Variety Stores in the United Kingdom

2020 IMPACT

Despite declines, some variety stores receive boost due to “essential retail” classification during lockdowns

Variety stores had been negatively impacted towards the end of the review period by difficulties of the retailing environment, such as inflating rent and weakening consumer confidence. However, the pandemic, and more importantly, the classification of such stores as essential retailers brought a tipping point for consumer perceptions towards the channel.

Pandemic encourages variety stores to expand online

In previous years, one of the weaknesses of variety stores in retailing’s competitive landscape was considered to be the lack of online operations. In order to supply the elderly and vulnerable consumer groups, and to remain in competition with the limited number of players that had already established an online presence such as Argos, variety stores started to re-evaluate its channel strategies.

Key players record a good year, despite overall store closures

B&M European Value Plc (B&M Bargains) continued to lead variety stores in 2020, recording double-digit value growth as it expanded its store network of more than 600 outlets, despite the challenging retail environment. The company benefited from using low prices to differentiate itself from the competition and offering attractive bargains.

RECOVERY AND OPPORTUNITIES

The recession to encourage move towards variety stores amongst consumers

Key drivers of the success of variety stores in 2020’s uncertain economic situation were the appealing bargains and low prices that the channel offers. This factor is likely to remain key to attracting customers to both its stores and online due to expected lower consumer confidence combined with restricted family budgets throughout the forecast period.

Variety stores selling online – Is it an opportunity or a challenge?

Efficiently combining in-store and online operations has been gaining increasing popularity among many players across the retailing landscape. However, most variety stores have just started to explore the opportunities that e-commerce could bring as the large scale of products offered at low prices makes it challenging for variety stores to operate online.

Technology and in-store provide opportunities to boost sales

Competition with discounters will continue to be a significant challenge for variety stores throughout the forecast period. Discounters’ “middle aisle” offers strongly compete with bargains of variety stores, and therefore, a potential way of differentiation for variety stores could be to engage customers with in-store experiences.