Tighter consumer spending, rising operating costs, and “fierce competition” from the discounters and supermarkets are putting pressure on convenience stores, according to the ACS.
The trade body’s 2025 Local Shop Report, published today, showed the total projected sales this year had fallen to £48.8bn, from £49.4bn last year. It marks the first time the sector’s sales have dropped since 2021.
Store Investment by retailers has also fallen, by £100m, from £1bn to £900m, while the number of jobs they provide has dropped from 445,000 to 443,000.
The “extremely challenging year” is a result of convenience stores fighting against an increasingly competitive market, the backdrop of stretched household budgets, and changes in regulation and policy, ACS said.
The latter includes employment costs, which have risen significantly over the past year as a result of the combination of national living wage increases and changes to employer National Insurance rates and thresholds.
The cost of business rates has also risen as government reduced relief from 75% to 40% this year, with more cost increases on the horizon through the incoming business rates revaluation.
ACS said employer NI rises, the national living wage increase and business rates would together cost retailers an additional £612m this year.
Retailers have also had to deal with the additional cost of vape recycling, and most recently the impact on their sales from the ban on disposable vapes.
Later this year, retailers that are part of a larger overall business will be banned from providing multibuy promotions like buy-one-get-one-frees on HFSS products.
“This has been an extremely challenging year for local shops as the cost of doing business has risen significantly while sales have stagnated due to fierce competition from discounters, supermarkets and other retailers,” said ACS CEO James Lowman.
“These figures should serve as a warning to government that we cannot continue taking the brunt of additional costs and other burdens without the impact being felt by the communities these essential stores serve.”
While retailers have faced challenges this year, the sector “remains robust” in its commitment to serving their communities, ACS said.
Its report showed 80% of convenience stores had been involved in community activity over the past year, and that convenience stores were consistently ranked in the top three services that had a positive impact locally, alongside pharmacies and Post Offices.
“Despite the challenges, convenience stores are still right at the heart of communities, more relevant than ever to people’s daily lives, and making a positive difference not just through diversified products and services but as job creators, investors and social hubs,” said Lowman.
“Every community has different needs and our members’ greatest asset is being able to adapt their offer to meet those needs.”
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