Convenience stores
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
1.1 A convenience store has the following characteristics:
- a trading area less than 280m² (recognised in the industry as 3000 ft²)
- this is not subject to restricted opening hours under the Sunday Trading Act 1994. The Sunday Trading Act 1994 allows shops with a retail area less than 280 m² to open for unrestricted hours on a Sunday
- it usually stocks at least seven of the following categories of product; alcohol , bakery, canned and packaged grocery, chilled food, confectionery, frozen food, fruit/vegetables, health and beauty, hot food -to- go, household, national lottery, milk, newspapers/ magazines, non food, sandwiches, savoury snacks, soft drinks, tobacco
1.2 This section is intended to cover larger convenience stores which have dedicated sales area in excess of 80 m². In this context, ‘dedicated sales area’ is defined as the area within the unit dedicated to the sale of goods only. It does not include stores, ancillary offices etc. It is the property’s attributes and not the operator which is important in determining whether it falls within the scope of this section.
1.3 The following types have been identified:
Type 1
Classified as a ‘Very good or Prime’ convenience store as defined by:
1. Location – usually located in major town or city centres, popular tourist destinations.
2. Catchment – usually located in either large catchment areas with a high-density population and affluent locations. They have a high level of footfall or vehicular flow, or they are in a high Zone A value area.
3. Physical attributes – usually purpose built or very good quality conversions (e.g., former public house). Built close to the optimum size for the retail area (trading area of 280m²) and storage and commonly ground floor only. They may have their own exclusive car parking on-site but not necessarily in densely populated urban areas.
Type 2
Classified as a ‘Good or Prime/Secondary’ convenience store as defined by:
1. Location – usually located in either good town centres and suburban areas, or prominent main road locations.
2. Catchment – Affluent suburban locations - good villages and urban areas usually have a good catchment area, or residential area nearby, or there are relatively high Zone A values in the locality. Can include less affluent but in good high-density populated areas.
3. Physical attributes – usually purpose built or good quality conversions (e.g., former public house). Built close to the optimum size for the retail area (trading area of 280m²) and storage and commonly ground floor only. They may have their own exclusive car parking on-site but not necessarily in densely populated urban areas.
Type 3
Classified as an ‘Average or Secondary’ convenience store as defined by:
1. Location – Typically located usually on a main road/B road, or in a neighbourhood. Can include average suburban or village locations.
2. Catchment - They usually have a reasonable catchment area, or a residential area nearby, or they are in an average zone A value area.
3. Physical attributes – can be purpose built, or stores consisting of multiple shops being knocked through, or an average to good standard of conversion and may have parking.
Type 4
Classified as an ‘Poor or Secondary/ Tertiary’ convenience store as defined by:
1. Location – Usually located in small parades, including local authority estates and less densely populated rural areas.
2. Catchment - Generally areas of less affluence. They are in a low Zone A value area.
3. Physical attributes – These can include older purpose-built units, converted properties and stores consisting of multiple shops being knocked through. Typically, smaller than optimum size (trading area less than 280m²) and run by mainly private single operators, or franchisees. Generally, have little or no parking facilities.
Type 5
Classified as an ‘Very poor or Tertiary’ convenience store as defined by:
1. Location – Usually located in small parades, including local authority estates and less densely populated rural areas.
2. Catchment - Generally areas of less affluence. They usually have minimal passing traffic, with the majority of customers arriving on-foot. They are in a very low Zone A value area.
3. Physical attributes – Generally converted from other uses (not fit for purpose) Typically smaller than optimum size (trading area less than 280m²) and run by mainly private single operators, or franchisees. Little or no parking facilities.
Bulk class: shop
Primary description CS
List description shop and premises
SCAT code: 106, suffix G
3.1 Convenience stores are a generalist class.
3.2 Each unit will be responsible for identifying, and valuing their own convenience stores. It is recommended that units appoint named co-ordinator(s) or Lead Valuer -(s) to act a point of contact within the Unit and so that they can liaise with other Lead Valuers within other units on technical and valuation issued.
4.1 The Class Co-ordination team has overall responsibility for the co-ordination of this class. The team are responsible for overseeing the approach to convenience store valuations. Caseworkers have a responsibility to:
- follow the advice given at all times – practice notes are mandatory
- not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
Sunday Trading Act 1994:
5.1 Under the Sunday Trading Act 1994, a store must have a retail area of less than 280m² to be exempt from the restricted trading hours prescribed by the Act.
