The boom in convenience retailing is showing no signs of subsiding and the sector continues to be the star performer of the food retail market, according to IGD's annual report on UK convenience retailing.
The study values sales through convenience stores - ie stores that stock a large number of different food and drink product categories in a sales area typically less than 3,000sq ft - as worth £26.1bn in the year to April 2007. This represents growth of 4.9% on the previous year, and once again outstrips sales growth in the grocery market as a whole, which increased by 4% in the same period.
This market growth was achieved despite a slight decline in the number of UK c-stores, which fell by 1.4% to 50,814. The recent move towards fewer but better quality c-stores is continuing, and this trend is backed up by the continued decline in unaffiliated independent retailers and the growth in symbol stores.
Unaffiliated indies fell by more than 5% last year to 24,526, so for the first time pure independents make up less than half of the c-store market numerically. However, it is clear that many retailers are joining symbol or fascia groups. Symbol group numbers were swelled by a net growth of 725 stores - or 5.6% - in the year to April, with the symbols from wholesale operators such as Booker and Bestway developing well. According to IGD's survey, the three fastest-growing product categories in symbol stores are cigarettes, alcohol and news, implying that much of the growth in symbols is due to recruitment from the traditional cash and carry-style trader.
Convenience multiples continue to increase their market share without a huge expansion in store numbers. Sales in the multiple sector - which includes Tesco and Sainsbury's c-stores but also regional chains such as Mills - grew by 13.3%, while store numbers increased by a relatively modest 83 outlets. However, the multiple sector now accounts for 13.3% of c-store industry sales, despite having only 4.8% of the stores.
One emerging trend is the growing strength of the co-operative movement. Although the co-ops have made acquisitions in recent years, 2006-07 was arguably the first time that these have triggered a significant growth spurt for the movement - a sure sign that the Co-operative Group in particular is getting its act together when it comes to absorbing new stores.
While co-op store numbers increased by 6.6% during the past year, sales leaped ahead by 12.5%, with classic convenience lines alcohol, chilled food and snacks the top three best-selling product categories.
The report also notes that as the appetite for convenience foods grows, foodservice operators such as high street coffee houses and retailers such as Wilkinson, WHSmith and Poundland are all offering more convenience lines.