Set against a growth forecast projecting the market to reach £56.2 billion by 2030, convenience retailers face a period marked by both opportunities and headwinds.
In its latest report, IGD (Institute of Grocery Distribution) identifies five key trends driving structural change and retailer responses in the channel in 2026.
The convenience channel is expected to see a CAGR of 2.7% over the next five years, lagging slightly behind the wider grocery market’s 3.0% CAGR.
Declining tobacco sales will be the primary restraining factor in convenience, owing to the much greater relative scale of the category in the channel.
Patrick Mitchell-Fox, Insight Partner at IGD, shares the five trends with Wholesale Manager.
Are convenience retailers facing greater financial stress?
The first trend is that retailers are facing financial stress, which has been brewing for a couple of years, despite the focus of the big retailers on convenience, they see it as a growth opportunity. In totality, the sector is having a tricky time, particularly because the independent and symbol retailers are having a much harder time, struggling with declining tobacco sales, above all, that is the major headwind that these guys all face. It’s one of those factors that’s been around for a few years but seems to be reaching a crunch point.
It’s the people in that independent sector who have the largest level of exposure to tobacco as a category. It also disproportionately affects retailers in smaller footprint stores. The smaller the footprint of the store, typically, the higher the level of tobacco participation is in the overall sales mix. The challenge for those guys is trying to generate meaningful alternatives to backfill the declining sales of the tobacco category.
Alcohol has not been delivering particularly well in the last couple of years. Some categories have been stronger, soft drinks have done well.
Looking forward, the question is how will the DRS scheme impact the sector? I don’t think we know the answer to that yet. I don’t even know how retailers are going to interact with the DRS scheme. The disruption is not favourable to retailers trying to engage with the scheme, particularly to retailers with less resources to invest.
There are some notable examples of retailers feeling financial stress in the last year, the most obvious example being Appleby Westward in the southwest of England, whose parent company decided to exit the market, having posted disappointing numbers in 2024 and 2025. That sits alongside some disappointing numbers in other parts of the SPAR network as well. Blakemore was up against it too, but Appleby Westward, being the smallest in the network, didn’t see themselves having big opportunities to expand their operation. They decided to pull the plug and were sold to Blakemore.
The cyber incident at Co-op added further pressure, prompting several regional Co-ops to close significant numbers of stores. In many cases, these were locations they judged to be unprofitable, so they moved to rationalise their estates.
The focus across the sector is now on rightsizing portfolios. There has long been an assumption that all convenience stores are attractive assets, but that is not the case. Every convenience retailer has stronger and weaker stores, and the priority is to retain the sites that can deliver sustainable returns. The multiples understand this well and apply strict performance targets when deciding whether stores should remain open.
They are also concentrating on the best locations: high-footfall sites in city centres, metropolitan areas and residential neighbourhoods. With more large players competing for these sites, not every operator can win. The sector is therefore moving away from expansion at any cost and towards a more financially disciplined approach, with sustainability and profitability guiding decisions.
Are symbol groups in growth?
The other trends flow from the financial pressure. Retailers are increasingly looking to consolidate their position or protect their businesses, including through symbol-group affiliation. The fastest-growing symbol groups are those retailers perceive as offering the best value. Independent retailers are scrutinising what each group provides, because their choice directly affects their livelihood. Groups that offer more support for less cost are gaining ground.
Premier is a good example. It has grown strongly for several years and continues to attract retailers. Its appeal lies in a relatively low-cost model, with no specific upfront fees and, in some respects, lower ongoing commitments. It also gives retailers more flexibility to manage their own margins, which is highly attractive in a market where margin pressure is a major concern.
Go Local is another symbol group growing strongly. Like Premier, it has roots in cash-and-carry wholesale rather than a purely delivered model. That heritage appears to support a more flexible and potentially more sustainable approach, allowing retailers to combine delivery with cash and carry when managing costs and purchasing requirements.
By contrast, wholly delivered symbol models depend on driving volume through distribution networks. That can create pressure to secure retailer loyalty and prevent spend from leaking elsewhere. This has long been a challenge for groups such as SPAR, Nisa and Co-op. Nisa has recently relaunched its terms, removing some visible costs for retailers and simplifying the model so it looks more comparable with less restrictive arrangements. This appears designed to appeal to retailers who are examining benefits and commitments more closely before joining a symbol group.
