Current trends in food retailing – small shops


This page covers current retail trends for UK small shops.  For historical development of UK shops up till the 1950s, see ‘how did food deserts develop’. 


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1) Loss of local shops in Britain

  1.1) Total number of independent stores.

  1.2) Numbers of grocery/convenience stores

  1.3) Market share of small independent grocery stores

  1.4) Changes in particular types of small food stores.

  1.5) Quotes and examples of small shops facing difficulty.

2) Financial situation of small shops

  2.1) Fixed and variable costs, mark up of wholesale groceries.

  2.2) Regulations and fees on small shops

  2.3) Supermarket buying power

  2.4) Changes in consumer buying habits

  2.6) Small shops’ pricing policies

  2.6.1) Small shops more expensive

  2.6.2) Local monopolies, or loss leaders

  2.7) Small shops, delayed closure when supermarket arrives

  2.8) ‘Opportunity costs’ and small shop closures

  2.9) Goods and services, different inflation rates, effect on small shops




1. Loss of local shops in Britain


1.1. Total number of independent stores (single-store businesses)


1945, 500,000

1950, 450,000

1960, 356,000

1970, 330,000

1980, 225,000

1990, 215,000

2000, 200,000




1.2. Numbers of grocery/convenience stores


Approximate number of independent grocery convenience stores in the UK



Total number of grocery stores*

Non symbol group stores

Symbol group stores **

Garage forecourt

Total ***


























































































































*Independent stores only, i.e. those with ten or less branches

** The main Symbol Groups in the UK are (2008) Booker, Costcutter, Londis, Premier, Nisa, and Spar.

*** Includes symbol and non-symbol stores, garage forecourt stores, convenience multiples (i.e. convenience stores operated by the multiple chains, for example Tesco Express), convenience co-ops, and joint ventures


Selective closure of weaker (smaller, more isolated) convenience stores


Not surprisingly, there has been a proportionately greater decline in the number of independent grocery stores than there has in their market share.  This is because it is selectively the most precarious single grocery stores, with the smallest amounts of business, that have closed.  Isolated corner shops were more likely to close than shops on parades. However once one or two shops on a small suburban parade of six shops close, footfall to the remaining ones may fall so far that they too are at risk.  G Monbiot (Captive State, 2000, p.169), says, between 1990 and 1996, small specialist food shops fell in numbers by 22%. However if these shops had sales of under £100,000 per annum, they stood a 36% chance of closure over this period.


1.3. Market share of small independent grocery stores


1900, 80%

1940, 54%

1950, 54%

1960, 51%

1970, 43%

1980, 32%

1990, 25%

2000, 18%


1.4. Changes in particular types of small food stores


1950, 25,000

1970, 19,000

1971, 18,442

1976, 13,893

1977, 14,984

1978, 12,914

1980, 12,000

2005, 8,000


1960, 43,000

1970, 33,000

1971, 32,415

1976, 22,289

1977, 21,776

1978, 21,422

1980, 21,000

2000, 9,700

2001, 8,344

2007, 7,186

2008, 7,022


1950, 10,000

1970, 6,000

1971, 5,978

1976, 3,286

1977, 3,716

1978, 2,999

1980, 2,800

2000, 2,408

2007, 1,657

Supermarket share of the UK fresh fish market

1990, 21%

2000, 66%


1950, 43,000

1970, 29,000

1971, 27,758

1976, 15,246

1977, 15,738

1978, 14,799

1980, 12,000

2004, 3,980




Between 1967 and 1990 many small independent rural petrol stations were put out of business by oil company stations selling fuel at lower prices, also offering self-service which many motorists preferred as it was quicker. Then from the 1990s the oil company stations in turn came under pressure from supermarket petrol stations selling fuel at near zero profit to attract shoppers to their out-of-town sites. Many independent urban petrol stations became worth more as a block of flats, after UK property prices began to soar in the 1990s.


However the decline in the number of UK filling stations has halted as their numbers stabilised at around 9,000 in the late 2000s. They have found a new role as food retailers, and many also sell hot drinks, alcohol, road atlases, functioning as cafes and grocers. Many have teamed up with grocery chain retailers.


