Regulation, technology and costs: key trends shaping the convenience store sector in 2026

Convenience stores remain at the heart of local communities, with operators continuing to adapt their offer to changing customer needs. Against this backdrop, regulatory change, rising costs and new technology are shaping how retailers run their businesses. These issues also influence value, with purchasers increasingly focused on the sustainability of maintainable earnings, the level of capital expenditure required, and the resilience of each store’s income streams.

REGULATORY CHANGE SET TO RESHAPE RETAIL OPERATIONS

From 1 January 2027, the Tobacco and Vapes Act will ban tobacco sales to anyone born on or after 1 January 2009, creating a gradual “smoke-free generation”. As tobacco sales decline, retailers are strengthening alternatives such as food-to-go, vaping products and alcohol to protect revenue and footfall.

From April 2027, England’s ban on high-caffeine energy drink sales to under-16s will require retailers to update age checks, till systems and staff training.  The UK-wide Deposit Return Scheme, launching in October 2027, will add refundable deposits to eligible drink containers. Storage and administration will be challenging, but returns could increase store visits and engagement.

Businesses with a high reliance on tobacco or affected product categories may face greater scrutiny over future turnover and gross profit, while stores that can evidence successful diversification should present a more resilient earnings profile. Valuers and buyers will also consider the cost and practicality of compliance, including till upgrades, staff training and space required for deposit returns.

RISING COSTS DRIVING NEED FOR DIVERSIFICATION

Cost inflation remains one of the sector's biggest concerns, with increases in wages, National Insurance contributions, business rates and utility expenses continuing to squeeze already pressured profit margins. To ease these pressures, we’re seeing operators diversify and improve efficiencies by bringing in services such as food-to-go, parcel collection, ATMs, Post Offices, and fresh produce, which can support profitability and buyer interest.

Turnover growth alone does not necessarily translate into higher value. The key measure is the quality and maintainability of operating profit after allowing for realistic staffing, utilities, rates and other costs. Diversified income can strengthen value where it produces sustainable margin and footfall, but buyers will distinguish between profitable services and those that add complexity without an adequate return.

TECHNOLOGY AND AI BECOMING COMPETITIVE DIFFERENTIATORS

Technology is playing an increasingly important role in helping retailers manage rising costs and improve performance. AI is helping operators across the country improve efficiency and value in stock management, merchandising and customer analysis, while AI-enabled EPOS and loyalty systems can sharpen ranging decisions and improve profitability.

Self-checkouts, electronic shelf labels and automated back-office systems are also reducing labour dependency while improving efficiency and customer experience. However, valuers will separate proven efficiencies from projected benefits and will consider ongoing licence costs, system compatibility and any near-term replacement expenditure.

INVESTMENT IN STORES CONTINUES TO COMMAND A PREMIUM

A key trend identified in the review is the premium placed on modern, well-invested stores. Refurbished stores aligned with symbol groups such as Spar, Nisa, Londis, Premier, Costcutter and One Stop attract strong buyer interest through greater buying power, branding, range and support. Symbol-group alignment may enhance purchasing terms, range and operational support, although buyers will also examine contractual commitments, change-of-control provisions and refurbishment obligations.

Stores that can demonstrate clear opportunities for future growth, whether through expanded food-to-go offerings, additional services or unused development potential, continue to achieve stronger valuations and greater market appeal. Growth potential can add competitive tension, but it is strongest where the opportunity is deliverable and supported by space, planning, customer demand and a credible investment case.

CRIME REMAINS A SIGNIFICANT INDUSTRY CHALLENGE

Retail crime continues to be one of the most pressing issues facing convenience store operators. According to the ACS Crime Report 2026, there were an estimated 5.8 million incidents of shop theft in 2025, with convenience retailers spending £313 million or an average of £6,213 per store on prevention and detection measures, before accounting for stock losses.

Retailers are responding with CCTV, body-worn cameras, product security and local intelligence-sharing, making staff and customer safety a core priority.

Crime affects value through stock loss, security expenditure, insurance costs and potentially higher staffing requirements. Buyers are likely to look closely at incident history, shrinkage, local risk and the effectiveness of prevention measures. A store with robust controls and clearly evidenced normalised losses will be easier to underwrite than one where crime-related costs are unclear or increasing.

COMMUNITY CONNECTIONS PROVING SUCCESSFUL

Despite ongoing challenges, one of the sector's greatest strengths remains its role at the heart of local communities. According to the ACS Local Shop Report, around 80% of UK convenience stores participate in community activities, reinforcing their position as trusted local hubs. Beyond everyday groceries, many stores now provide services ranging from parcel collection and postal services to locally sourced products and food-to-go offerings. Retailers that tailor their offer to local needs often perform well, while strong community ties signal long-term sustainability to buyers.

In valuation terms, however, the benefit of a strong local position needs to be evidenced through consistent trading, customer retention and sustainable profitability rather than reputation alone. Buyers will also consider whether relationships and goodwill are embedded in the store and team or are heavily dependent on the outgoing owner.

THE IMPACT OF THESE TRENDS ON THE MARKET

Despite these operational challenges, buyer demand for convenience stores continues to exceed the supply of quality businesses.

The trends outlined above are shaping what buyers look for including labour costs and profitability, while modern stores with diversified income streams, strong community ties and scope for growth attract particular interest.

Looking ahead, the sector’s important role in everyday shopping and its ability to adapt underpin a positive outlook, with well-invested businesses that respond to local needs expected to remain particularly attractive.

For more insights on these trends, read our Retail Market Review 2026 here: https://www.christie.com/sectors/retail/market-review/