Come and have a go…

With local retailing set to grow at twice the rate of supermarket shopping over the next five years, Asda and B&Q’s forays into the convenience market are understandable – but what makes them think they can succeed where so many others have failed? 

By Findlay Stein

Convenience retailing: it’s not as easy as it looks. Many major retailers have had a go over the years but, let’s be honest, their track record is uninspiring at best. Several major multiples have learned to their cost that operating convenience stores isn’t as simple as just building small footprint versions of their big box stores. ‘Build it and they will come’? Not necessarily.

The reasons why operating convenience format stores can be extremely difficult are obvious to every independent retailer, but that doesn’t appear to stop the big boys thinking they can crack it anyway. Asda and, bizarrely, B&Q, are the latest big retailers to step up to the plate to give it a punt.

So what is the big fascination with convenience? Well, the main reason is that convenience is flying. Despite all the doom and gloom – war in Ukraine, post-Brexit mayhem, soaring energy prices and industrial unrest – the future looks bright for the channel, if the crystal ball-gazers at IGD are to be believed.

According to its forecasts, the overall convenience market is set to grow by 13% over the next five years, with sales climbing beyond the £50bn mark. Granted, inflation will account for a chunk of that, but it’s still good news. Especially since the figure is double how much IGD predicts that the supermarkets will grow by.

Another reason why convenience is attractive to businesses like Asda is the fact that it’s very hard for them to grow their supermarket estate in what is already a saturated market. The pressure from the discounters isn’t making things any easier. Yet supermarkets need growth and if they can’t grow the business through increased sales from existing stores, they need to add stores.

The answer? Let’s build a convenience chain. How hard can it be?

And how many times have we heard ambitious major retailers loudly proclaiming their plans to be the leading convenience player from a standing start? The latest is Asda with Mohsin Issa, Asda’s co-owner, who has his roots firmly planted in forecourt retailing, making no bones about it: “The potential for growth in this market is significant. Our ambition is to become the convenience destination of choice.”

And to bring this about, Asda intends to offer 10,000 new convenience store posts over the next four years as it speeds up the roll-out of its new Asda Express store concept. The news broke at the beginning of December, on the same day the supermarket opened its second Asda Express store and confirmed plans for a further 300 by the end of 2026.

The stores tick the boxes for a number of convenience store missions, including top-up shops, food-to-go, and dinner from scratch. They will stock around 3,000 lines, including a comprehensive range of fresh, ambient and chilled groceries, as well as products from Asda’s premium Extra Special range and a wide selection of beers, wines and spirits.

So far, so predictable. The challenge in building a strong independent retailing business, however, is not just in getting the right range into a store. That’s the easy bit.

The move is to be expected from Asda. After all, Tesco gained substantial ground in the convenience sector when it acquired Booker. This brought thousands of Premier, Budgens, Londis and Family Shopper stores under its umbrella, and without too much grief from the Competition and Markets Authority, as the stores are independently owned. And more recently, Morrisons bought McColl’s out of administration, although that did upset the competition watchdog a tad.

What came as more a surprise last month though were reports that B&Q – of all retailers – was throwing its DIY-shaped hat into the ring, with plans for “dozens” of convenience stores. The first two of these are understood to be opening in central London early this year, under a ‘B&Q Local’ fascia, which the company recently applied to trademark.

The stores will stock basic DIY products, offer a kitchen planning service, and let customers order from a wider home improvements range for click-and-collect.

Details are sketchy regarding which convenience categories the Local stores will offer, although without going into the nuts and bolts of it – if you’ll excuse the pun – B&Q boss Graham Bell gave a nod in the direction of Sainsbury’s Local and Tesco Express.

So do these incursions represent the latest in a long line of existential threats to convenience retailing as we know it?

Probably not. Just like any other business model in a free market economy, running a chain of c-stores is essentially Darwinian in nature. It’s the survival of the fittest – that’s why McColl’s went down the tubes in the first place, when it struggled to adapt after its wholesaler Palmer and Harvey went belly-up. Compare McColl’s to Bestway, which grabbed the opportunity to snap up 180 P&H vehicles from the administrators to start its own van sales business.

And Bestway continues to evolve, with plans to strip back its current 10 fascias to focus on just Best-one and Costcutter in the convenience channel. Managing Director Dawood Pervez says Bestway is “pushing boundaries on what a good shop looks like”.

So fair play to B&Q for looking to diversify, but it’s hard to imagine that it knows what a good shop looks like or how it builds convenience relationships with its customers. And are customers unsophisticated enough not to be able to see through B&Q’s attempt to muscle in on a growing channel?

Don’t forget too that there’s a reason that the convenience market is growing. In a word: you.

It’s growing because the people already in it are good at what they do. They’re passionate about convenience and they care about their customers and the communities they serve.

So it’s unlikely Scotland’s local retailers need to lose any well-earned sleep over the antics of Asda, which is essentially a novice when it comes to convenience.

And what about B&Q? It should probably stick to selling lawnmowers rather than trying to cut our grass.