As Sainsbury’s this week announced a further acceleration in its convenience store opening programme, a new report into the grocery market shows c-stores owned by multiples are opening at three times the rate of symbol c-store conversions.
The Grocery Retail Structure, compiled by William Reed Business Media and IGD, shows the number of multiple c-stores jumped by 291 (or 9.61%) last year to total 3,318 stores.
While the number of symbol stores rose by 518 (to 16,889), the percentage increase was just 3.16%. And the majority of these were conversions from unaffiliated c-stores, with a net gain of 107 new symbol stores if you discount the 411 who no longer trade as independents.
The long-term decline in the number of affiliated actually slowed to 2.1% - from 4.5% in 2011 - but with 18,826 unaffiliated stores out of a total of 41,670, the supermarket chains have the bit between their teeth.
After opening 146 c-stores last year, Tesco said a larger proportion of its openings would be c-stores in the future, while Morrisons has promised to open 100 M locals by the end of 2013.
“The capital return [of a c-store] is 1.5 times that of a supermarket because of the lower capex requirements as c-stores are typically leasehold”
John Rogers, Sainsbury’s
And this week Sainsbury’s revealed its portfolio of Local c-stores, which now stands at 523 stores and boasts a turnover of £1.5bn and posted year-on-year growth of more than 17%, would overtake the number of stores in its 583-strong supermarket portfolio within a year.
Speaking at the release of the retailer’s full-year results, which saw underlying pre-tax profits rise 6.2% on sales up 4.6% to £25.6bn, CEO Justin King said Sainsbury’s opened 87 Locals in the year to 16 March 2013 and would open “slightly more” in 2013/14, with two a week the target.
Its c-stores were benefiting from the “historic” changes in transaction frequency in 2011/12, which “have stabilised at a new higher level,” and were making a positive contribution to the bottom line, and regeneration of local high streets in terms of footfall, increased trade and employment opportunities, King said.
While the contribution of c-stores to supermarkets was 10:1, on average, “the capital return is 1.5 times that of a supermarket because of the lower capex requirements as c-stores are typically leasehold,” added CFO John Rogers.
The value of the UK c-store sector to April 2013 was £35.6bn, up 4.9% on last year, according to the IGD. It predicts this will rise to £46.2bn by 2018, with compound annual growth of 5.3%.Symbols were worth £14.8bn, up 8.3% on 2012, and their share has grown by 1.3% to 41.5%.
Booker - whose Premier fascia is the biggest symbol in the UK - this week announced plans to launch a new value-led fascia called Family Shopper. A store is currently being trialled in the West Midlands.
Next week: more details from the Grocery Retail Structure report.