Store market

Convenience Market Update – Lancashire Business View

Kings Business had a successful start to 2021, particularly in the convenience store with record levels of interest and visit requests. As the industry thrives, we’re answering the questions that are on the minds of buyers and sellers right now.

What level of interest is Kings currently seeing in convenience stores?

Kings has seen an increase in demand for opportunities in the convenience industry, with high volumes of inquiries received along with viewing requests and strong offers received.

What is driving increased buyer interest in the convenience market?

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 the lockdown and created initiatives such as expanding their food lines. Many stores have also started offering delivery in their area, which has increased the accessibility of the store.

Has the pandemic changed what shoppers look for in a convenience store in terms of location, type, or services?

Not that kings have seen. There has always been a preference for branded stores, such as Nisa and Premier Stores, with at least 20,000 feet of store space. Buyers are also looking for stores in attractive residential properties that will attract high footfall.

What type of proximity site is most in demand?

All types of convenience stores have seen an increase in demand across the country.

Is the demand driven by people looking to enter the industry or by store owners buying additional sites?

Demand is driven by new buyers and experienced buyers. We are currently seeing many first-time buyers looking to acquire local and off-license businesses alongside confirmed buyers, already owners, who are looking to acquire additional premises.

What happens to the valuation/sale price of local shops?

Currently, convenience stores are receiving offers that are at or around the asking price due to competition for business. Previously, some discounts took place.

While the convenience sector has thrived (on the whole) during the pandemic, the reverse is true for almost every other retail sector. What impact have broader market challenges had on the convenience sector?

Many retail businesses have had to close due to the lockdown or limit their hours of operation, leading customers to rely on convenience stores. Additionally, many other retail businesses were unable to open due to ongoing restrictions.

We have heard of convenience store owners struggling to secure financing for convenience store acquisitions/renovations because finance companies see retail as a whole as high risk due to the pandemic, have any have you seen a lot of evidence?

At Kings, we’ve seen many business owners use programs put in place by the government, such as rebound loans, to renovate convenience stores. On top of that, many buyers are taking advantage of the CBILS loan and using it for new acquisitions, so we haven’t seen much evidence of a struggle to secure financing. In addition, there has been an overall increase in liquidity, with banks being more open to takeover proposals and interest being charged on debt at historically low levels.

Post CEO Nick Read admitted the Horizon scandal had hurt demand for Post offices, making it difficult for some PO retailers looking to sell. Have you ever noticed this and has there been a return in demand since steps were taken to settle the scandal?

The scandal has caused extreme distress to loyal postmasters and mistresses but since the resolution of the saga there has been a spike in those looking to invest in post offices. The only problem at the moment is the processing time for new requests by La Poste.

If you have any further questions or would like advice on acquisition opportunities, contact our industry leading experts on 01772 775 775.

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