Introduction
 
Neighbourhood retailing is outperforming all other locations. The location offers substantial opportunities, but the dynamics of the market are changing. As the market consolidates, growth is becoming more elusive and while substantial opportunities remain, trading conditions are more challenging and the strategies for success very different.
 
 Scope
 
 *Key metrics of neighbourhood retail: sales growth, space, store numbers, store sizes and sales densities.
 
 *Detailed market analysis (convenience, off-licences, CTNs, food specialists, pharmacies) and profiles of all the leading neighbourhood retailers
 
 *Focus on composition of convenience market (The Co-operatives, Multiples, Symbol Groups, Independents, forecourt retailing)
 
 *Market shares for leading players 2003-2008
 
 Highlights
 
 Neighbourhood retailing is benefitting from a shift in shopping habits, an increased demand for convenience, improved standards and the arrival of the grocers. The expansion of the grocers has enticed people to shop locally and the symbol groups to enhance their propositions, encouraging independents to join and consumers to shop with them.
 
 Competition is intensifying and pressures on food specialists, independents, off-licences and CTNs mounting. With the market consolidating, the easy wins of the past are harder to come by, while the boost received from the arrival of the grocers can not be repeated. Growth is set to become more elusive and the strategies for success different.
 
 With propositions becoming more comprehensive, the need for CTNs, off-licenses and undifferentiated specialists is diminishing. As the market consolidates, store environments, fresh food and food-to-go will be key battlegrounds and the multiples, with the expertise and investment available to them, are well placed be the big winners.
 
 Reasons to Purchase
 
 *Benchmark retailer performance against the market. Understand the dynamics of the location, its composition and prospects for each channel
 
 *Identify the growth prospects of key players in neighbourhood retailing
 
 *Analyse the key issues impacting the location and identify thestrategies for success

CHAPTER 1 EXECUTIVE SUMMARY 24
 Food-led neighbourhood to outperform total retail 25
 Neighbourhood retailing creating a virtuous circle 25
 Tesco and Sainsbury feeding virtuos circle and exerting competitive pressure 25
 Takeover of Somerfield cements top place for The Co-operative 25
 Symbol groups recruitment blitz will consolidate market further 26
 CTNs and Off-licences a dwindling format 26
 Grocers look at alternative sites for expansion as market saturates 26
 Symbol groups improve offer, but risk falling behind 27
 Convenience stores benefit from demand for top-up shopping 27
 Diversifying offer to exploit high footfall and desire for convenience 28
 Neighbourhood sales growth becoming more elusive 28
 Power to shift further to grocers and large symbol groups 28
 CHAPTER 2 KEY ISSUES 30
 Exploiting opportunities in outperforming location 31
 Changing shopper demographic 31
 Demand for top-up shopping 32
 Desire for convenience 33
 Adapting to changing dynamics of location 34
 Market consolidating 34
 Competition intensifying 35
 Consolidation to impact future growth opportunities 36
 Flexible formats 38
 Flexible propositions 38
 Symbol groups boost loyalty 38
 Diversify & Differentiate 39
 Threats Remain 40
 CTNs and off-licences lose out to bigger players 41
 Onerous legislation will hit sales and profits 41
 Dwindling need for CTNs & Off-licences 42
 Only highly differentiated food specialists will survive 42
 CHAPTER 3 NEIGHBOURHOOD MARKET 44
 Summary 44
 Supermarkets and symbol groups pressurise unaffiliated independents 44
 Components of neighbourhood retailing 46
 Neighbourhood sales channels 47
 Majority of neighbourhood sales through convenience stores 48
 Space 50
 Multiples and symbol groups slow decline in space 50
 Neighbourhood SWOT analysis 52
 
 CHAPTER 4 NEIGHBOURHOOD V OTHER LOCATIONS 53
 Sales 55
 Sales growth driven by multiples and symbol groups 55
 Space 58
 Opportunistic retailers help slow declines in neighbourhood space 58
 Sales densities 60
 Boosted by product mix and expansion of multiples 60
 Stores 62
 Vacant stores are snapped up quickly 62
 CHAPTER 5 C-STORES AND SMALL GROCERS 65
 Summary 65
 Despite continued consolidation, market remains fragmented 65
 SWOT analysis 67
 Key messages 68
 Unafilliated independents continue to be recruited by symbol groups 68
 Smaller Grocers – The Co-operative stamps authority and supermarkets exert pressure 68
 Convenience retailing will benefit from changing shopping habits 69
 Constrained household budgets make value key 69
 Growing importance of fresh food and food-to-go 70
 C-stores expand on to forecourts 70
 Waitrose sensibly commits to convenince store expansion 71
 
