Given the events of the last couple of months, punctuated by the Budget, you’d be forgiven for thinking that the outlook for the sector was pretty gloomy in 2025. Incoming increases in Employers National Insurance contributions, a reduction in the business rates discounts, and rises in the National Living Wage are all going to add costs for retailers, and that’s before you start factoring in the impact of regulations like the ban on disposable vapes, so called ‘simpler’ recycling rules, and changes to employment rights. The impact won’t be felt evenly, but for thousands of stores there will be significant cost increases coming in April.
What we hear from retailers is that difficult decisions are going to have to be made in the business sooner rather than later. After several years of above inflation increases in the National Living Wage, convenience stores aren’t exactly running with a lot of slack. Where in the past, some stores may be able to absorb cost increases, that’s just not the case any more. Something’s got to give, whether it be a reduction in staff hours, cancelling investment plans, or ultimately putting up the cost of products on the shelf – none of which are things retailers want to do in a crowded and competitive market, but the Government have left us no choice.
While there will be challenges next year, there are also reasons to be cheerful. In mid-November, we hosted our Innovation and NPD Showcase at the fantastic London Stadium, with a real buzz in the room from both retailers and suppliers. One of the things that I took away from the event was that there are lots of companies out there that are innovating with new ideas and products that have convenience stores as a core part of their growth strategy, and similarly there’s a real hunger from retailers to get involved with new things and not to rest on their laurels.
It’s also true that people aren’t going to stop needing their local convenience store overnight – if anything, we hear that the range of services and products that convenience stores offer have never been more relevant and essential to the lives of communities. With every customer is an opportunity to make an impression – that could be with a new product that they can’t find anywhere else, the ability to get cash out in an emergency, or it could just be with a smile and a hello.
If the direction of policy from this Government stays as it is, our message is very simple – convenience stores are crucial to communities for all of the reasons outlined above and more, and it’s about time that they started recognising that when setting policy. The Government needs to find ways to support our sector, or even to just get out of the way and let us invest in the future, because the alternative is a dramatic reduction in the services (both paid for and unpaid) that we provide to communities.
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