As we step into 2025, the convenience retail sector is bracing for a year filled with both challenges and opportunities.
Rising operating costs, the end of a high-margin product line, and a wave of new legislative restrictions paint a demanding picture for this year. Yet, in true entrepreneurial spirit, convenience retailers not only stand firm but are also ready to innovate, expand and thrive.
Asian Trader got in touch with some of the leading convenience retailers to gauge the sector's mood. Despite the impending changes directly affecting the business, the mood in the sector is found to be upbeat and positive.
Plans for product line expansions, store refits, and strategic innovations are already set in motion, showcasing the resilience and creativity that define this industry.
For Londis Solo Convenience store owner Natalie Lightfoot, the mantra for 2025 is “work smarter, not harder”. Her 620-square-foot store thrives on its one-hour home delivery service, a unique offering amidst neighbouring supermarket competition.
“Over the last five years, I have been building up the delivery side of my business. I want to further increase my delivery sales share, which is at 40 per cent at the moment.
Retailer Natalie Lightfoot
"However, it's quite labour intensive. Considering the upcoming rise in wages, I will be streamlining this side more. That's going to be my top thing this year,” she says.
“I need to work smarter, not harder. I will also be focusing on improving tech in my store like getting headset for my staff.”
The Glasgow-based retailer is also planning to alter the layout of the store to adjust more freezers so as to increase the frozen food line.
In Dartford, retailer Nishi Patel is also planning to boost the delivery side of his business this year apart from building on his success in tracking trends through social media.
“We try to stay ahead of the curve when it comes to trends by keeping a keen eye on Tik Tok and Instagram. We will be adding more of Japanese sweets and drinks and American candies.
"We are also collaborating with a chocolate company in London to get some exclusive stock for Valentine's Day,” he tells Asian Trader.
Innovation isn't limited to products. In Hampshire, retailer Imtiyaz Mamode plans to upgrade his Wych Lane Premier Store with layout changes to accommodate new product lines, all while eyeing even a potential symbol group switch.
He said, “We have decided to change a bit of the layout of the shop so that we can stock more line of products. We will discontinue some non-performing ones and add some more potential ones.”
Popularly known as “TikTok retailer” for his knack for identifying viral trends, Mamode aims to introduce a cotton candy machine this year in his store, potentially a UK-first for convenience stores.
Elsewhere in Glasgow, for retailer Girish Jeeva, 2025 will be all about investing in his human resources and technology.
He shares with Asian Trader, “Our top priority for 2025 is to focus more on our team and benefits for them. We want to focus on developing their skills further and create a core team so we can remotely run our stores.
“We also have some amazing new innovations planned like anti-theft system and some more technology-based improvements.”
Retailer Imtiyaz Mamode
In south Of London, retailer Benedict Selvaratnam is aiming to expand the market presence of Freshfields Market, both locally in Croydon and through its brand-new e-commerce website.
The retailer is also planning to enhance customer experience by offering a “luxurious yet affordable” shopping atmosphere this year while introducing innovative packaging and operational processes for e-commerce.
Selvaratnam is also set to target Asian grocery segments this year to further diversify the store’s range, considering the growing consumer demand for ethnic and niche food products.
He is also seeing a greater emphasis on sustainability, including eco-friendly packaging and carbon footprint reduction as a rising trend in the convenience sector.
Meanwhile, retailer Priyesh Vekaria in Manchester, who has worked closely with the likes of Nestle, Phillip Morris, and Walkers in the past year, aims to focus on further strengthening relationships with suppliers to bring new product developments (NPDs) directly to the convenience sector.
“What I am hoping for this year is suppliers working more closely with us for the launch of NPDs directly to the convenience stores,” he says, adding that some of the big names are willing to work directly with convenience retailers.“
"Such events and activations work greatly in our favour as we can tap new customers. Earlier, brands only wanted to work with big supermarkets but now suppliers are acknowledging the reach and volumes of independent convenience sector as well,” he tells Asian Trader.
Retailer Priyesh Vekaria
Echoing the optimism of the wider sector, James Lowman, chief executive of ACS, states that suppliers are now more committed than ever to prioritising product launches and tailoring NPD to the convenience sector, so there’s a big opportunity there.
Lowman tells Asian Trader, “I think convenience stores acting as a bridge between online shopping and bricks and mortar through Post Office services, click and collect, parcel lockers and other similar services is something that can be a growth driver in the year ahead.
“Food-to-go has been long-identified as a big growth area for the sector and retailers should be looking to commit further in this area.”
