Executive Summary

The key to a successful convenience store business is good location and customer service -- which means understanding both today's and tomorrow's needs of the local community being served. Convenience stores are now an established part of retailing in the UK. The sector has its own Association of Convenience Stores (ACS), strengthening its ability to represent the interests of its members to government.

Key Note estimates the real potential UK convenience store market at 1995 prices to be worth just over £21.3bn. The market is as yet only 28% penetrated, with 13.1% in the hands of Symbol retailers and 5.2% with petrol forecourt convenience stores (largely company-owned).

Key Note forecasts in 1996, total sales at current prices will reach £6.45bn, an increase of 8.9% against 1995. Over the next 5 years, between 1996 and 2000, sales at current prices will increase by 38.5% to reach £8.93bn.

Sales growth within established sectors, such as Symbol groups; confectioners, tobacconists and newsagents (CTN)-based convenience stores; and independents, will be at a rate of around 6% per annum; more explosive growth, of just over 12% per annum, is forecast for petrol forecourt convenience stores.

In spite of continued denials, it seems most unlikely that major food retailers will not enter the convenience store market. From 1998 onwards, rapid expansion is predicted for sales from convenience stores owned by the major food multiples as these retailers develop a serious interest in the sector.

The demographic changes occurring in the UK population will help convenience stores, as will the groundwork that has been laid by the food multiples in promoting fresh produce and developing ready meals. The trend towards snacking is also good news and fast food, while not yet a feature of most convenience stores in the UK, is an opportunity which needs to be developed.

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