UK supermarkets are heavily investing in local convenience stores, setting a record £1bn in spending, up from £646m last year.
- Major chains like Morrisons, M&S, Waitrose, and Tesco are leading the expansion focusing on new stores and site revamps.
- This shift is driven by changing consumer habits, hybrid work culture, and a need for quick commerce solutions.
- Convenience stores are becoming hubs for omnichannel strategies, facilitating rapid delivery and offering varied product ranges.
- Despite competition from discounters, supermarkets are enhancing customer experience with price matching and value propositions.
In recent months, UK supermarkets have significantly increased their investment in local convenience stores, with spending reaching a record £1 billion, a dramatic rise from £646 million the previous year. This trend reflects a growing focus on convenience as supermarkets like Morrisons, M&S, Waitrose, and Tesco enhance their market presence through new and refurbished stores.
Morrisons has been at the forefront, acquiring 38 stores in the Channel Islands and planning to open 400 more Daily convenience sites. M&S follows with plans for 10 new stores this year, renewing 50 locations to benefit from what it calls a ‘halo effect.’ Simultaneously, Waitrose has announced intentions to launch 100 new outlets over five years, recently opening its first new store in six years. Tesco joins the race, planning over 150 new Express stores in the next three years, creating over 2,000 jobs.
The push towards convenience formats is largely driven by the evolving lifestyles of consumers, characterized by hybrid working conditions introduced during the Covid-19 pandemic. This has heightened the demand for convenient, yet varied shopping experiences. PwC’s Lisa Hooker highlights the need for grocers to adapt to these changes, catering to demands for convenience and diversity in offerings. Similarly, Bryan Roberts from IGD points to factors like an aging population, reduced car ownership, and smaller household sizes as influential trends.
Convenience stores are increasingly pivotal in retailers’ omnichannel strategies, serving as collection points for rapid deliveries and accommodating ‘food-for-now’ and ‘food-for-later’ trends. This adaptability boosts foot traffic and opens additional revenue streams, making them essential in today’s grocery ecosystem. Many supermarkets use these stores for partnerships with delivery services like Deliveroo and Uber Eats, further augmenting their rapid commerce capabilities.
Despite intensified competition from discounters like Aldi and Lidl, convenience store expansion is viewed as a strategic move to solidify existing customer bases and capture new market share. Retail Economics’ Josh Holmes notes the pressure traditional grocers face to protect their market segments and capitalize on higher-margin opportunities within these smaller formats. Sainsbury’s, for instance, has extended its Aldi Price Match initiative into its convenience stores, following a strategic overhaul of its store layouts and offerings.
The sector remains challenging as independents and symbol groups continue to withstand the competition. The resilience of these smaller players suggests that supermarkets need to continuously innovate and refine their approaches. Analysts believe that while intense competition persists, the increased investment in convenience formats will offer consumers more choice and potentially better value.
UK supermarkets’ focus on convenience stores signifies a dynamic shift in consumer engagement strategies, with broader implications for retail competition and service delivery.