1967, 39,958

1970, 38,000

1977, 29,751

1980, 25,500

1987, 20,197

1990, 19,500

1997, 14,824

2000, 14,000

2007, 9,271

2015, 9,000

           Supermarket share of the UK fuel market

           1992, 11%

           2007, 30%


1970, 9,500

1971, 9,401

1976, 9,845

1977, 10,294

1978, 9,015

1980, 9,000


Ethnic-oriented food retailing in the UK


Immigration to the UK has created business opportunities in the grocery sector for a wide range of food stores oriented towards ethnic minorities. In addition to Chinese food stores, generally found on the fringe of town centre of UK cities (e.g. Wing Yip), UK High Streets and corner stores cater for East European / Polish market (including smaller communities such as Lithuanian and Russian, and Asian-oriented stores such as Halal butchers (often sharing premises with a grocery store catering for both White and Asian customer’s tastes). As the UK’s Polish / East European population has grown, Polish food stores have expanded, their range has grown to include more fresh fruit and vegetables as well as tinned / dry goods, and small Polish supermarkets have appeared. Similarly Asian supermarkets such as Pak now operate alongside the smaller Halal groceries. There are also a smaller number of Sub-Saharan African-oriented food stores, often also selling non-food goods such as cosmetics.


Where a certain ethnic community has a strong presence in a specific locality this will be observable in the type of grocers visible, along with other shops. For example the Belgrave Road area of north Leicester has many Hindu-oriented stores, and the Spinney Hills district east of centre has many Muslim-oriented stores. Stamford Hill in London has many Kosher shops for its Orthodox Jewish community. As populations shift, so does the mix of shops operating; for example Golders Green (NW London), and Brick Lane in inner east London once had many Kosher stores but now has more south Asian oriented shops, In Kilburn, NW London, a former (1980s) strong presence of Irish-oriented retailers and entertainment premises has now (2014) become more Asian.


In many retail centres the three main categories of food retailer in the UK (Asian, East European, White British) operate alongside each other, though not of course exclusively patronised by just their main target consumers.


1.5 Quotes and examples of small shops facing difficulty


South Birmingham newsagent, 2002,

“In ten years time, you’ll have to buy your newspaper from Sainsbury” [because then there will be no local shops left].

Bromwich, Birmingham, butcher, 2003,

 “I’ll have to go and work for those [the supermarkets] who’ve put me out of business”.

Bromwich, Birmingham, general grocery store, 2003 (in a reasonably well off area), they had a shotgun held to their head in a robbery, now on Wednesdays [half day closing], they nail up the shop door for security.

Newcastle on Tyne convenience store, poorer area, February 2004,

“I tried stocking vegetables round here for the last three months but nobody buys them, they just go off. I sold one carrot in the last three months, that was for the kids to use as a nose for their snowman”.

Birmingham general stores, western suburbs, 2004,

“A few months ago, schoolchildren around here had to do a project on fresh fruit and vegetables. One came in here asking for a banana, but he didn’t know what one looked like, he didn’t recognise them on the counter”.

Scunthorpe general stores, 2004,

“I would do fresh fruit and vegetables but the delivery people don’t want to deliver it here in the small amounts I could sell”.

North Lincolnshire, small-town greengrocers and general stores, 2004,

“The supermarkets are selling stuff cheaper than I can buy it from the wholesalers. For example Lidl in Barton sell 500g of tomatoes at 29p, my wholesale price is 79p. They do cucumbers for 29p, iceberg lettuces also for 29p, my wholesale prices are 69p for these things. It’s the same thing with the town centre shops. Currys in Scunthorpe had a music centre reduced from £329.95 to £199, but Lidl [Barton] were selling them for £99”.

Grimsby area, rural general stores, 2004,

“If it wasn’t for the [income from the] National Lottery we’d close up today”.

Rural Hampshire grocery stores, 2006,

“All the small shops will be gone in ten years. We’re lucky, we do magazines, but so do Sainsburys now, supermarkets do everything, you can’t compete with them”.

Suburban convenience store, Stoke on Trent, 2008

”Fresh vegetables?  They won’t buy anything round here unless it comes in a tin”


Most small shops, if asked about fresh fruit and vegetable provision, or the lack of it, locally, made comments under one of the following four headings.


1) We can’t compete with the retail prices at the supermarkets. Most people who want fresh fruit and vegetables find some way of getting to the supermarkets.

2) Wholesale prices are too high for us, especially for the small amounts we would order.

3) The wholesalers don’t want to deliver the small amounts we would order, and it just isn’t worth my time or money to go a long way to the wholesaler and get it myself. (Centralisation of wholesaling has meant an increasing average distance between shop and wholesaler, and this is exacerbated by high fuel prices).

4) There’s just no demand for it here, they don’t eat them here; mostly it goes off before I sell it, and my business can’t stand any kind of loss as profits are low anyway.