Choppy waters
Despite the optimism, significant challenges loom on the sector. The upcoming disposable vape ban, rising wages, and National Insurance hikes are some of the main hurdles that retailers will have to navigate this year.
What is keeping most retailers restless in the impending disposable vape ban.
Lately, vapes not only has replaced lower-margin cigarette sales but they also come with higher margins for retailers. The transition to reusable devices, while inevitable, brings a sense of uncertainty.
Lightfoot informs, “A huge portion of our sales come from vapes and with the disposable vapes disappearing, it will be a huge issue for us. We have started stocking reusable ones but not all of them as I want to wait and watch how the market evolves after the ban.”
Jeeva also shares the same apprehension, saying “We need to see how much the ban is going to impact the business.”
To combat the impact, the Londis retailer Patel in Dartford has already started prepping up a bit.
“We have started getting liquid refillable devices in. With the ban inching closer, we are trying to get customers used to reusable ones. The response has been encouraging so far,” he says.
Retailer Vekaria is also concerned over Tobacco and Vapes Bill. He strongly believes that the policies, no matter how good they are, will prove inefficient if they are implemented without support on a grass root level.
Rising wage costs are another aspect bothering most of the store owners as some are even planning to cut down on staff and reduce working hours.
Vekaria says, “Increase in wages and National Insurance contribution are something that we will have to brace ourselves for. We will have to work out from where the additional revenue is going to come from. That’s the motto that we will be working towards this year.”
Retailer Nishi Patel
Echoing the wider sentiment, leading retailer Atul Sodha tells Asian Trader, “We are all very concerned how are we going to combat increasing costs this year. With National Insurance contributions going up to increase in minimum wages, we are getting squeezed from all sides.
“I think the key is to keep on top of the trends throughout the and what is happening in the market. Like for January, people usually become more health conscious. They are looking for healthier food and drinks and convenience stores should aim for such signs by offering healthier food like protein yoghurt.”
Apart from rising costs and compliances, retailer Selvaratnam also foresees navigating supply chain disruptions, especially for international imports, as another major challenge this year.
“We’re closely monitoring regulations around environmental compliance, such as waste management (vape laws) and packaging requirements, employment laws, particularly those affecting working hours and wages and food safety standards and labeling regulations, especially for products with an international origin,” the retailer tells Asian Trader.
To prepare, he is already investing in compliance tools, staff training, and adopting sustainable practices where possible, he adds.
ACS identifies business rate as another big challenge for 2025.
For anyone paying business rates, the discount will be going down from 75 per cent to 40 per cent in April which will have an impact, especially for urban retailers and those running petrol forecourts.
Lowman from ACS adds, “The smallest stores will be protected from the National Insurance increases by the increase in the Employment Allowance, but for anyone with more than seven or eight staff, or with multiple stores, the NI increases along with the National Living Wage hike will push up costs.
“And then if you’ve got more than 10 FTE employees, in March you’ll be included in the simpler recycling regulations that require stores to separate their waste into different bins before being presented to waste collectors.”
Rising crime also continues to plague the sector, with retailers like Mamode expressing frustration over limited support from authorities.
“We are left to protect ourselves. We try to stop them and take back the stolen products; we do fight if need to,” he reveals.
ACS advices retailers to think about investing in equipment and systems to make themselves a “harder target” and to “report crime every time”.
“There will also be a lot of new advice coming in 2025, some has already been trailed like the disposable vaping guide, but we’ll also have advice on the simpler recycling rules and some exciting developments on accepting digital proof of age in store,” Lowman says.
Thriving Against the Odds
No matter how chaotic 2025 sounds like, the sector continues to remain focused on adaptation and growth.
Lowman from ACS tells Asian Trader, “The one constant that I see every year in the independent sector is that retailers always innovate their way to growth.
“I can’t go as far as to say for certain that conditions will be one way or another this time next year, but I do believe that customers will continue coming through the door and then it’s up to us to make the most of that opportunity.”
Hoping for some respite, Andrew Goodacre from British Independent Retailers Association (BIRA) is calling on the government to support independent retailers in 2025.
“We need the cost of running a shop reduced and consumer spending increased. To increase spending, we need to see a rise in consumer confidence – driven by falling inflation falling and reduced interest rates.
“Reducing costs is much easier – simply reverse the proposed increase in business rates until the reform of business rates has taken place,” adds Goodacre.
The road of 2025 may seem patchy at some points, but convenience retailers seem confident on their abilities and potential.
