2020: A transformative year for convenience retail
16th June 2020
What a year 2020 has been so far! Following a tough 2019 for the convenience channel, with a slowdown in new store openings, rising business costs and increased competition from other sectors resulting in the weakest growth we’ve seen in a decade, who would have predicted such a strong turnaround? The convenience channel has done a fantastic job of responding to unprecedented demand and significant change in shopper behaviour.
This week we are releasing our brand-new UK Convenience Market Report 2020 and here we share four stats from the report which highlight the impact of coronavirus on the convenience retail market and how we think the year will bottom out.
UK convenience market to grow +8% in 2020
Grocery sales – including those made through convenience stores - have benefited as consumers eat the majority of their meals in-home, due to a lack of alternative options, risk aversion, as well as watching their discretionary spend. Despite lockdown measure beginning to ease and the broader retail and hospitality sectors poised to start re-opening, this is a trend that we forecast will continue beyond lockdown.
As a result, we forecast the UK convenience retail market to be worth £44.7bn in 2020 – up 8% year-on-year vs. 2019. This is significantly higher than the 2.6% growth that the market experienced in 2019, highlighting a sizeable opportunity for retailers, suppliers and wholesalers. However, growth will be reserved for those are best prepared and able to adapt to the changing trends impacting the market.
Unaffiliated independents to outperform the overall market in 2020
The independent c-store sector is set to outperform the overall convenience market and grow 11% in 2020. Many independent retailers are the cornerstone of their local communities and the strong growth forecast reflects the resilience and motivation of stores to support the local area and its customers. In fact, a recent snap survey we conducted found that 69% of consumers believe that their local convenience store is doing all that it can to support the community and its customers.
Basket value is up 17%
Shoppers have had to change the way they shop. When lockdown was introduced, there were strict limitations on time spent outdoors and consumers were encouraged to shop less often, which forced new habits – which for many have remained in place. Less frequent trips have naturally led to bigger baskets, a move away from the ‘little and often’ approach favoured in recent years.
With government advice to ‘stay home’, many shoppers opted to stay local for their shopping, which has been to the benefit of convenience stores. Convenience retailers have worked incredibly hard to ensure that their local communities have been able to get hold of the goods that they need, especially those shielding at home. In some cases, this has included the introduction of a home delivery service for the first time. In addition, many shoppers have been delighted to find hard to obtain items in their local store, which is likely to encourage them to return.
Own label increases its importance with shoppers and retailers
The proportion of shoppers purchasing own label products within convenience has risen 6pp to 24% in 2020. Growth in own label buying has been substantial this year as consolidating supply chains has widened the output of high-quality developed own-label brands, including Co-op, Tesco and SPAR.
In addition to a more diverse range, we anticipate that own label will be further bolstered by recessionary spending, which is set to see shoppers trading down and seek out competitively priced products in the coming months.
All of these examples highlight the strength and resilience of the UK convenience retail market and the significant opportunity that this channel continues to offer for retailers, suppliers and wholesalers. The market has weathered a period of vast change and volatility and has come out stronger.
Click here to find out more about our new UK Convenience Market Report 2020.
UK Convenience Market Report 2020
A comprehensive overview of the Convenience channel in the UK including detailed market sizing, competitive landscape and consumer metrics, as well as a dedicated coronavirus section to show the impact lockdown has had on shopper behaviour.