A new report reveals the local shop sector is in great shape, growing by more than five per cent. Mary Isokariari finds out why.
Convenience stores are winning the battle against supermarket chains as the number of independent retailers increases in the UK, according to new research.
The 2014 Local Shop Report report conducted by Association of Convenience stores (ACS), revealed there are now 50,747 convenience stores in mainland UK, making up a sector that is now worth £37.4billion, a growth of 5.2% on 2013.
ACS Chief Executive James Lowman said: “The convenience sector is outgrowing the rest of the grocery market for a number of reasons, including changes in consumer behaviour, an increase in single person households and a rise in the number of older people in our communities.
"However, the sector has only been able to grow by adapting the range offered in stores and diversifying the services that are offered to customers.”
Local shops are a vital source of employment – nationally, the convenience store sector provides jobs for around 386,000 people.
The figures also reveal that 23% of shop owners work more than 70 hours per week on average, while 20% take no holiday at all throughout the year.
"This report is an incredibly valuable tool in engaging with Government. ACS will be sending the findings of the report and specific data on each constituency to all MPs to ensure these important decision makers have a much fuller understanding of the local shop sector,” added Lowman.
According to the ACS report, fruit and veg is the fastest growing category in stores, now contributing around £2.4bn to the sector indicating that customers are now using convenience stores for more than just the traditional top up grocery needs.
Lowman said: “In many cases stores will have a relationship with a local supplier to supply fresh produce that has been grown nearby.
“In the coming years, we are likely to see a continued rise in fresh produce sales but also in areas like food to go and coffee, which are becoming an important footfall driver for stores.”
Local shops are a source of new investment – three quarters of convenience store owners (75%) are new investors.
James Bielby, Chief Executive, the Federation of Wholesale Distributors (FWD), which is the member organisation for UK wholesalers, said the growth came from “the continuing incursion of the multiples into the convenience sector.”
“But that simply reflects that consumers are turning away from out-of-town supermarkets and looking for more flexible, accessible local services," he added.
“Symbol group membership is growing, and this partnership with a wholesaler who understands your business will drive up standards, and make sure independents are well placed to take advantage of the new desire to shop locally.”
Bielby believed convenience stores were now “breaking down traditional channels” by expanding their range and “changing expectations of what a local shop can do,” by providing items such as an eat-in option.
He added: “If it is presented and merchandised well, fresh food can be a great attraction in a local store and it challenges customers to rethink what the independent on their doorstep can offer them.”
Convenience stores typically have a catchment area of about half a mile and are used regularly by consumers in addition to shopping larger supermarkets as a top-up to their weekly shop.
The ACS report follows warnings that local shops were set to face a turbulent time in the next five years due to the increasing needs of the modern consumer.
Professor Joshua Bamfield from CRR agreed there had been a shift towards convenience stores therefore was “not surprised” by the ACS findings.
“In urban areas people visit convenience stores several times a week. Going back 15 years ago and people would go to a large supermarket once a week on a Saturday taking their kids with them.
“The question is as people have more money in their pockets to spend, will they go back to the way they used to shop”, he added.
Bamfield highlighted one of the major issues faced by the sector was the way convenience stores will have to constantly evolve all the time and adapt to changes in consumer behaviour.
He said: “I don't want to be gloomy but not all will succeed, a proportion of independents will do well…while others will fail.”
For now local retailers are revelling in the fact that consumer trust in supermarket chains is at an all-time due to media speculation that large supermarkets are not as cheap as they make out.
Britain's biggest retailer Tesco, has issued three profit warnings in two and a half years after losing customers to discount rivals Aldi and Lidl.
Bramfield said: “In 2016 it should be clear whether Tesco can get their mojo back or become the Woolworths of the future.”
While consumer support for independent stores remains strong, retailers must play on their strengths in order to survive.
Asian Trader Best Bakery Retailer of the year 2014 Bal Aulakh is the owner of Select & Save in Shirley, Solihull. The store thrives on its personal customer service, competitive pricing and is part of the symbol group membership.
“Since we are located within an estate, we are on first name basis with customers, we interact with them and are part of the community."
“Select and Save enhances the buying power. We are able to offer deals with prices that in some cases are better than what the supermarkets are offering.”
Aulakh believed the threat of multiples meant that “independents will have to step up their game” and that convenience stores were much more accessible than online shopping.
“We are there all the time and ensure we have fresh produce and are competitive in price so customers know they can just pop in.”
FWD Chief Executive James Bielby was confident that independent retailers could bear the brunt of online shopping growth as well as the rise of the mini-supermarket.
He said: “Many are establishing their own online ordering and delivery service, but as always the aim is to keep the customer coming into the shop, to remind them that shopping local is about far more than ticking items off a shopping list.
“It’s about meeting your neighbours and feeling that you’re part of a community, and knowing that the shop owners will adapt their offer and their service to meet your needs. Local shops also thrive in the areas where online delivery services are weak, such as distress, impulse and specialist purchases.”