Recent developments have witnessed an extraordinary push by UK supermarkets to upgrade and expand their convenience store networks, with investments reaching new heights. This trend aligns with changing consumer behaviours, as shoppers increasingly prefer convenient shopping experiences.
A remarkable surge in investment by UK supermarkets in their convenience store portfolios has been observed, with spending soaring to a record £1 billion, according to the Association of Convenience Stores’ 2024 Local Shop Report. This figure marks a significant increase from £646 million the previous year, indicating sustained momentum in this sector.
Supermarkets such as Morrisons, Waitrose, M&S, and Tesco are spearheading this expansion by developing new stores and enhancing existing ones. For instance, Morrisons has already acquired 38 stores in the Channel Islands and plans to inaugurate 400 additional Daily convenience sites, aiming for a total of 2,000 smaller stores by 2025. Similarly, M&S is focusing on opening and renovating convenience stores to enhance the customer experience.
Meanwhile, Tesco anticipates creating over 2,000 jobs by opening more than 150 new Express stores in the coming three years. This expansion is partly driven by the rise of flexible and hybrid working patterns established during the Covid-19 pandemic, fostering a growing demand for accessible shopping solutions.
Experts like Lisa Hooker from PwC suggest that the demand for convenience sites is driven by the need to adapt to hybrid lifestyles, offering immediate consumer satisfaction. Bryan Roberts from IGD highlights the shift towards convenience stores due to factors such as a growing ageing population, reduced car ownership, and smaller household sizes.
Convenience stores serve as crucial hubs for quick commerce, with many supermarkets collaborating with rapid delivery services like Deliveroo, Uber Eats, and Just Eat. These partnerships complement the physical shopping experience with digital conveniences, thereby strengthening consumer engagement.
Josh Holmes from Retail Economics observes that convenience stores are pivotal to omnichannel strategies, bridging the gap between physical and digital retail. These stores also provide additional revenue streams by acting as hubs for click-and-collect services, returns via lockers, and rapid delivery options.
The continuous expansion by traditional grocers is also a response to the competitive pressure posed by discounters such as Aldi and Lidl. Holmes notes that the compact and efficient formats offered by these discounters have forced established supermarkets to defend their market presence in local areas.
Despite these competitive pressures, convenience stores remain strategic assets for supermarkets, serving as localized fulfilment centres and offering premium products that enhance customer loyalty. Roberts asserts that the demand for these high-quality sites will only increase due to growing retailer interest.
In efforts to maintain competitive edge, supermarkets are also focusing on pricing strategies. Recently, Sainsbury’s extended its Aldi Price Match scheme to its convenience stores, marking a significant investment in affordability. Tesco followed suit by reducing prices on over 200 products in its Express stores, ensuring competitive pricing for essential items.
Local, independent retailers, however, show resilience in the face of supermarket expansion. Data from IGD suggests these independent entities continue to thrive by delivering personalised service and precisely tailored product ranges.
As UK’s major supermarkets embark on ambitious plans for 2025, the convenience store sector is set for a transformative phase. The emphasis will likely be on providing diverse product offerings, improved shopping experiences, and competitive price points, stirring up competition and offering shoppers a wider array of choices.
The strategic push by UK supermarkets into the convenience store arena reflects an acute awareness of evolving consumer preferences and market dynamics. As these retailers vie for local shoppers, the competition will invariably benefit consumers, providing more choices and improved services. The landscape of convenience shopping is on the cusp of significant change, one that promises to redefine customer experiences in the coming years.
