Inconvenient truth: c-store business is changing fast

This Saturday, The Grocer is publishing a special report on the convenience sector. The angle for that report is ‘How is convenience changing?’.

Booker gave us some help in answering that question this morning when it announced a £40m cash deal to acquire Budgens and Londis – the UK-based symbol groups owned by Irish operator Musgrave Group.

It’s a fascinating deal for a sector that has already seen plenty of activity over the past year. Tesco went into franchising in January 2014 through its convenience chain One Stop, while Palmer & Harvey and Costcutter came together through a buying and distribution agreement in July last year.

This new deal, which is subject to approval from the Competition and Markets Authority, will give Booker, which is already the biggest symbol operator and the UK’s largest wholesaler, an additional 1,797 stores and £833m in sales.

But Booker will have a lot of work to do. The wholesaler is still turning around the fortunes of Makro – the loss-making wholesaler it acquired two years ago. The Musgrave GB business Booker has picked up today is also loss-making (it made a loss of £7.3m last year), and commentators have speculated that though Londis is a perfect fit for Booker’s Premier chain, it will have to prove itself with the more upmarket and fresh-focused Budgens.

Initial reaction has been positive. The City loves it – with Booker shares soaring today. Retailers have also greeted the news, though are keen to see what will happen next.

Those unlikely to be so appreciative are its symbol group rivals and it will be interesting to see what impact an enlarged Booker with Budgens and Londis under its wing will have on the likes of Costcutter and Palmer & Harvey.

So, in answer to our question – convenience is changing , and changing fast. Retailers need to keep on their toes, just like Booker proved today.

You can read our special convenience report, together with the publication of the Grocery Retail Structure 2015, in Saturday’s issue – or tomorrow if you are a digital member.