2026 will be a year of significant change for the convenience sector, both operationally and with changing regulations affecting how everyone trades. Here are some of the front of mind issues for us going into next year.
The Government is committed to changing regulations on key product categories like tobacco and vapes, energy drinks and HFSS products, as well as looking at new processes on digital age verification and a UK-wide deposit return scheme. While some of these changes don’t come into force until 2027, the preparation will need to start sooner rather than later to minimise the impact. On the positive side, we’ve marked April 2026 as a major milestone when the Crime and Policing Bill comes into force, which we hope will be a turning point in the perception of shop theft among the public, the police and the wider justice system.
As we’re not far past the Budget, we have to highlight the costs that we know will be going up next year. Firstly, the headline rate of the National Living Wage will be going up by 50p to £12.71 per hour in April. While this represents the midpoint of the estimates that the Low Pay Commission put forward earlier this year, and a retention of the two-thirds of median earnings target, it will nonetheless put significant pressure on wage bills - especially when coupled with the continued high costs of Employers’ National Insurance Contributions that were announced in last year’s Budget. Add in the costs and bureaucracy associated with measures in the Employment Rights Bill - notably new sick pay rules coming into force in April and a raft of new rights being consulted on during the year – and the costs of employing people will increase during the year. This makes it all the more important to invest in training and technology to drive productivity and get full value from every colleague.
The second known cost increase for the vast majority of convenience retailers is on business rates bills. The 40% Covid reliefs are ending and being replaced by lower multipliers that on the face of things are beneficial to retail, and transitional support to smooth out the loss of that Covid relief, but many retailers will still see their bills increase by over a thousand pounds in April, especially as we’re also at the end of a revaluation period when many stores’ rateable values will be increasing.
Taken together, these cost increases could make the difference between a store being able to invest in its future, or having to make difficult decisions about cutting costs. This is the second year in a row when these costs have increased significantly, and we know from this year’s Local Shop Report that overall investment and staff hours in the sector are already falling, so we expect another challenging year in 2026.
Despite all of these challenges, there is still a great deal of good news. I was particularly struck at our Innovation and NPD Showcase a couple of months ago by the diversity of new products, services and technology offerings targeting the convenience sector as an area for growth. There are lots of brilliant retailers pushing the envelope on innovation and productivity, and we expect this to become more widespread in the coming year.
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