New forecasts from IGD reveal that the UK convenience market is set to grow by £6.9bn in the next five years, to reach £48.2bn by 2024. The channel will benefit from lots of new store openings over the period, helping to fuel a compound annual growth rate of 3.1%.
Patrick Mitchell-Fox, Senior Business Analyst at IGD, said: “While we expect relatively muted store development across the sector as a whole in the next two years, with the sector undergoing a period of consolidation, we forecast key segments – in particular co-operatives, multiples and symbols - to benefit from strong store growth again from 2021.”
Reviewing the current year in convenience, Patrick said: “After a stronger 2018 (+3.2%), total convenience sales are expected to grow by 2.6 per cent in 2019. This growth is being led by the co-operatives segment above all, driven not only by a focus on opening new stores, but also by outstanding like-for-like performance underpinned by strong private label development, better fresh and chilled ranges and more competitive value.
“Multiples, though still seeing solid growth, are now opening new stores at a more modest pace, targeting only those sites with the best potential.
“Meanwhile, after a year of slower growth, the symbols segment is beginning to pick-up again, though it remains restrained as it stabilises after a period of notable disruption and instability.”
With the average shopper spending just under eight minutes in a convenience store , IGD identifies three factors shaping the future of the UK convenience channel that will enable stores to give the shopper what they need, as quick as possible.
Driving top-up shopping: With 54% of shoppers citing a top-up shop the reason for their most recent visit to a convenience store , this remains by far the most frequent reason people shop in this channel. However, retailers have traditionally struggled to implement ranges in-store with enough scope to meet a variety of shopper needs in a way that is space-efficient and quick to shop.
Increasingly, retailers are using shopper data to better understand these needs. And in-store, flexible fixtures and small packs sizes are being introduced to optimise space.
Attracting new shoppers: With food-to-go and takeaway coffee now well-established features of convenience stores, retailers are increasingly looking to build new merchandising focuses into store layouts, with coffee stations growing in importance as the destination for hot drinks and related purchases.
Evolving the ‘mission-based’ shop: While the lunchtime meal deal is a familiar and successful driver of food-to-go purchases, similar deals are taking a bigger role in how shoppers are using convenience stores, such as meal for tonight. As well as creating value for shoppers, these offers help with the speed of decision-making. Furthermore frozen meal deals also encourage participation amongst independent retailers with limited chilled space.