In the words of retailer Patel, independent retailers have always adjusted and adapted and will continue doing so in the coming months too.
As Lighfoot aptly puts it, “We are quite flexible as an industry. That’s like one of our greatest assets.”
Post office Horizon scandal campaigners have slammed the government for extending a post-Brexit contract worth £67 million with the controversial firm Fujitsu.
A recent report by The Independent stated that His Majesty’s Revenue and Customs (HMRC) has granted a year-long extension to Fujitsu, which developed the faulty software leading to the wrongful prosecution of hundreds of subpostmasters for theft and false accounting, to run its Trader Support Service (TSS),
Fujitsu ruled itself out of bidding for government contracts in January last year due to its role in the Horizon Post Office scandal.
But the extension, worth £66.8m and detailed in documents seen by the media house, was approved because it is not a new contract.
Former sub post-mistress Seem Misra OBE has criticised the government over this move.
She stated on X, "We (SPMR) couldn't work due to wrongful convictions, yet Fujitsu—whose system destroyed lives—is expanding. What have they offered this time to stay quiet? Where's the justice?"
— (@)
Lord Arbuthnot, who campaigned for wrongly convicted sub postmasters, said it was “a worrying decision by the government on several levels”.
“First, it sends Fujitsu and other companies the message that the country doesn’t care about the unethical behaviour shown by Fujitsu in the Post Office scandal.
“Second, it weakens the government’s bargaining power in requiring Fujitsu to bear a substantial portion of the cost of that scandal.
“Third, it suggests that the government is uncomfortably dependent on Fujitsu. And fourth, it ignores the fact that Fujitsu’s capability on this contract may be no better than their Post Office capability," he told The Independent.
“Why didn’t they start work earlier on finding someone else?”
Meanwhile, HMRC said the extension was needed in order to “ensure a period of stabilisation” while new trading arrangements come into place under the Windsor Framework.
It has promised to run a procurement process in the coming months to replace Fujitsu in delivering the service.
Fujitsu in the past has won nearly £6.8bn in nearly 200 contracts from the public sector, including 11 for HMRC to the value of over £1bn, and 12 contracts with the Ministry of Defence for £582m.
The Labour government is getting rid of a "shoplifters’ charter" to take a grip on rising retail crime left behind by the Conservative party, prime minister Keir Starmer stated on Wednesday (5) in the Commons Chamber.
Starmer was answering a question raised by Labour MP Claire Hughes when he acknowledged that shoplifting is no more a "low level" crime.
Citing an example of seaside town Llandudno where businesses are struggling with a rise in shoplifting, Hughes raised the concern in the Commons Chamber, adding that thieves are now committing robbery in full view of staff because they have no fear of consequences.
She stated, "The recent funding boost for neighbourhood policing is very welcome, but will the Prime Minister please tell my constituents what more the Government are doing to tackle retail crime and deter repeat offenders?"
Starmer agreed, saying shoplifting is not a victimless crime.
He said, "For far too long, crimes such as shoplifting have been written off as 'low level'.
"That is wrong; such crimes are devastating. The Conservative party left us with rising crime and effectively told the police to ignore shoplifting of under £200-worth of goods.
"We have got rid of that shoplifters’ charter, and we are working hard to ensure that we take a grip where they lost control."
Nearly half a million shoplifting offences were recorded by police in England and Wales in a year, the highest 12-month total on record, according to the data released by Office for National Statistics (ONS) last week.
.A total of 492,914 offences were logged by forces in the year to September 2024, up 23 per cent from 402,220 in the previous 12 months. The figure is the highest since current records began in the year to March 2003.
Industry body the British Retail Consortium's (BRC) annual crime survey also shows similar trend.
BRC survey shows that theft and violence against retail workers in Britain soared to record levels last year and are "out of control", driven partly by criminal gangs.
The survey found more than 20 million incidents of theft were committed in the year to Aug 31 2024, which equates to 55,000 a day, costing retailers a total £2.2 billion. There were 16 million incidents in the previous year.
Incidents of violence and abuse in 2023/24 climbed to over 2,000 per day, up from 1,300 the year before. This is more than three times what it was in 2020, when there were just 455 incidents a day.
Incidents included racial or sexual abuse, physical assault or threats with weapons. There were 70 incidents per day which involved a weapon, more than double the previous year, shows BRC survey.
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FWD's new report highlights the crucial role wholesalers play in the supply chain.
Food and drink wholesale distribution sector generated £33.6 billion of turnover in 2023-24 with £17.5 billion coming from sales to mainly independent retailers, reveals an industry report released today (5).
