Executive Summary

Confectioners, tobacconists and newsagents, or CTNs, form one of the UK's longest-established retail sectors. They are primarily sited in three main positions, locally, in the High Street or out-of-town shopping centres, or in heavy commuter traffic areas as kiosks. As well as offering a counter service the neighbourhood CTN has traditionally offered a home delivery service for newspapers.

The industry has a clear structure, with 90% of outlets being independently owned. However, the 10% of shops which form parts of multiple chains account for 20% of CTN sales. The majority of these sales lie in the core product areas, but other goods also form part of the mix including snack products, ice cream, soft drinks, greetings cards and social stationery. The CTN sector generates sales of £11.4bn in 1993. Turnover has been rising ahead of the full retail sector for a number of years and this trend only began to falter in 1993. The market for two of the three primary products retailed by CTNs are in gradual decline and it is through diversification that many operators have managed to maintain and improve sales.

The recession had less of an impact on the CTN sector than many other areas of the economy, primarily because the items sold are fairly low priced in nature and habitual or impulse purchases. However, many operators face tough trading conditions due to the competition they are facing in key markets from other retailers. The rise of the convenience store and petrol forecourt retailing have impacted on the target markets of the local CTN. The trend towards one-stop supermarket shopping and the drift towards out-of-town retail developments have also decreased customers for the smaller outlets. The result has been an increase in the number of business failures in recent years and this seems set to continue in the short term.

There have been significant developments in the sector during 1993/1994. In November 1993, the MMC released the results of its investigations into the supply of newspapers. The final outcome of this has yet to be decided, but it is likely that the CTNs' traditional control of the newspaper retailing sector will be lost.

The tobacco trade continues to come under pressure and a new voluntary code agreed between the Government and the tobacco manufacturers will mean a reduction in the level of product advertising. Part of this deal is the removal of tobacco fascias from retail outlets by the end of 1996. It seems likely that the manufacturers of other key core CTN products will fill the gap this leaves in shop front advertising. The high levels of tax levied on UK tobacco products are encouraging the purchase of goods from elsewhere in the EC following the removal of trade barriers and there is increasing concern that this will further reduce sales by UK retailers.

The long-term outlook for the sector is positive. Sales of traditional CTN lines are being lost to supermarkets and other retailers, but diversification into the convenience market will ensure continued survival for many operators. The ageing nature of the UK population will contribute towards ensuring the survival of the local outlets, which form the backbone of the sector.

More Information

  Denotes a required field.