In recent months, leading UK supermarkets have significantly increased their investment in convenience stores to cater to local consumers. This strategic shift follows a substantial £1 billion investment in local shops over the past year, as reported by the Association of Convenience Stores (ACS).
Investment in the convenience sector has reached record levels, marking a substantial rise from £646 million in the previous year. This trend is expected to continue into 2025 as supermarkets pursue long-term investment plans. Major retailers like Morrisons, Waitrose, M&S, and Tesco are leading this expansion with new openings and site renovations.
Morrisons, for example, has acquired 38 stores in the Channel Islands and plans to open 400 Daily convenience sites, aiming for 2,000 smaller stores by 2025. Similarly, M&S is set to open 10 new stores this year, alongside renewing up to 50 existing sites. Waitrose and Tesco have also announced significant expansion plans, with Tesco aiming to create 2,000 jobs through 150 new Express stores over the next three years.
The shift towards convenience stores is driven by various factors. According to PwC, the first half of 2024 saw 85 new convenience stores. The growing demand is partly attributed to hybrid working patterns established during the Covid-19 pandemic. Lisa Hooker from PwC highlights the need for retailers to adapt to consumer trends favouring convenience and fun. Bryan Roberts from IGD agrees, citing hybrid working, an ageing population, and reduced car ownership as key influences.
Partnerships with delivery services like Deliveroo, Uber Eats, and Just Eat are enhancing the role of convenience stores. These stores serve as efficient pick-up points for online orders, boosting their significance in the retail ecosystem. Waitrose’s recent Hampton Hill store reflects this trend, featuring a hatch for delivery collections.
Retail Economics consultant Josh Holmes sees convenience stores as essential to modern retail strategies, serving as hubs for omnichannel operations like click-and-collect and rapid delivery. These features not only increase customer visits but also offer new revenue streams.
The focus on convenience stores also involves competitive pricing strategies. Sainsbury’s, for instance, has extended its Aldi Price Match to convenience stores, increasing its investment in value. This move prompted Tesco to reduce prices on over 200 products, intensifying competition in the sector.
Despite the rising competition from traditional supermarket chains, independent retailers remain resilient. According to Bryan Roberts, independents are holding their ground by offering personalised service, a strategy that continues to attract loyal customers.
The expansion of convenience stores by UK supermarkets is set to intensify competition in the grocery sector, offering consumers more choices in where and how they shop. This strategic push not only aims to meet current consumer demands for convenience but also sets the stage for sustained growth and innovation in the retail landscape.
