Convenience store market update
Kings Business enjoyed a successful start to 2021, particularly in the convenience store with record high levels of interest and viewing enquires. As the sector thrives, we answer the questions currently on buyers and sellers minds.
What level of interest is Kings seeing in convenience businesses at the moment?
Kings has seen a surge in demand for opportunities in the convenience store sector, with high volumes of enquiries being received with viewing requests and strong offers received.
What is driving the increased interest in the convenience market from buyers?
There has always been a demand for this type of property in the retail sector but, due to the pandemic, buyers have seen the importance of convenience stores. The sector performed well during lockdown and created initiates such as expanding their food ranges. Many stores also began to offer delivery in their local area which increased the accessibility of the store.
Has the pandemic changed what buyers are looking for in a convenience store in terms of location, type or services?
Not that Kings have seen. There has always been a preference to branded stores, such as Nisa and Premier Stores, with at least 20,000 ft of shop space. Buyers also look for stores in attractive residential properties that will attract high footfall.
What type of convenience site is most in demand?
All types of convenience sites have seen an increase in demand across the country.
Is demand being driven by people looking to get into the sector, or shop owners buying additional sites?
The demand is being driven by both new and experienced buyers. Currently we are seeing many first-time buyers who are looking to acquire convenience stores and off-licenses alongside experienced buyers, who are already owners, who are looking to acquire additional premises.
What is happening to the valuation/selling price of convenience businesses?
Currently convenience stores are receiving offers that are in or around the asking price due to the competition for businesses. Previously, some discounts were taking place.
Whilst the convenience sector has flourished (on the whole) during the pandemic, the opposite is true for nearly all other retail sector. What impact have the challenges in the wider market had on the convenience sector?
Many retail businesses had to close due to lockdown or limit their operating hours which saw customers begin to rely on convenience stores. Additionally, many other retail businesses have been unable to open due to ongoing restrictions.
We’ve heard of convenience store owners struggling to secure finance for acquisitions/refurbishments of convenience stores because finance firms see retail as a whole as high-risk due to the pandemic, have you seen much evidence of this?
At Kings, we have seen many business owners using government introduced schemes, such as bounce back loans, to refurbish convenience stores. In addition to this, many buyers are taking advantage of the CBILS loan and use the loan for new acquisitions, so we have not seen much evidence of any struggle to secure finance. Furthermore, there has been an overall increase in liquidity, with banks being more forthcoming towards acquisition proposals and interest charged on debts at historic lows.
The Post Office’s CEO Nick Read admitted that the Horizon Scandal has damaged demand for Post Office sites, making it hard for some PO retailers looking to sell. Have you noticed this previously and has there been a return of demand since steps were taken to address the scandal?
The scandal has caused extreme distress to loyal post masters and mistresses but, since the resolution of the saga, there has been a spike in those looking to invest in post offices. The only issue at the moment is the time it takes to process new applications by the Post Office.
If you have any further questions, or would like any advice on acquisition opportunities, contact our industry-leading experts on 01772 775 775.