2. Financial situation of small shops


2.1. Fixed and variable costs, mark up of wholesale groceries.


Small shops are often perceived as charging high prices, and in some was ‘ripping off’ the local customers who cannot get to large supermarkets. One shop, in Scunthorpe, Lincolnshire, now closed, was termed by the local people the ‘robber shop’ because of its high prices. In fact such shops may, despite their higher prices than supermarkets, be selling some foodstuffs at a loss, and their higher overall prices may be due to the basic economics of small shops themselves.


The costs faced by businesses may be classified as either fixed or variable. Fixed costs are those incurred whether the business actually trades or not – for example the rent on its premises. Variable costs are those incurred as a result of trading – for example the wholesale costs of goods bought in to be sold. Of course a business that is to survive, in the long term, must cover both these types of cost, and leave some profit over for the business owner to live on. But it is only the trading that actually brings in income, so the mark up on the wholesale goods, for example, must cover both the variable and fixed costs.


A large business, such as Tesco, will have a low proportion of its costs as fixed, and a high proportion as variable. This is for two reasons. Firstly, if the company has high levels of trading, as Tesco does, the volume of variable costs (e.g. wholesale prices) simply is very large compared to fixed costs such as premises rental. Secondly, a large retailer like Tesco can employ its staff flexibly, having more in when demand is high, sending some home when demand is low. So staff costs are a variable costs for Tesco.


Yet for a small shop, staff costs are fixed costs, because the shopkeeper must be there whether the shop is busy or not. And small shops have lower levels of trade anyway. So small shops are the opposite to a large retailer such as Tesco; small shops have high proportions of their costs as fixed costs, low proportions as variable costs.


So what does this mean for the mark-up in Tesco, and in small shops? It means that Tesco can afford to make a quite low level of mark-up on its variable costs (wholesale prices) to cover what is quite a small extra level of fixed costs. On the other hand, small shops must make a high level of mark up on their relatively low level of trade to cover a greater relative amount of fixed costs. Therefore, Tesco can manage to cover its total costs, and make a profit, by marking up its wholesale prices by perhaps 6%. A small shopkeeper could never cover all their costs, and have some left over to live on, by marking up their wholesale prices by 6%. Typically, small shops need mark-ups of 80%, 100%, or more to generate enough profit to live on.


2.2. Regulations and fees on small shops


A major complaint of small shops was the amount of time and money they had to spend on regulations and charges.


Of course all businesspersons complain at almost any amount of regulation and fees, however small, but the problem for small shops seemed to be that regulations applied to all shops, regardless of size, affected them relatively more.  For example environmental regulations on waste paper could be absorbed by a supermarket, with the staff and resources to comply with this, but to a small shopkeeper this was an extra burden on their time they could ill-afford. A survey by NatWest claimed that sole traders were “spending 41% more time dealing with government regulations and paperwork than they did three years ago, 8.9 hours a month as against 6.3 hours”, (Daily Telegraph, 15/9/2003, p.29). Meanwhile the same survey found companies employing over 50 people spending slightly less time on these activities than three years ago, spending just 1.2 hours a month per employee here, as against 1.3 hours three years ago. Even so this translated into the larger companies having to employ one person per 50 employees to spend 79.9 hours a month – around 2 weeks – on government regulations.


Fees for gaining approval to diversify, for example into sandwiches to supplement a declining grocery trade, could be in the hundreds of pounds. If the shop went just a little too far in its food provision, it might just be re-classified as a restaurant, with hundreds of pounds more of licence fees and requirements such as ventilation installation.


The smoking ban in the UK, implemented from 2007, posed a further threat to small independent shops.  From 2007 all public premises, shops, pubs, workplaces, etc became smoke-free zones.  At one level, this further threatened many pubs, whose smoking customers had a further reason to stay at home to drink; the loss of a pub, especially in rural areas, may reduce the trade of nearby shops.  (Pubs were already under threat from higher energy costs, a shift to supermarket-purchased drinks, increased concerns about drink-driving, and in some inner-city areas a population shift from White to ethnic minorities who visit pubs less).  At another level, from 2013 small shops have to remove cigarettes from public display (supermarkets have to do this from 2011).  Small shopkeepers say this will result in more people buying their tobacco products from larger stores.


EU regulations on vapour emissions from petrol stations (2011) may cause the closure of some independent petrol stations, which would mean the loss of retailing facilities, especially in very remote rural areas of the UK.


