Investment levels in the convenience store sector have recovered slightly over the last three months after a shock fall in the summer, while concern among retailers about employment costs has led to a widening gap in optimism between sales and staff hours for the year ahead.
According to the ACS (Association of Convenience Stores) Investment Tracker which surveys over 1,200 independent retailers and a number of multiple operators, in the three months of September to November, the convenience sector invested just over £157m in stores, with independent retailers spending an average of just over £2100 per store. This is in contrast to the summer months, when investment levels dropped to £116m as retailers cut back to prepare for the impact of changes to employment costs announced by the Chancellor in the July Budget.
ACS chief executive James Lowman said: “The latest investment figures show the resilience of the convenience sector with many stores still making improvements in their business infrastructure despite rising costs and continuing shop price deflation. For stores to stay relevant and competitive, investment in better refrigeration, signage and new features and services is crucial to their long term survival.”
Despite the recovery in investment levels, the percentage of retailers who have increased staff hours over the last year continues to fall, reaching just 7% – its lowest level since February 2012. When asked about the year ahead, retailers were more optimistic about increasing sales than they were in the summer but less optimistic about the prospect of increasing staff hours.
Lowman continued: “As retailers look ahead to 2016, they will be faced with the introduction of a £7.20 living wage as well as continuing uncertainty over the future of business rates. The Chancellor neglected to extend the £1500 retail rate relief beyond this year, which when coupled with the cost of the living wage and other employment costs such as auto-enrolment, will have a direct negative impact on thousands of stores trading on the edge of profitability.”
Regionally, the East of England was region that saw the most investment over the last three months with 36% of stores in the area making an investment, while the lowest levels were found in Yorkshire and Humber, with just 26% investing in their business since September.