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Symbol Groups Lead the Way
According to a new report from the Institute of Grocery Distribution, Convenience Retailing 2003, the UK convenience market grew by 4.1% to £21.5bn in 2002 with symbol groups leading growth.
The sector outperformed the total grocery market, which grew by 2.9% in 2002 and now accounts for 20% of all grocery sales. Most convenience store segments saw strong growth in 2002 with symbol groups growing rapidly ahead of the total sector, with membership up 5.7% and sales up 12.9% to £5.2bn year on year. As a result, symbol market share increased from 22.5% to 24.3% (value). IGD estimates that like-for-like sales growth for this segment was ahead of inflation and the general grocery market at 6.7%, indicating very strong trading. Increased store numbers were also a key growth driver, with new membership coming from both the recruitment of new retailers and the opening of additional stores by existing members. Spar in particular has been very successful in recruiting whole chains into its membership e.g. CTN and convenience chain Star News.
With consolidation and the major supermarkets moving into the convenience market, discussions have centred on radical structural change at the expense of the smaller players. However IGD predicts that although store numbers will continue to decline slowly, mainly in the independent segment, many of these retailers will transfer to symbol operation and the relative size of each market segment will change only slightly year on year.
Despite the fact that turnover for independent convenience stores fell, sales-per-store rose. Convenience multiples saw a dramatic fall in sales but this was connected with the transfer of Alldays to the co-operatives segment, which saw a corresponding strong increase in sales. Discounting the effect of structured change, both co-ops and multiples saw a background increase in both sales and store numbers.
David Gordon, IGD Business Manager said, 'In recent months the talk has naturally been on major acquisition activity, but looking beyond this it is clear that the convenience sector is enjoying stable, long-term growth. We expect that the development of larger, higher quality store chains to continue to fuel demand for convenience shopping over the next five years growing the total market to around £25bn by 2007. Most operators will benefit from this trend but a move to symbol operation is looking increasingly attractive for independent retailers as competition in this sector intensifies.'
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