Local shops axe jobs and cut investment amid surging costs

According to the Association of Convenience Stores (ACS), the sector has faced an “extremely challenging year” as the cost of doing business rises sharply while consumer demand remains flat.

Although the number of stores in the UK grew slightly to 50,486, the total number of jobs fell from 445,000 to 443,000.

James Lowman, chief executive of the ACS, said the pressures are becoming unsustainable:

“This has been an extremely challenging year for local shops as the cost of doing business has risen significantly while sales have stagnated due to fierce competition from discounters, supermarkets and other retailers.

"These figures should serve as a warning to Government that we cannot continue taking the brunt of additional costs and other burdens without the impact being felt by the communities that these essential stores serve.”

The ACS’s annual Local Shop Report also found that total projected sales in the sector have fallen to £48.8billion, down from £49.4billion the previous year.

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Shop owners say the decline is being driven in part by competition from discount supermarket chains like Aldi and Lidl, which continue to expand and undercut local retailers on price.

Larger supermarket brands have also responded to this competition by slashing prices and increasing promotional activity.

Investment by local shop owners has also taken a hit. In 2024, total investment across the convenience sector was £1billion.

This year, it has dropped to £900million, as retailers tighten spending in response to lower sales and higher costs.

The Centre for Retail Research predicts that approximately 17,350 stores will shut down in 2025, potentially leading to as many as 202,000 job losses, eclipsing the darkest days of the pandemic downturn.

A significant part of the financial strain comes from recent changes in employment legislation and tax policy, leading to criticism from retail bosses.

Increases to the National Living Wage and National Insurance Contributions, along with reduced business rates relief, are expected to cost convenience stores an extra £612million this year alone.

Many retailers say these costs are simply unaffordable without making cuts to staff and scaling back plans for store upgrades or new services.

Despite the tough conditions, Lowman highlighted the vital role local shops continue to play:

“Convenience stores are still right at the heart of communities, more relevant than ever to people’s daily lives, and making a positive difference not just through diversified products and services, but as job creators, investors and social hubs.

"Every community has different needs and our members’ greatest asset is being able to adapt their offer to meet those needs.”

With economic pressures showing no signs of easing, the ACS is urging the government to take action to support local retailers and prevent further job losses.

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Without intervention, thousands more jobs and community businesses could be at risk.

With the growing dominance of large supermarkets and discount retailers, supported by vast supply networks and economies of scale, threatens the diversity of the UK’s retail landscape.

Independent convenience stores offer unique, locally tailored services, from Post Offices and parcel pick-up points to ethnic groceries and community noticeboards, and a sense of familiarity and place.

Long-term, this could diminish local character and reduce consumer choice, potentially sanitising local community high streets in the future.