Investment by independent convenience stores is at a record low, while investment by multiples is soaring, according to latest research by the Association of Convenience Stores (ACS).
The ACS Investment Tracker found convenience stores across the UK have invested a record £210m in store improvements in the past three months, driven by multiple convenience retailers spending £9,514 per store. However, investment levels among independent retailers have fallen to their lowest level since the survey began in 2012.
Just 13% of independent retailers have plans to invest in their store over the coming year, the lowest level of planned investment in the independent sector since the survey began in 2012, matched only by the results in August 2015 after George Osborne announced plans to introduce the National Living Wage in his first post-election Budget.
Key findings from the survey include:
• the most common form of investment in stores remains in refrigeration, with chilled foods a fast-growing category in the convenience sector;
• investment levels are lowest in London, and highest in the South West;
• two-thirds of the independent stores who are investing are funding this with their own reserves, with just 8% going to the banks for funding;
• 13% of stores that are making some investment in their businesses are doing a full store refit.
ACS chief executive James Lowman said: “There is a widening gap between stores that are having to cut costs in their business to stay afloat, and those that have the capital to be able to invest in measures like full store refits and new technology and services in store. This is especially concerning as retailers that aren’t able to invest will struggle to stay competitive, missing out on opportunities to provide more fresh and chilled options to customers and capitalising on the growth of the food-to-go market.
“The convenience sector is facing an ever increasing cost base with the introduction of the National Living Wage, auto-enrolment pensions and uncertainty over business rates, and we believe that more can be done by central Government and local authorities to incentivise investment and help smaller independent businesses to secure their long-term future.”