2.3. Supermarket buying power,


The large supermarkets like Tesco can bring their prices down in other ways too. They do not actually use wholesalers but buy their goods directly from manufacturers and farmers. This cuts out a middleman; small shops cannot do this because farmers and manufacturers would not want the complications of dealing with thousands of small shops as customers – they prefer to sell via a wholesaler. Supermarkets, though, are such large customers to those producing food and other goods that they can virtually dictate on what terms and at what prices they will buy. This power of the supermarkets to force down manufacturers’ prices is called ‘buying power’. Large companies such as Tesco also have the power to demand certain concessions, such as on tax, from governments, in return for locating some of their commercial operations in that country.


2.4. Changes in consumer buying habits


Some of the staple products traditionally bought at smaller stores rather than supermarkets are in decline overall.  Two examples of this are newspapers and cigarettes.  These are regularly-consumed items bought daily which consumers would want to buy quickly and locally; hence small stores had an advantage here.  When a customer bought such an item at a small shop, they might buy other items as well.  But various anti-smoking campaigns have reduced the number of adults who smoke; the advent of the Internet has cut newspaper purchases.   Also the opening of local branches of supermarkets such as Tesco Express has eroded the convenience advantage small shops once had.


The array of shops on High Streets and suburban parades has moved away from food into personal services provision.  The traditional butcher, baker, greengrocer, and (especially) fishmonger are in decline, along with independent clothes shops.  The main supermarkets all sell clothes as well as food.  What has arrived in their place?  In the 1990s,mobile phone shops, computer shops, and charity shops were on the rise.  In 2010 these too are being replaced to an extent; large chains sell electronic goods, the mobile phone market is becoming satutared, and developments such as eBay have undermined charity shops.  In the early 2000s, ‘beauty shops – nail bars and hairdressers – were on the rise, along with cafes.  The Credit Crunch hasn’t harmed the beauty / personal grooming sector as much as one might think.  There is the ‘lipstick effect’ whereby consumers who can no longer afford big luxury purchases instead buy smaller pampering treats.  And a tight job market has increased the importance of looking good at that job interview.  The end of the property boom in 2007 also heralded a decline in estate agencies, along with other financial services premises; although betting shops and pawnbrokers are doing well.  Also on the rise are discount shops, such as Poundland and the ‘99p stores’.  Although these may see themselves undercut by the arrivalof ‘98p stores’. 


2.6. Small shops’ pricing policies


2.6.1. Small shops more expensive


‘The Observer’, 13/9/98, p.11, reported that ‘on some less well off housing estates, food prices in the local shops could be up to 60% higher than in the supermarkets. Many shopper’s comments in a survey of Leeds, and in Birmingham during 1999 and 2000 confirmed this. In Sparkbrook, Birmingham, a corner shop sold flour at 80p a kilo (2002) but at a small supermarket one kilometre away it was 47p a kilo. A 2-litre bottle of coke was 80p in a small shop 92002) but Sainsbury had a BOGOF offer of 2 2-litre bottles for 31.00. With tinned tomatoes there was an even bigger price differential, because the small shop only bought one box at a time. So the small shop faced a bigger wholesale price, because of the small delivery and besides the supermarket would but direct from the manufacturer, cutting out a middleman. Then the small shop needed higher margins to survive. The small shop paid £12 a box, as against the supermarket paying £2 a box. Retail, the supermarket sold the tins at 5p each; they were 80p in the small shop.


2.6.2. Local monopolies, or loss leaders


Some small shops may exploit the fact that they have a catchment area containing elderly disabled, or people who cannot afford cars and so find it hard to get to cheaper supermarkets, and raise their prices by more than necessary. One grocery shop in Scunthorpe (now closed) was called the ‘robber shop’ because of its high prices. Many customers mentioned prices at local shops as being 50% to 100% higher than supermarket prices for the same goods.


In may cases however the small shop will sell staple goods such as bread and milk at lower prices than they paid the wholesaler for it. A small shop in East Park, Leeds, sold bread for 55p a loaf, despite paying the wholesaler 89p for it (2003). Morrison in Hunslet, nearby, sold similar bread for 39p a loaf.


The idea is to get shoppers in who would have otherwise travel to larger shops for these things; these customers may then buy items like alcohol and cigarettes which the small shop will make more profit on. Unfortunately for small shops, the strategy of loss leading on staple foods to capture alcohol and cigarette trade is undermined by tax shifts. As governments shift tax away from the multinationals, and compensate by raising it on alcohol and cigarettes, consumers behave like the multinationals and attempt to source these items from lower cost countries. So UK drinkers and smokers go on ‘booze cruises’ to Calais, or buy these things over the Internet from, for example, wholesalers in Belgium. Now not only do small shops lose trade but so do local pubs, as alcohol brought from France is consumed at home with friends. The local area where the shop is loses part of its social fabric as the pub, and perhaps the shop too, closes, and local employment, at shop and pub, is lost.


