While the financial crisis may be over and Britain is now officially in recovery, certain sectors within British industry continue to struggle to lift profits due to consumers remaining wary of spending excessively. This especially applies to the pubs sector, which is yet to see results of the Chancellor’s freezing of alcohol duty in the latest Budget.
However, under a new plan by The Co-operative Group, 54 pubs could stand to benefit from an affiliation with the rapidly growing convenience store sector. The retailer this week confirmed a deal with Marston’s pub owner NewRiver Retail which will see the group take over leases in order to construct new convenience stores on adjacent land. But some pubs could be forced to close.
For the most part, these stores will measure between 3,000 square feet and 4,500 square feet and will be built on adjacent land such as car parks or green space. In some cases, where this is not possible, the pubs will be converted into convenience stores or redeveloped in order to create stand-alone Co-op shops.
With troubles ongoing in both the pub and retail industries due to a lack of consumer confidence and high competition, this latest move by the Co-op may seem to be something of a risk. Yet chief executive of The Co-operative Group’s retail division, Steve Murrells, believes that this deal will prove extremely popular with consumers given the current preference for convenience shopping.
He says; “The Co-operative Group has a clear vision to establish itself as the best local food retailer in the UK and over the coming years our focus will be to develop and grow our existing convenience estate of over 2,000 stores.
“Our focus is on convenience stores and a move away from larger stores, as we look to highlight our strengths and consolidate our position as number one in the competitive convenience market.
“To do this we are investing in our stores to ensure that the product offering, the service and the prices appeal to shoppers.”
The Co-op will not be responsible for the running of any of the pubs upon leased sites, and will instead lease these properties back to NewRiver so they are able to operate under their current format. No details have yet been released regarding the location of the leased sites, but they are thought to be concentrated in central, northern and eastern England.
NewRiver acquired 202 pubs from Marston’s in November 2013. This deal with the Co-op meets NewRiver’s original strategy for these acquisitions, as the firm’s intention was to convert the land and buildings for alternative use.
Property director at NewRiver Retail, Allan Lockhart, says; “NewRiver has efficiently delivered on its stated intention to identify viable demand from major food store operators to expand their convenience store portfolios.
“The agreement significantly develops the Co-operative Group’s UK footprint and we look forward to expanding our strong relationship with them in the future.”
Do you think this strategy will work well for both the pub and convenience store businesses on affected sites, or will one party benefit more than the other?