The report was launched in the Houses of Parliament in the presence of Daniel Zeichner, Minster for Food Security and Rural Affairs.
Zeichner said, " “This report highlights just how important the wholesale sector is. These are really significant numbers. Economic growth is absolutely central to wholesale businesses, as is breaking down the barriers to opportunity.
"Our pledge to you is to work with you as we begin to develop our policies. Our stated goal is to try and help change the way the supply chain operates to make sure there is a fair distribution of resources through the supply chain, and I really look forward to working with the wholesale sector on this.”
Retail businesses account for 52 per cent of food and drink wholesalers' revenue, while foodservice and caterers account for 29 per cent and 10 per cent respectively.
Delivery remains the most common route to customers with 58 per cent of sales value fulfilled through deliveries. 40 per cent of sales value fulfilled through cash and carry and 1.3 per cent of sales are made through click and collect.
In total, wholesalers spent £27 billion on stock to be sold to retailers and foodservice providers. The largest product categories were tobacco, vaping and alcohol, followed by soft drinks, frozen food, confectionery, crisps, snacks and biscuits.
The report states that food and drink wholesale distributors directly contributed £3.5bn to national output in terms of gross value, employing 77,000 people. The overall value chain that it supports employs a total of 1.5 million people, about 4.8 per cent of the UK workforce.
The sector faces a series of challenges going ahead, highlighted the report through a recent survey of FWD's members. Some of the main concerns among the wholesalers are inflation, increase in transportation costs, labour and skill shortage and regulations.
Wholesale warehouse
iStock image
AI and automation hold significant potential to positively impact the sector like in identifying the wallet share gaps and predicting reorder needs . However, the report states that companies are yet not fully embracing these technologies, saying "no distributor has integrated AI into its operation to a great extent".
60 per cent of the respondents indicated they have incorporated AI into supply chain management.
FWD reiterates in the report to reach net zero Scope 1, 2 and 3 emissions by 2040, which will require 90 per cent reduction in emissions and coordinated actions across value chains.
Furthermore, the sector is facing labour shortage stemming from ageing workforce, Brexit, images issues and competition.
"The sector's image poses a challenge in attracting new recruits as over 90 per cent of people never consider a career in logistics", states the report, mentioning terms like "demanding" and "boring" associated with warehouse work.
Speaking at the launch, FWD head of external affairs Lyndsey Cambridge said, “Wholesalers are the lifeblood of the nation – from supporting high street restaurants to supplying hospitals, schools and local retailers with food, the FWD membership is delivering for people across the length and breadth of the UK.
"This groundbreaking research provides a comprehensive economic impact of food and drink wholesale, demonstrating the value and importance of the sector in improving consumer choice through its support for retailers and caterers.
“Given its reach and contribution, our sector has and will play a pivotal role in driving economic growth in the coming years. We look forward to partnering with policymakers across the UK to grow our industry further while meeting the everyday challenges our members face in areas such as increased transport costs and labour shortages.”
Cost of living is still consumers’ number one concern, shows recent data, highlighting how shoppers are turning to scratch cooking to both save money and have a healthier diet.
According to new data released today byNielsenIQ (NIQ), total till sales grew at UK supermarkets (+5.3 per cent) in the last four weeks ending 27th January 2025, up from +3.6 per cent recorded in December.
With a better outlook on food inflation (+1.6 per cent) compared to last year (+6.4 per cent), there was good unit growth of +0.9 per cent at the Grocery Multiples. However, growth slowed after the new year.
January is typically a time of year for a healthy reset for consumers, and NIQ data shows 12 per cent of British households purchased meat-free substitutes in the last four weeks. Whilst this is a small drop from 14 per cent last year, shoppers have not cut back on healthy diets with double-digit growth in freshly prepared fruit (+16 per cent) and fresh veg accompaniments which grew by +9 per cent.
Meat, fish and poultry was the fastest growing super category (+9.1per cent) as shoppers sought to cook protein-rich meals as part of New Year diets. This was followed by pet care (+8.3 per cent) and dairy products (+6.8 per cent).
In addition, NIQ data shows that half of all UK households now say they cook from scratch every day or most days, with around 16 per cent doing so more due to the rising cost of living.
The impact of this shift in behaviour marks a spike in demand for easy hacks to speed up or elevate the dining experience, with a boost in sales for fresh gravy (+28 per cent), fresh dough and pastry (+18 per cent), fresh dips (+15 per cent) and fresh cream and custard (+14 per cent).