5.2 Consequently there are examples where an operator occupies a store as a convenience store which is exempt from the Sunday Trading Act but VO records show a retail premises with a retail area in excess of 280 m². This will normally be due to the fact that a trading area of 280 m² has been partitioned from a pre-existing retail area which is larger than 280m². In many cases this has been achieved by erecting a non-structural wall.
6.1 Convenience stores should be measured to gross internal area (GIA).
6.2 It is mandatory that photographs of the exterior of the property and its surroundings are taken so that it is possible to identify the type of convenience store. Non-structural partitions must be marked on plans showing the dedicated sales area as defined in para 1.2.
6.3 It is mandatory to record the opening hours on the store on the inspection check list.
6.4 It is mandatory to record the type of convenience store under survey remarks.
7.1 All types 1 to 5 should be scat coded 106.
8.1 The rental method is the primary method adopted in this class of property. Care should be taken when carrying out analysis and valuation of properties as some convenience stores may have excessive areas of ancillary space and may not be directly comparable.
8.2 Evidence will generally be derived from the rent passing on the property and other similar convenience stores in the locality.
8.3 A convenience store could be situated in an established parade of shops either in a town centre, village or a neighbourhood centre adjacent to other retail premises, showcasing similar characteristics to other properties in the parade or pitch.
8.4 The property occupied as a convenience store must be valued bearing in mind the decision of Fir Mill Ltd v Royton UDC and Jones (VO) 1960 R&IT 389. This means where a convenience store is surrounded by a number of other units which are of a similar size to the convenience store, the basket of rents of all of the units of a similar size and character must be considered rather than just the passing rent of the convenience store. This is because vacant and to let, more than one of the properties would be suitable as a convenience store. Evidence from all similar units must be considered when valuing the subject property.
8.5 Where a convenience store which is within a parade but is of a unique size or characteristic to other retail units in the parade or pitch, it can be valued by reference to the passing rent or other comparable convenience stores (i.e. those that occupy the only large unit within a parade or pitch locally) even if this shows a premium above other properties in the immediate area. In such instances there should normally be no allowance made for the size, shape or layout of the unit.
8.6 Under the Sunday Trading Act 1994, a store must have a retail area of less than 280m² to be exempt from the restricted trading hours prescribed by the Act. Consequently there are examples where an operator occupies a store as a convenience store which is exempt from the Sunday Trading Act but VO records show a retail premises with a retail area in excess of 280m². This will normally be due to the fact that a trading area of 280m² has been partitioned from a pre-existing retail area which is larger than 280m². In many cases this has been achieved by erecting a non-structural wall. In such circumstances, the operator will either use the remainder of the original trading area as storage or welfare facilities or will leave it empty.
8.7 Care needs to be taken when analysing and valuing convenience stores in this category. Whilst the code of measuring practice must be followed and any non-structural walls ignored, the Valuer needs to take care when analysing rental evidence on these stores as they will reflect a potential significant difference in GIA when compared to stores with a GIA below 280m².
8.8 Where there are a number of premises of a similar size to the convenience store (ignoring any non-structural walls) then the comments regarding Fir Mill Ltd v Royton UDC and Jones (VO) 1960 above will apply. However, if the converted retail store is unique in its location, care should be taken when valuing to ensure that any premium attaching to the property due to its desirability as the location of a convenience store is taken into account.
8.9 A comment MUST be made in the survey remarks regarding the presence of the non-structural walls to create the trading area of 280m².
8.10 Customer car parking
8.11 Customer car parking is commonly found at type 1 convenience stores, (but can also be found in other types). Where car parking is present, it is reflected in the value of the store.
8.12 If there are unit of assessment issues with car parking related to convenience stores reference should be made to the specific guidance on car parking found in the Rating Manual: Section 5a: Valuation of all Property Classes: Car Parks
8.13 Where the car park has been identified as a separate hereditament it should be valued at a level appropriate to the locality.
8.14 It should be noted that the car park may not be in control of the store operator.
The following sources are available to Property Inspectors and Valuers dealing with the maintenance and defence of convenience stores.
