Convenience retail – both stand alone and associated with petrol – apparently brushed aside the concerns of the wider retail marketplace in 2012, according to Christie + Co’s Business Outlook 2013.
While average sales prices for convenience retail businesses fell by a marginal 0.9 per cent across the year, the mood remained cautiously positive, suggests Steve Rodell, director and head of Retail at Christie + Co, with stores that fit corporate requirements achieving prices not seen for many years.
“Given the sentiment reported throughout the year — high-profile retail failures, the Portas review simply paying lip-service to the high street’s problems and over-rented high street property — it may come as a surprise to some that convenience retail has provided some respite to this beleaguered sector," he said.
“However, convenience stores and, particularly, petrol forecourts have demonstrated resilience and an appetite for transaction that serves as a lesson to the wider retail sector. Yet even in these sectors it would be unwise to suggest we’re out of the woods just yet.”
Despite the bullishness at the top end of the market, trading conditions remained tough for independent forecourt operators through 2012 as the supermarkets reaffirmed their commitment to using forecourt operations to attract grocery shoppers.
Rodell adds: “There is now massive clear water between the fuel volumes of the large grocers, the oil company forecourt operators and independent dealers, with the supermarkets trading at an average of 11.2 million litres per site compared with the 4.8m per site of the oil companies and the 2.3m litres per site of the independents.
“While the supermarkets continue to sell fuel at what some are claiming is a loss-leader on larger grocery sales, this position is likely to remain stable, causing further pressure on independent operators.”
The scale of the concern for independent operators was also reflected in new Christie + Co research which revealed that in the first half of 2012 more than four out of five planning applications involving petrol forecourts were submitted by supermarkets or developers working with a supermarket.
Rodell said: “If all the supermarket planning applications are approved and the forecourts are built, then this spells trouble for the fuel-led operators who have not found a way to diversify their offering – typically through an enhanced convenience or off licence offering.”
While the growth of the multiples were and will be a considerable factor in the fortunes of independent operators in the convenience store sector, the outlook for independent operators remains on the positive side, thanks to their resilience, consumer demand for convenience over out-of-town shopping, onging growth of symbol groups and importantly willingness to engage with local communities.
“The market for high street convenience is likely to become ever more congested, and potentially difficult for independent operators, as the supermarkets react to consumer demand by seeking local sites for small format stores," added Rodell.
The modernisation of the Post Office led to a divide between those postmasters trialling Post Office Locals and those who didn’t. Those who eschewed the opportunity — therefore not benefiting from a guaranteed income for the next three years — may face the consequence of losing their franchise in the future. As far as delivery of Post Office Local services was concerned, it was far better to be in than out.
Rodell said: “The jury remains out on whether Locals are successful and whether the real opportunities for other convenience and high street operators to assume Post Office services will exist. Some multiple convenience operators were reported at looking to take a swathe of ‘Local’ services into their units, but whether it is a matter of time before a major retailer takes that route is something only the future will tell.”