2.7. Small shops, delayed closure when supermarket arrives


A paradoxical effect of small shops having a high level of fixed costs to their variable costs is that they can continue to trade at a loss for quite some time before finally closing. We said above that for ultimate survival, a business must cover both its variable (trading) costs and its fixed (costs incurred without trading) costs and leave a profit for the owner. But in the short term, a business making just enough money to cover its trading costs alone, but not managing to cover its fixed costs too, should still stay open. The business is making more money by staying open than it would if it ceased trading altogether. Fixed costs can be covered from the reserves the business has. Only when these reserves, the money in the bank the business has kept for a rainy day, run out will the business finally have to close. It is a bit like a hungry animal, a predator, not finding enough food to keep itself alive. The hungry animal does better to chase after what little prey there is, rather than sitting still to conserve energy, so long as the food value of the prey is higher than the energy the predator spent in chasing it. The predator can live off its fat reserves till times get better. Only when the fat reserves are gone does the predator die (or ‘cease trading’ in business terms).


So when a supermarket enters an area, the small shops around may not close immediately. A typical time lag is in fact two to three years between the opening of a new supermarket and the closure of the small shops it will ultimately supplant. During this time, some shopkeepers may retire, shopping patters will shift, and the link between the new supermarket and local shop closures is blurred.


2.8. ‘Opportunity costs’ and small shop closures


Even where small shops are still generating a living for their owner, they are liable to be closed through something called ‘opportunity costs’. ‘Opportunity cost’ is the next most profitable alternative use of some asset, such as a shop premises, that is foregone by using it in its current situation. If the ‘opportunity cost’ is more lucrative than the current use, economic logic dictates that the current use should be changed to this new more lucrative use. (Note that this is ‘economic’ logic – often there are psychological factors in running, say, a small shop, such as contact with regular customers, liking that lifestyle, etc. Most second hand bookshops, for example, would fail the ‘opportunity cost’ test and be immediately changed to some other retail of office use). In areas that are ‘gentrifying’, being taken upmarket by an influx of wealthy house buyers, shop uses such as bistros, wine bars, restaurants, will always bring in more money than grocery shops. Usually such uses can bid to pay more rent than the grocery shop, and the landlord of any rented grocery shop premises will raise the rent demands to the maximum they can get, so the grocery gives way to the bistro.


2.9. Goods and services, different inflation rates, effect on small shops


A more subtle economic threat to local grocery shops comes from the fact that Britain experiences not one but several inflation rates. We have become used to the idea of multiple alternative inflation rates, for example the Retail Price Index, the price Index minus housing costs, the Tax and Price Index, and so on. This is the tip of a multiplicity of inflation rates. In general the price of manufactured goods rises more slowly than the price of services. This is because the manufacture of goods can often be shifted to a low wage country, or automated, and there has been a general worldwide trend for the global price of raw materials to fall. Improving technology enables manufactured goods to be made more efficiently, with less inputs of energy and materials. In the case of computers, the UK has experienced price falls – deflation – for several years as technology here has progressed rapidly; price falls are greater if improvements in quality are taken into account. The shift to cheaper wage countries has meant the UK has also seen deflation in clothes and footwear.


Meanwhile, services often have a high labour content, and salaries generally rise by 2% to 3% more than the (average) inflation rate. Services, from hairdressing and personal care to accountancy and architecture, cannot easily be delivered from abroad or automated. Incidentally, this differential inflation hurts pensioners on the State Pension, which for some years has risen only in line with the average inflation rate. Pensioners tend to buy a ‘basket’ of goods and services containing more services than the average, on which the Retail price Index is based. Hence pensioners experience a slightly higher inflation rate than the headline rate, on which the pension rises are based, so gradually their standard of living is eroded. Pension rises in line with inflation only in any case deny them the general rise in living standards other people experience.


Sudden adverse events can precipitate the closure of small marginally-economic independent stores, when the same event happening to a Tesco Express would simply cause the repairmen to come in and fix things. An armed robbery caused the closure of a shop in Leeds, because the staff were too traumatised to come to work. A drunk driver crashed their car into a shop / Post Office in east Lincolnshire, and the shop never re-opened. Less dramatically, when the shopkeeper retires, it os hard to find a replacement for them.


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