- Rating support application (RSA)
- Survaid
- Class Co-ordination team
- National Valuation Unit
Appendix 1
Appendix 2
Inspection checklist
Whilst carrying out the survey special attention should be given to the following features:-
| CONVENIENCE STORE . INSPECTION CHECKLIST | ||||
| Occupier | ||||
| Address | ||||
| Rental details | ||||
| Convenience store Type See RM Section 6 - Part 1 section 1 standalone purpose built 2 Converted pub etc 3 Purpose built integrated into new development eg beneath flats 4A In parade but shares characteristics with other units within parade (to be on same sub loc as surrounding parade but scat code 106 to be adopted) 4B In parade but unique characteristics to all other retail 5 Conversion from larger retail premises | ||||
| Location | ||||
| Size | TOTAL AREA | RETAIL AREA | ||
| Transport | ||||
| Car Parking Allocated/ communal, open/covered, number of spaces, staff/customers, free/ charge made/ refund given | ||||
| Competition/ comparables to include all sizes of food retail outlets | ||||
| Building External | Built: | No. of floors | ||
| Construction | ||||
| Customer access | ||||
| Delivery and Loading | ||||
| Other points | continued.../ |
| Building Internal | Refurbished: | Fit out: | ||
| Disabilities | ||||
| Accommodation | Access from loading | |||
| Extraordinary features | ||||
| Natural light | ||||
| Customer WCs Extent and Quality | Lifts & Escalators Type manual/automatic, goods, passenger, staff/ customers, capacity, floors served | |||
| Other occupiers in the building | Shared facilities: | |||
| Services. Fire Precautions. Security | ||||
| Air Conditioning (age) Cassette or ducted. Purpose. Extent of area covered. Heating. Fuel. System | ||||
| Surplus Accom. Notes should be made of any accommodation in excess of 400sq m with use type of excess accommodation being noted | ||||
| General remarks Including opening hours | ||||
| Date of survey | Survey by: |
| Building Internal | Refurbished: | Fit out: | ||
| Disabilities | ||||
| Accommodation | Access from loading | |||
| Extraordinary features | ||||
| Natural light | ||||
| Customer WCs Extent and Quality | Lifts & Escalators Type manual/automatic, goods, passenger, staff/ customers, capacity, floors served | |||
| Other occupiers in the building | Shared facilities: | |||
| Services. Fire Precautions. Security | ||||
| Air Conditioning (age) Cassette or ducted. Purpose. Extent of area covered. Heating. Fuel. System | ||||
| Surplus Accom. Notes should be made of any accommodation in excess of 400sq m with use type of excess accommodation being noted | ||||
| General remarks Including opening hours | ||||
| Date of survey | Survey by: |
1. Market Appraisal
1.1 Convenience stores are part of the multi-channel, multi destination food retailing sector, which continues to develop to meet the demand of consumers.
1.2 Consumer food shopping habits evolve over time. Demographic changes including smaller households and older population, together with changes in working patterns and a move to reduce food waste, are all likely factors to continue to support the trend of shopping a little and often.
1.3 Convenience stores help to meet the move to smaller more frequent shopping. To do this one of the key factors for a convenience store is its location. For example, often preferred locations are densely populated urban areas, with a demographic profile, which is likely consider shopping a little and often. Historically, convenience stores are often located close to workplaces and transport hubs but with the ongoing changes to working patterns more neighbourhood locations may be preferred.
1.4 Given the trends in consumer shopping habits, demand for convenience stores in the best locations is likely to remain with ongoing limited expansion into such locations
1.5 During the COVID pandemic convenience stores continued to trade and those stores located in small parades surrounded by local housing tended to trade well. It is understood that convenience stores on petrol forecourts showed an improved trade of 10% and a similar level of improvement would likely have taken place within smaller convenience stores in local shopping parades and on street corners. An increase in values for such convenience stores might be expected and will fall in line with increases taking shape elsewhere in many of the smaller parades and tertiary areas.
1.6 Whilst smaller stores within housing areas will have seen an improving picture the convenience stores around transport hubs will have seen a sharp decline in value.
1.7 The convenience store around university hubs will have seen a mixed picture but it is likely that trade during the term year 2021-2022 will have improved to the point of getting back to normal levels. Large falls in values are not anticipated in such locations
1.8 The convenience stores within the major city centres often located on High Streets away from High Density housing will have likely seen falls in value and the rents subject to rent review will need to be treated with caution as many of the larger multiples were agreed on an upward only basis or be part of a financial package that took shape at the time the store was developed.
