The convenience store sector will grow by a further 11% to £41.9bn over the next five years, according to latest forecasts from IGD.
However, that growth will come at a slower rate, as the impact of increased competition takes its toll on the industry, IGD chief executive Joanne Denney-Finch said.
“Convenience stores have historically been seen as the ‘go-to’ channel for a top-up shop and 63% of all shoppers still visit these stores for that reason,” she said.
“However, they are now facing increased competition from other channels, such as discounters and supermarkets.
“We still expect convenience to grow, but that is slowing down as the sector comes to maturity and other channels compete more effectively for the top-up pound.”
Convenience will remain the third fastest-growing sector behind online and the discounters, which are projected to grow by 68.3% and 39.5% by 2021.
Finding new sites would also become more challenging for convenience operators over the next five years, she added.
In total the UK food and grocery market is forecast to grow by 10% between now and 2021, giving it a value of £197bn.
IGD is also predicting a stabilisation of sales at hypermarkets and supermarkets over the next five years, following a challenging few years for the large store channel.
“The growth of other channels over the last few years has forced larger stores to rethink their layouts. Two-thirds (64%) of shoppers say that changes such as better prices, better loyalty rewards, more staff and local, independent concessions would encourage them to use larger stores more often,” Denney-Finch added.
“Retailers are responding to this, with many now updating and refurbishing their existing space to make it easier for people to just pop in for a few top-up items, while also offering a range of additional services such as click and collect, restaurants, dry cleaners and other concessions.
“Over the next five years, we expect this time and investment to pay off for larger stores, which is why we are forecasting a stabilisation in sales for this part of the industry.”