The convenience retail sector in the UK is now worth £23bn and looks set for a period of strong growth that could see it exceed the £30bn mark by 2008 the Institute of Grocery Distribution (IGD) has said in a new report - Convenience Retailing 2004.
After an exceptional year, the sector has grown by 7.3 per cent despite a 0.4 per cent reduction in overall site numbers. These figures show it is outperforming the total grocery market, the IGD said, which grew by 3.3 per cent over the same period. Convenience now accounts for 20p in every £1 of grocery spending.
Most operators have performed strongly, benefiting from a combination of rising consumer demand and improved operational practices, with the performance of each segment better year-on-year.
As part of the report, IGD surveyed 12,000 convenience stores and found that their average store size has risen from 1,371 sq ft in 2003 to 1,418 sq ft in 2004. IGD believes that this trend will continue as operators seek to improve their customer offer in terms of the breadth of product ranges as well as services available.
Average weekly sales have also increased by 9.7 per cent year on year, within the sample. The Co-operative segment is the top performer, with average weekly store sales of £22,568, followed by the convenience multiple sector with £19,589.
Performance has been boosted by factors including store development programmes, re-ranging following acquisitions, and the fact that the average store size in these two segments is generally larger than the average for the convenience sector.
Suppliers too are realising the potential of convenience and investing more in the sector. IGD found that 73 per cent of retailer respondents agreed that their suppliers were devoting more resource to the c-store sector than last year (compared to 50 per cent last year). This was in line with suppliers' opinions - 77 per cent said that their company devoted more resources to the sector than last year.
" We have seen convenience stores change from entry level retail operations to a very slick and dynamic sector with suppliers giving more resource to the sector working with retailers to understand customers and develop specific strategies," said Joanne Denney-Finch, IGD chief executive. "With the c-sector doubling its growth rate this year and continuing to outgrow mainstream grocery retailing, it is clear why this market is attracting so much interest."
The IGD expects to see a wider roll out of better operational practices, with continuing upgrades of both store environments and product ranging. "Consumers have shown their enthusiasm for convenience and it is up to suppliers and retailers, working together, to achieve the full potential of he sector," said Denney-Finch.
Convenience Retailing 2004 is available from IGD priced £600 for members and £850 for non-members. For more information visit www.igd.com.
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