Investment levels at convenience stores declined 1.4% year-on-year, despite record financing for the last yearly quarter, according to data from the Association of Convenience Stores’ (ACS) investment tracker.
C-stores invested £600m in their businesses over the 12 months, including a record £181m in the last three months of the year, up from £177m in the same quarter in 2015.
Symbol groups were the only segment of the sector to show an increase in investment compared to the same quarter in 2015.
The ACS expressed concern on behalf of retailers, attributing the decline to rising employment costs resulting from the National Living Wage and auto-enrolment pensions.
James Lowman, ACS chief executive, said: “In this crucial quarter for investment, with retailers gearing up for summer trading, we have seen a decline in the amount invested per store. We are concerned that this is due to the introduction of the National Living Wage, which we know forces retailers to review investment decisions because it is now much harder to get a return on those investments as their costs rise sharply.
“We are also seeing a split developing, as symbol group retailers make bigger investments while investment by non-affiliated stores is down year-on-year. Retailers who don’t invest now risk becoming uncompetitive.
“It remains a concern that most retailers are investing from their own reserves, with only 7% accessing bank finance. At the moment retailers are waiting to build up their own reserves before making these investments, which suggests that they are still very cautious about taking on debt, and also indicates that the banking system is not working for local shops. The CMA inquiry into banking for small businesses needs to address the cost and availability of bank finance for local shops, and we are submitting this evidence to that inquiry.”
The investment tracker also found that the areas attracting most investment were refrigeration, shelving and lighting, all up in the last quarter.