Rising Taxes and Inflation Squeeze Investment in UK Convenience Stores, Report Finds
The Association of Convenience Stores says higher business taxes and inflation are forcing local shop owners to cut staff hours, delay investment and in some cases sell up.
Investment stalls after record high
The Association of Convenience Stores (ACS) has warned that increases in Employer National Insurance Contributions and business rates are undermining investment across the UK’s convenience sector, according to its newly published Local Shop Report 2026.
The report shows that retailer investment hit a record of more than £1bn in 2024 but has since slipped back to around £900m a year in both 2025 and 2026. ACS says this coincides with the Government scaling back rate reliefs and raising employer National Insurance contributions over the past two years.
Sales growth outpaced by inflation
Total sales across the convenience sector are forecast to reach £49.1bn in 2026, up just 0.6% on the previous year. With inflation averaging 2.9% over the past 12 months, ACS says retailers are having to find efficiencies and protect margins simply to stay afloat.
One response has been a growing reliance on labour-saving technology. The report finds that one in five convenience stores now has self-service tills, while 14% use electronic shelf-edge labels.
Difficult decisions already being made
In its submission ahead of the recent Budget, ACS said retailers are already responding to cost pressures by cutting staff hours, with owners covering more shifts themselves, delaying or reducing investment, and in some cases selling their businesses.
ACS chief executive Ed Woodall said local shops are resilient but can only absorb so much before hard choices become unavoidable. He said tax rises and new regulations were affecting retailers’ ability to invest and grow, which in turn could limit their capacity to support the services communities depend on. Woodall said retailers gathering in Parliament this week want to send a clear message to the Prime Minister that the cost of trading needs to be addressed, adding that the sector is not seeking handouts but room to invest, innovate and continue serving local communities.
Sector still a major employer
The report highlights that convenience stores support more than 456,000 jobs across the UK, with 97% of staff on permanent contracts. Almost half of retailers (47%) now offer some form of home delivery, most commonly through platforms such as Deliveroo or Uber Eats. For the first time, a third of store owners are under 30, and 78% of retailers are actively involved in their communities through charity fundraising, sponsorship and initiatives such as litter picks.
The Local Shop Report 2026 will be formally launched at ACS’s Heart of the Community conference in Westminster on Wednesday 9 September, when retailers will lobby Parliament over the rising cost of trading.