ACS Local Shop Report 2019: Investment drops by £181m

The ACS Local Shop Report found that retailers invested £633m in extending their range of services available to customers this year, compared to £814m in 2018.

Refrigeration and internal building maintenance remained the top two areas of investment across both years, with unaffiliated independents investing 3% more than last year overall.

ACS chief executive James Lowman blamed business rates as one of the factors for the decline. “The cost of business rates still hits hard, especially for those looking to invest, and as an employer of around 405,000 people, any unpredictable increases in wage rates will have a real impact,” he said. “One in five independent retailers already works more than 70 hours per week, and it is often by taking on more hours in the business themselves where retailers make up the shortfall in other areas.”

Average basket spend this year accumulated to £6.50, falling 12p, with 2.31 items purchased, on average. For the first time, the report revealed that a store’s product margin across the year ranged from 20% to 28%.

For independents only, tobacco and e-cigarettes made up 43% of their category sales, followed by alcohol at 20% and chilled foods at 12.8%.

The Local Shop Report reinforced the growth of social media used by independents, with all channels increasing activity compared to the year before, with 39% (33% in 2018) using Facebook, 27% (21%) using Twitter, 11% (5%) using Instagram and 9% (3%) using WhatsApp.

The phrase ‘convenience store open near me’ was used by 80% of consumers, hinting at the growing demand for convenience. This was coupled by 57% of people travelling to their convenience store by foot, compared with 38% who drive.

Post offices and convenience stores remained the top two services that have a positive impact on a local area, with specialist shops still holding on to the top spot for most wanted service for the second year running.

Lowman added: “The UK’s network of convenience stores has remained resilient, in part due to the entrepreneurial spirit of thousands of independent retailers that have continued to change, adapt and develop their stores.”

New figures also reflected the potential impact of a no-deal Brexit on the rest of the sector. Almost one in four independents (23%) have reported that they do not have any additional space in their stores. Forty-five per cent of independent retailers also rely on deliveries from wholesalers for their products, while 34% get all of their products from a cash and carry.

Lowman explained that due to independents having no control over their supply chain, they will be “significantly affected”.

He said: “This is particularly problematic for the 23% of independent retailers that have no additional space in their stores to stockpile products. Convenience stores have a unique reach into every community, so its absolutely essential that the regular delivery and supply of products to our sector is maintained in the event of disruption as a result of no-deal, especially for isolated communities where their local shop is the only place for people to get everyday groceries for miles around.”