Britain’s convenience stores, once the Cinderellas of the retail sector, are starting to attract suitors.
The biggest UK grocers, including Tesco and J Sainsbury, are battling for a slice of the local market because their larger stores have proved less popular than executives anticipated during a building spree that ended only in the middle of this decade.
The dominant chains have the financial clout and buying power to supply convenience stores more efficiently. Meanwhile financial weakness may be forcing some wholesale groups to seek a buyer, according to several analysts and executives who follow the sector.
“If you’re a food supplier, you’ve got very aggressive buying teams from the big supermarkets constantly challenging your terms,” says one. “It’s got to be tempting to make up some of the lost margin by hitting the smaller players with a worse deal.”
As many of the supermarkets increasingly struggle to find new locations — Neil Turton, a former chief executive of convenience chain Nisa, says the decent local sites have gone — they are turning to acquisition.
There is a “frenzy of activity”, with no competitor wanting to be “left on the shelf”, according to one industry figure. Tesco is attempting to buy Booker, the biggest convenience wholesaler, while the Co-operative Group and Sainsbury’s have made bids for Nisa.
