New study: convenience store numbers reach saturation point
The study by The Local Data Company looked at the growth of convenience stores over the last five years, analysing growth by fascia and town and identifying where and which fascias have been changing.
The figures show how competitive the market has become with the total number of convenience stores increasing from 13,617 in 2010 to 16,426 at the end of 2015.
Furthermore, some 228 towns saw a net loss in convenience stores in 2015, with a total of 300 stores closing in total.
The study found that the compound annual growth rate of the ‘big four supermarkets’ convenience store formats over the last five years was 8.4%, which was faster than the growth of their larger store formats at 4.9%.
However, convenience stores were found to be the slowest growing segment in the food and groceries market with a compound annual growth rate of 3.2% over the last five years. This is lower than the growth rate for discount stores at 7.2% in the period.
The supermarket was the only format to see a fall in its growth rate between 2013 and 2015. The growth rate fell from 5.3% to 1.6%.
Tesco’s growth has been focused on Tesco Express, with an increase of 17 stores and One Stop, with an increase of 70 stores, while Tesco Metro showed a loss of 17 stores in 2015.
Of the fourteen convenience store fascias researched, five had a negative net change in stores including Londis, M Local, Tesco Metro, Mace and Budgens although some were rebrands rather than actual closures.
Independent convenience stores had a compound annual growth rate of 5.6% within the five year period increasing from 3,755 in 2011 to 4,707 in 2015.
The town with the lowest ratio of people to stores was Inveraray in Scotland with three convenience stores and a population of 596 people - 199 people per store.
Meanwhile, the fastest growing region for convenience stores is the West Midlands with a net change in 2015 of 66 new stores across the 79 towns in the region analysed, giving an average of +0.84 new stores per town.
Matthew Hopkinson, director at The Local Data Company, said: “The key point of note in this research is the relentless expansion of all food formats across Great Britain for the last five years. The way people shop has changed which has impacted the large superstores sales, which has been further impacted by convenience formats of the same supermarkets alongside the discounters and the symbol groups.
"Last week’s announcement of the launch of Amazon’s new grocery service will be an interesting one to watch as it has the potential to compete with not just the supermarkets, but the discounters and the convenience stores.
“The role and relevance of food shopping for consumers is changing profoundly. We have seen the physical impact but unlike other sectors we have yet to see the online impact. Perhaps Amazon will be the catalyst to change this and if it does then we will see some retailers under significant pressures over the next five years.”
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