Are convenience retailers competing with food-to-go specialists?
The third trend is the search for new sales opportunities, particularly in food to go. Co-op has been especially active, launching a standalone food-to-go format and taking it directly onto the high street in competition with specialists such as Pret a Manger and Greggs. Its offer is built partly around value, including meal deals, but the broader aim is to strengthen its credentials in the food-to-go market and reduce reliance on categories such as tobacco. These stores do not sell tobacco and have a stronger focus on food-to-go missions, showing that major retailers believe they need to engage with this opportunity more seriously.
How important is the rapid delivery trend?
The fourth trend is rapid delivery, which has grown quickly in recent years. It is seen as a way to drive additional sales from small stores, with Co-op again among the leaders. Independent retailers also have opportunities through platforms such as Snappy Shopper and the major aggregators, including Deliveroo, Uber Eats and Just Eat. Aggregators provide ready-made delivery networks and sales platforms, making it easy for retailers to launch online, but they also take significant value through commissions and delivery-related costs.
As a result, wholesalers and retailers are increasingly exploring their own platforms and delivery networks. Tesco Whoosh has been expanding for some time, while Booker has launched Scoot and Co-op has launched Peckish, both aimed at giving independent retailers tools that are less costly than major aggregators. This could be particularly valuable outside major metropolitan areas, where demand for delivery exists but aggregator coverage is less dense. Independent retailers can use local delivery to build new revenue streams.
Are convenience retailers increasingly focused on price?
The final trend is value. Convenience retailers are under pressure to narrow the price and value gap with the wider grocery market. Much of the public focus has been on Aldi price matches and loyalty pricing from Tesco and Sainsbury’s, but these offers are largely concentrated in larger stores. Aldi price matching, for example, does not generally apply in Tesco Express, reinforcing the perception that convenience stores are more expensive.
This affects top-up shopping in particular. Customers may still buy impulse items or products they need immediately, but they are more likely to avoid buying items such as toilet roll or laundry detergent in convenience stores if they believe they can get them cheaper elsewhere. As a result, some top-up missions are shifting to larger stores and discounters. Convenience stores may not be able to compete on price across the board, so they need to be selective about where they offer value and ensure their value message is clear and impactful.
Tobacco is in decline but are tobacco sales being replaced by vape sales?
On tobacco and vapes, the shift is not straightforward. Vape sales were disrupted in 2025 by the disposable vape ban, contributing to overall category weakness. It remains unclear whether lost tobacco sales will transfer back into vape within convenience or move to other channels. Vaping is available across many retail formats and through specialist vape stores, so tobacco decline does not automatically convert into vape sales for convenience retailers.
Regulation has also encouraged grey and black market activity in some areas. Where regulation affects cost or availability, bad actors can enter the market with cheaper counterfeit or illicit products. The future of legitimate convenience sales will depend partly on how effectively authorities enforce the rules and tackle contraband. Only when enforcement improves will legitimate retailers be better placed to benefit.
Alcohol sales are in decline. Do you put that down to the younger generations drinking less than the older generations?
Alcohol decline appears to reflect several factors. There is a generational shift, with younger consumers drinking less, but price competitiveness also plays a role. Larger formats are using price matching, Clubcard pricing and Nectar pricing to compete strongly on value, which can pull alcohol sales away from convenience. The category will need more focused attention on differentiation and value if it is to improve.
Which categories are in growth within the convenience channel?
There are also more positive category opportunities. Soft drinks, confectionery and crisps are seeing considerable innovation, which is working well for independent retailers. Soft drinks have become more experimental, with shoppers increasingly open to new flavours and experiences. Independent retailers have tapped into this by bringing in US imports and unfamiliar brands that feel distinctive to UK shoppers. Major manufacturers are also investing in new flavours and products with strong viral appeal among younger consumers.
Protein-led products are also reshaping snacks and confectionery, while meal-in-a-bottle products such as Huel have created new opportunities. Although the concept is not entirely new, brands in this space have built strong recognition and can now help independent retailers drive footfall and sales. Similar products, including brands such as YFood, are contributing to a growing category with further potential.
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