Brits are still spending money on groceries, but only when it suits their busy lives.
Consumers no longer want to spend two or three hours on a Saturday buying essentials for the week and prefer to visit stores more frequently to purchase fewer items, said Trevor Green, head of U.K. equities at Aviva Investors in London.
He sees the pattern of shoppers combining online buying with convenience store trips continuing.
“This is all about people’s view on time rather than price,” Green said in a phone interview. “It’s a long-term trend and it’s running independent of consumer confidence or spending decisions.”
Market Growth
Researcher IGD estimates that convenience sales in the U.K. grocery market will increase by almost 18 percent to 46.2 billion pounds ($64 billion) in the five years ending 2022, compared with 5.9 percent growth in supermarkets. Convenience will be the third-fastest expanding sector after online and discounters, according to IGD.
“The growth rate in convenience will continue to outstrip the grocery retail market overall, supported by changing shopper behavior,” Patrick Mitchell-Fox, a senior business analyst at IGD, said Wednesday in an email. The shift is partly because of the increasing number of households with just one or two people, “but also reflects the significantly improved retailer capability developing in smaller formats.”
Here’s a look at some stocks that benefit from Britain’s time-pressured consumers:
Tesco, Sainsbury
“The winners have to be Tesco Plc and J Sainsbury Plc because they have clear convenience investment strategies and have scale already,” said Aviva’s Green. “Convenience isn’t just a lot of small stores, unbranded. Some of these are owned by very big groups and we keep seeing more and more consolidation.”
McColl’s
Shares in McColl’s Retail Group Plc, which operates more than a thousand convenience stores across the U.K., have almost doubled since the end of 2015. Sales for the 13-week period to Nov. 26 rose 29 percent from a year earlier, leading to annual sales of more than 1 billion pounds for the first time, Chief Executive Officer Jonathan Miller said in December. The company is scheduled to publish its full-year results on Feb. 19.
WH Smith
A growing appetite for travel has helped drive profits at WH Smith Plc, which sells books, magazines and newspapers at train stations and airports. The stock has jumped more than 400 percent in the past decade, although the shares are down about 14 percent so far in 2018 as the retailer’s U.K. high street stores continue to suffer from declining sales.
Whitbread
Sales at Whitbread Plc’s Costa U.K. grew 7.2 percent in the 13-week period ended Nov. 30, which the owner of the coffeehouse chain said was helped by strategically opening new stores in locations that get a high footfall, amid a “growing demand for quality and convenience.”
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
