Have we reached peak convenience store?

The UK may now be saturated with convenience food stores after five years of rapid growth in towns and cities.

A report compiled by the Local Data Company (LDC) shows a 21 per cent increase in the number of convenience stores between 2010 and 2015, the BBC reports, bringing the number to 16,426.

In particular, the amount of small stores being opened by the established "big four" chains has far outstripped openings of larger supermarkets in that time, adds Retail Gazette. The compound annual growth rate in the convenience format was 8.4 per cent, compared to 4.9 per cent.

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But appetite is waning and there is a growing sense that there are now "more stores than shoppers needed". In 2015, there were 300 new openings, down from 1,000 in 2012, while 228 towns and cities saw the number of smaller grocery shops decline last year.

Morrisons has already ditched its small shops, which have been sold and rebranded as M Local, and Asda has also abandoned its nascent roll-out of convenience stores.

There is evidence in the LDC data that overall saturation may have been reached some time ago, with the relentless rise from the big four putting pressure on small brands such as Londis, Mace and Budgens, all of which saw their store count drop over the five years.

Consequently, in aggregate and on a net compound annual basis, the number of convenience stores actually grew at a slower rate than supermarkets - although this is now similarly slowing - and discount stores.

LDC director Matthew Hopkinson said the data in aggregate showed increasing segmentation of the market as consumers shop around between artisanal, local and discount-branded options.

He added that Amazon's launch into the grocery sector had the potential to be even more disruptive still.

Noting that food was one of the few markets relatively undisturbed by the expansion in online shopping, Hopkinson said: "Perhaps Amazon will be the catalyst to change this and if it does then we will see some retailers under significant pressures over the next five years."