In terms of retailer performance, Ocado led with a sales growth of +15.6 per cent compared with the same period last year.
This was followed by Marks & Spencer (+9.7 per cent) helped by its bigger store formats motivating shoppers to add more items to their baskets as well as its dine-at-home deals. There was also continued growth at the discounters Lidl (+7.8 per cent) and Aldi (+3.8 per cent) with both retailers gaining new shoppers and more store visits.
Mike Watkins, Head of Retailer and Business Insight at NIQ said, “The lift to grocery sales in the last four weeks was helped by the timing of the New Year, with a proportion of sales coming from the new year festivities which was week ending 4th January (+10.0 per cent).
"However, after this, weekly growth in January was slightly lower. Whilst overall Total Till sales growth was higher than December, the underlying trend is closer to +3 per cent which is the average growth in the most recent three weeks.”
Watkins adds, “NIQ Homescan data shows that the cost of living is still firmly consumers’ number one concern at the start of 2025. Shoppers are looking to save money and eat healthier leading to a growing trend in scratch cooking, which is one of the key behaviours driving the strong unit growth (+2 per cent) and value growth (+6.8 per cent) in fresh food categories in the last four weeks.”
Take-home sales at the grocers rose by 4.3 per cent over the four weeks to 26 January compared with one year ago, according to the latest data from Kantar, which also shows a consistent rise on spending on promotions and fresh produce. Share of symbols and independents however continued on a decline.
January spelled relief for shoppers as grocery price inflation slowed to 3.3 per cent over the four weeks.
With household budgets typically stretched at this time of year, retailers played their part in easing the pressure on purse strings.
Fraser McKevitt, head of retail and consumer insight at Kantar, comments, “Supermarkets were dishing out the discounts this New Year, and consumers responded. Spending on promotions rose year-on-year by £274 million, accounting for 27.2 per cent of sales – the highest level in January since 2021.
“People also turned to non-branded products to help keep costs down, with own label as a proportion of sales hitting a record high of 52.3% in January. Spending on supermarkets’ own lines was up 5.4%, helped by consumers buying premium own label products in the couple of days leading up to New Year’s Eve."
Typically, shoppers have an eye on wellness, not just their wallets, at the start of the year – and 2025 was no exception. More than 10 per cent of the average consumer’s January grocery bill was spent on fresh fruit, vegetables and salad, totalling £1.2 billion – £193 million more than in December.
Nathan Ward, business unit director for usage and out-of-home at Kantar, adds, “Rolling into the new year, health tends to play a bigger role in our grocery choices. Over a quarter of take-home food and drink in January is chosen with health at least partially in mind, as shoppers tell us they want to eat less processed food and feel the benefit of fibre and vitamins.”
Protein products pulled their weight at the tills too as demand for bars, bites and drinks boosted spend on sports nutrition products. Sales for this category at supermarkets were 47% higher than last year, with over two million households buying these items during the month.
Sales of low and no alcohol drinks were 7 per cent higher than last January, and 6.7 per cent of households bought at least one of these alternatives.
Fraser McKevitt comments: “It’s no surprise to see the low and no alcohol trend make its mark in January, but given some of the generational splits we have seen in grocery, it’s interesting that older shoppers are just as likely to take these products home as younger ones. Not everyone signed up for dry January though, with 49% of people buying an alcoholic drink this month – but this is a pretty big drop from December’s 76%.”
Lidl’s sales rose 7.4% over the 12 weeks to 26 January, making it three continual years of growth for the discounter, whose share hit 7.2%. Aldi accelerated for the third consecutive month with sales up 4.2% and its market share increasing to 10.2%.
Ocado was the fastest-growing grocer for the ninth consecutive month. Spending at the online retailer grew by 11.3% meaning it now holds 1.9% of the market. Joint owner of Ocado Retail, M&S has also seen a strong 12 week period of growth with grocery sales increasing by 10.5%* in its brick-and-mortar stores.
Britain’s largest grocer Tesco gained the most share, its 28.5 per cent hold of the market is 0.7 per cent higher than this time last year, and it also saw its fastest rise in sales since April 2024 at 5.6 per cent. Sainsbury’s outpaced the market at 4.2 per cent sales growth, increasing its share from 15.7 to 15.9 per cent. Morrisons has 8.6% of the market while Asda’s portion is 12.6 per cent.
Convenience retailer Co-op returned to growth, with sales rising by 0.8 per cent giving it a 5.2 per cent share of the market while symbols and independents again saw dip of 5.8 per cent.