 CHAPTER 6 C-STORES: OTHER SYMBOL GROUPS 73
 Introduction 73
 Summary 73
 How Costcutter / Nisa-Today’s relationship evolves will significantly impact on Nisa 73
 Prevalence of wholesalers with a symbol group offer could decline sharply 74
 Fresh produce and own brands become vital aspects of propositions 74
 Key players 75
 Best-one (Bestway) 75
 Key Store (JW Filshill) 76
 Lifestyle (Landmark Group) 76
 Mace (Palmer & Harvey McLane) 77
 Nisa-Today’s 77
 CHAPTER 7 C-STORES ON FORECOURTS 80
 Summary 80
 Still hold opportunities for convenience and food service brands 80
 Key messages 80
 After decline petrol station numbers stabilise 80
 Modern forecourt convenience stores continue to break old stereotypes 81
 Motorists shop spend was resilient despite high fuel prices in 2008 81
 Convenience store and oil company partnerships still being pursued 82
 Service station food-to-go remains a growth area 83
 Franchise arrangements increasingly prevalent 83
 BP, Shell and Total continue to prospect for new dealers 83
 BP franchise model successful template for others 83
 SWOT analysis 85
 Store numbers 86
 Key players 87
 BP has strongest shop brand on UK forecourts 87
 Shell develops private label food-to-go range 88
 Esso partnership with Tesco leaves it well placed 88
 Total trio of formats 89
 Almost all Texaco sites are dealer-owned 89
 Smaller fuel retailers partner with branded stores 89
 CHAPTER 8 TRADITIONAL FOOD SPECIALISTS 91
 Summary 91
 Niche players set to capitalise in struggling market 91
 SWOT analysis 92
 Key messages 92
 Food specialists continue to struggle 92
 Niche operators that diversify will prosper 93
 Future for the sector looks challenging 94
 Neighbourhood food specialists in wider context 95
 Multiples and symbol groups encroach on specialists territory 95
 Background of total sales, space and stores 97
 Food specialists sales continue to be pressurised by multiples 97
 Space and stores continue to contract as competition intensifies 100
 CHAPTER 9 TRADITIONAL OFF-LICENCES 102
 Summary 102
 Off-licences face uncertain future 102
 SWOT analysis 103
 Key messages 104
 Specialist off-licences under pressure from all sides 104
 Proposed minimum unit pricing will be of no benefit to off-licences 104
 Specialists need to utilise their strengths to advantage 105
 Problem areas: shallow range, lack of knowledge and prices not low enough 105
 First Quench (Threshers, Wine Rack, Haddows and The Local) 106
 Struggles for survival 106
 Other key players 107
 Bargain Booze 107
 Laithwaites 108
 Majestic Wine 108
 Oddbins 109
 Wine Cellar 109
 
 CHAPTER 10 NEIGHBOURHOOD PHARMACIES 110
 Summary 110
 Pharmaceutical market defies downturn 110
 SWOT analysis 111
 Key Messages 112
 Local chemists seek to capitalise 112
 Deregulation allows growth for supermarkets and independents alike 112
 Smaller independents struggle against supermarkets and abolishment of PPA 112
 Swine Flu injects boost 113
 Pharmacies compete with GPs 113
 Alliance Boots 114
 Key Messages 117
 Lloydspharmacy 118
 Key Messages 120
 CHAPTER 11 TRADITIONAL CTN OPERATORS 123
 Summary 123
 CTNs face increasingly uncertain future 123
 SWOT analysis 124
 Key messages 125
 Increasingly competitive marketplace 125
 Diversifying offer essential for survival 125
 Provide service to encourage loyalty and spend 126
 CTNs need to adapt store environments following tobacco legislation 126
 Consolidation in newspaper distribution will see more CTNs close 127
 Martin McColl 128
 CHAPTER 12 FORECAST 130
 Retail spending by location in 2008 and 2013 130
 Multichannel retailers will prosper as online spending grows 130
 Neighbourhood retailing to 2013 131
 Sales growth to rise as multiples and symbol groups take over 131
 Convenience stores will prosper in increasingly competitive market 133
 Declines in space and stores will slow as market consolidates 134
 CHAPTER 13 COMPANY DATA ANALYSIS 136
 Summary 136
 Winners & losers 136