New research from Circana has revealed that convenience and symbol stores may face increased competition from major multiples convenience, such as Sainsbury’s Local and Asda Express, in 2025.

However, independent stores may see a counter sales boost in more shoppers willing to pay a significant premium for convenience.

Circana, a market research and technology company, laid out the challenges faced by the UK grocery retail sector in 2024, and what to prepare for in 2025.

Next year, people are expected to continue to shop around more due to cost of living, Circana suggested, which will see shoppers ‘gravitate to the major multiple grocers’.

From July 2024, the percentage of adults reporting their cost of living had increased over the last month rose from 45% to 53%.

Adding to the pull towards major multiple grocers, the price gap between supermarket and grocer convenience is likely to widen with more price matching scheme extensions.

Food sales share in the retail sector

Symbols and independents were also found to be losing food sales share within the sector to the more price competitive major multiple grocer convenience channel.

In the last year ending 2 November 2024, symbols and independents lost 0.7 percentage points of total store food channel value sales share. This is in comparison to 0.1 percentage points for major multiples convenience and petrol.

In the four weeks ending 2 November, major multiples convenience gained shares in food sales (0.1 percentage points), compared to symbols and independents losing shares (0.3).

However, in a sign that the independent sector could see positive growth next year, especially those offering delivery, almost half said they were willing to pay a 25% premium for convenience, and 6% said this could be increased to a 37.5% premium for online delivery.

This price mark up is reflected in the sector’s consistent basket average unit price in 2024, with symbols and independents charging the highest average premium (26%) on products. This is followed by forecourts and travel (23%), minor multiples and petrol (13%), major multiples convenience (10%) and supermarkets (0%).

Challenges for 2025

Circana listed business rates, legislation, soft demand, lower margin channels, cost-of-living mitigation and growing consumer health consciousness as major challenges across all grocers in 2025, with the latter presenting both risks and opportunities.

Disproportionately impacting smaller businesses are the costs of running a business, which are set to increase with proposed workers rights legislation costing up to £5bn per year.

The removal of Winter Fuel allowance, which will reduce pensioners’ standard of living, will also pose a challenge, as well as the tobacco duty escalator and disposal vape ban, soft drink sugar tax levy and draught beer tax reduction. Meanwhile, a pre-watershed TV advertising ban, online advertising and volume promotion will restrict HFSS growth levers.

2025 predictions

Price is to remain as the primary growth driver, Circana reported, and price elasticity is also crucial with performance difference between increasers (brands which have increased average unit price year on year) and decreasers crucial.

Independent retailers are advised to look to price-marked packs to help protect margin erosion from the sector’s channel mix decline.

Price-marked packs have seen higher return-on-sales growth than regular packs, Circana found, with significant year-on-year increases.

Takeaways for 2025

Circana also shared recommendations for retailers in 2025 to see positive growth during a year of challenges and ‘headwinds’.

• Retain distribution: retaining distribution is the cornerstone for efficient growth in 2025
• Price elasticity: pricing decisions are crucial and price elasticity is the key, but don’t forget promotion price points
• Display over deal depth: off-shelf display is better at driving growth than increasing deal depths
• Efficiency: every penny counts and efficient return on investment is going to be key to success
• Growth pockets: look to health consciousness pockets of growth with functional product innovation, acquisitions and partnerships to accelerate growth

Read more advice for independent convenience retailers