000 sq ft and open for long hours every day of the week.
• Main Business Activity: All stores must retail food and drink, for consumption off the premises, as their main business activity.
• Product Categories: A group of fifteen products have been identified as being central to the offering of a convenience store. It must sell at least eight of these core products to qualify as a “true” convenience store.

In the UK convenience store ownership is highly fragmented, with a large number of operators present. Store operators may be divided into several types including co-operatives, forecourts (at e.g., BP, Shell, Total), Multiples (e.g. Tesco Express) and franchises/ symbols (e.g. SPAR).

There are 49,530 convenience stores in the UK, with the market valued at £27.4bn in 2008, a 5.1% increase on the previous year. The value of the market continued to grow despite a 2.4% fall in store numbers, and now represents 20.3% of the total UK food and grocery market.

Convenience multiples perform well with high store standards continuing. Supermarket retailers are achieving significant presence in this segment and now operate 1,807 dedicated convenience stores accounting for more than half of the segment.

Fresh food based services have a high level of penetration within this sector, outperforming all other sectors of the market. However, the penetration of food-to-go based services has only recently started to increase, with a number of operators starting to introduce a hot coffee offer.

The future outlook of the sector is becoming increasingly complex due to the changing economic conditions which have resulted in increased inflation and weakening consumer demand. Modern convenience retailing is relatively untested in such conditions, and demonstrating value will be more important than ever this year and is likely to result in a stronger focus on private label and promotions.

IGD forecasts that food-to-go is to be a major growth area within the convenience market as more time pressured consumers, a greater number of single households and a less formal approach to dining will ensure strong consumer demand, while retailers and suppliers will be attracted by the potential sales and margin benefit.

Adapted from Source: www.igd.com, 2008.