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Demographics suggest that as people get older and as households get smaller, then local convenience stores will prove more attractive for more shoppers. On the surface this is good news for local shops but don’t kid yourself that the multiple grocers have not got designs on this sector. Authoritative figures from the Institute of Grocery Distribution released earlier this month show that the convenience market is growing faster than the grocery market, up 6.3 per cent in the past year to £30.9 billion. Better news, the IGD says it will grow strongly over the next five years to £41.2bn in 2015. A good market to be in. Yes, says Tesco, which is adding 521,000 square feet of selling space in the convenience channel this year in 213 locations and expecting to grab just under £640 million of extra sales. With Waitrose and Sainsbury also active in providing “convenience options”, how much of this £10 billion growth in the next five years will be available to you? That depends on how se

Higher taxes give tobacco companies the "cover to raise prices" which means the tobacco industry is in rude health, an analysis in the FT's Lex column today shows. For local shops, which depend on tobacco sales to generate footfall, this means that they do not have to rethink their strategy anytime soon. In the US in 2009, a 25 per cent rise in cigarette prices caused consumption to fall by 8 per cent, which was "bang in line" with the impact of the 87 per cent rise in prices since 1969 (adjusted for inflation). Based on this, investment bank UBS argues that tobacco manufacturers can sustain price increases of 4 to 5 per cent a year (8 to 9 per cent for retail prices) for the next 10 years, while absorbing consumption declines of 3 to 4  per cent. What is good news for the tobacco manufacturers may not be good news for tobacco retailers, who might read into these numbers that the former could afford to be more generous with margins. However, they also need t

At the Newsagents Federation conference in Birmingham this week, Imperial Tobacco, the UK's market leader, suggested to retailers that they should focus less on cigarette margins, at 6.6 per cent, and more on stockturn, at 183 times a year. Using a simple model, general manager Amal Pramanik, showed that the 50 per cent margin offered by toothbrushes which turned over four times a year, offered a cash return of £200 a year for every £100 invested. Cigarettes, in contrast, would earn a retailer £1,200 for every £100 invested. It is a simple illustration and holds true even when retailers add on investment in assets, such as the space occupied by the product. In order to measure how well you are doing, you need to understand what return you get when you multiply your margin by your stockturn. Mr Pramanik's purpose in reminding retailers of this fact is to head off increasing pressure from retailers for a rise in the margin that they get on cigarettes. However, his reminder

The article from the front page of the Financial Times is perhaps evidence that newspapers will survive the launch of the iPad. The advertisement on the underground on the day of the iPad's UK launch may also be evidence of the same thing. Fresh from my first play with an iPad, I am sure that it will change a lot of things. I was surprised how small and light it was. Apps from the iPhone do not work on it. Apps written specially for the iPad look fantastic. My friend who is an expert says that the iPad is too middle class to be as successful as the iPhone. But if you have middle class customers, then you should expect it to change something. The newspaper story was about the creation of artificial life. I had seen the story on the internet the previous day and saw it on the television evening news. But putting the story on the front page of a newspaper made it more real for me. While we know that not everything that is printed is 100 per cent accurate, we also pay attention to