The convenience sector in the UK is growing faster than mainstream grocery retailing, up four per cent over 2005 and now worth £24.9 billion a year, according to leading research organisation IGD.

But levels of consolidation and acquisition activity were muted in comparison to 2003 and 2004, and store numbers have declined by 1.1 per cent this year, falling to 51,526.

The highest level of growth came within the symbol group convenience stores, where store numbers increased by 5.1 per cent. Bestway, Landmark and Booker have increased the number of stores operating under their various fascias by more than 600 in total.

This has lead to a 10.2 per cent increase in the symbol group’s value, with the segment generating sales worth £8.2 billion a year.

There has also been an increase in convenience multiples, up 2 per cent on last year, with sales up by16 per cent. Tesco Express, Sainsbury’s Local, M&S Simply Food along with regional operators Davis Sands, Mills and Smile have benefited from strong like-for-like trading and the conversion of stores into high performing formats.

The number of co-operative convenience stores has increased by only 0.6 per cent.

The forecourt sector experienced the greatest degree of change over the year as oil companies continued to divest their company-owned stores to focus on their upstream activities.

The number of forecourt convenience stores fell by 3.6 per cent, but this was less than the 5.7 per cent contraction in the total number of forecourt sites.

The long-term decline of non-affiliated independent stores has slowed down over 2005, with a 3.6 per cent fall in store numbers.

Some of these retailers will have been recruited by symbol group operators, although others would have chosen to leave the sector as a result of problems with succession, and the impact and costs of new legislation.

IGD forecasts that the value of the sector will continue to grow, with sales reaching between £30.8 billion and £33.9 billion by 2011.

Topics