1.9 The Multiple Convenience store in villages having a population of 4000 to 6000 will likely to have benefited during COVID times as people started to take shopping locally more seriously.
2. Changes From Last Practice Note
Market Commentary updated
3. Ratepayer Discussions
None to date.
4. Valuation Scheme
4.1 There is no agreed valuation scheme. Convenience stores are valued in accordance with RM section. The location and type of convenience store are important factors when valuing this type of property.
4.2 The valuer must bear in mind the following potentially value significant factors before arriving at their valuation:
Location – examples of prime locations include:
Is there a readily available population within the immediate locality, this may be a resident population or one that is in transit or visiting the area.
The demographics/affluence of the locality:
Convenience store operators may tailor their offer according to the demographics of the locality. The affluence of the area can affect the profitability of the store and the rental bid.
Property characteristics:
a. Purpose built stores tend to have a GF area of between 300m² and 400m².
b. Older stores or extended retail units may be much smaller or have significant areas of superfluous storage.
4.3 Having considered the above factors, the valuer must always refer to the rent on the subject property and always seek to compare similar stores. Generally speaking, the convenience store market shows similar levels of value across a broad geographical area for properties with similar locations, demographics and characteristics
1. Market Appraisal
1.1 Historically there has been almost continual growth in the food sector in the recent past. Like for like sales of the major food operators have generally increased year on year and margins had been maintained. The sector as a whole was buoyant and was largely unaffected by the post 2008 recession.
1.2 During the period since 2008 there has been a perceived shift in food shopping habits, with shoppers shopping more often in a wider variety of stores and retailers. As a consequence, occupiers of convenience stores have tended to benefit from this change in shopping trends.
1.3 Convenience store multiples opened 451 stores year ending July 2014. (Source The Institute of Grocery Distribution (IGD)).
1.4 By 2015 the four retailing channels of online, discount, convenience and superstore/ hypermarket format were firmly established. The perceived shift in shoppers’ behaviours, (with a change to shopping ‘little and often’ as part of a multichannel approach to meet their grocery needs) has caused the market to fragment. Continued growth for 2015-2019 in the first three areas is predicted. This suggests that demand for convenience stores will continue to grow.
1.5 Demographic changes such as an increase in smaller households, older population, together with changes in working patterns and a move to reduce food waste are likely to continue the trend of shopping a little and often.
1.6 The expansion of convenience stores is being accomplished by new openings of purpose built stores, conversion of existing premises such as public houses and the acquisition of existing retail premises. In the case of the last two the pace of expansion has been largely unhindered by the local planning process as convenience stores are often permitted development.
1.7 According to the IGD survey, in July 2014 there were 47,294 convenience stores nationally of which
18,630 Unaffiliated independents
17,080 Symbol Stores
5,133 Forecourts
3,771 Multiples
2,680 Co-ops
1.8 Whilst it is true that the there have been some store closures announced by the major operators such as Sainsbury and Tesco during 2014/2015 these have been relatively small numbers and looking behind the headlines, the closures fell into ‘fairly marginal’ locations and in places that were already well catered for by existing food outlets.
1.9 The demand for convenience store premises and the expansion into new locations is likely to continue after AVD as the growth in the trends of multi channel and multi destination shopping looks set to continue.
2. Changes From Last Practice Note
No practice was published for 2010.
3. Ratepayer Discussions
None to date.
4. Valuation Scheme
4.1 There is no agreed valuation scheme. Convenience stores are valued in accordance with RM section. The location and type of convenience store are important factors when valuing this type of property.
4.2 The valuer must bear in mind the following potentially value significant factors before arriving at their valuation:
1. Location – examples of prime locations include:
a.Within a densely populated environment.
b.Near office blocks where there is a high concentration of workers.
c.Near a transport terminus (train or bus station etc).
2. The demographics/affluence of the locality:
Convenience store operators tailor their offer according to the demographics of the locality. The affluence of the area can affect the profitability of the store and the rental bid.
3. Property characteristics:
a.Purpose built stores tend to have a GF area of between 300m2 and 400m2.
b.Older stores or extended retail units may be much smaller or have significant areas of superfluous storage.
4.3 Having considered the above factors the valuer must always refer to the rent on the subject property and always seek to compare similar stores. Generally speaking the convenience store market shows similar levels of value across a broad geographical area for properties with similar locations, demographics and characteristics.