Table of Contents Executive Summary
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Table of Contents Executive Summary
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Confectioners, tobacconists and newsagents, or
CTNs, form one of the UK's longest-established retail sectors. They are
primarily sited in three main positions, locally, in the High Street or
out-of-town shopping centres, or in heavy commuter traffic areas as kiosks. As
well as offering a counter service the neighbourhood CTN has traditionally
offered a home delivery service for newspapers.
The industry has a
clear structure, with 90 percent of outlets being independently owned. However, the
10 percent of shops which form parts of multiple chains account for 20 percent of CTN sales.
The majority of these sales lie in the core product areas, but other goods also
form part of the mix including snack products, ice cream, soft drinks,
greetings cards and social stationery. The CTN sector generates sales of
£11.4bn in 1993. Turnover has been rising ahead of the full retail sector
for a number of years and this trend only began to falter in 1993. The market
for two of the three primary products retailed by CTNs are in gradual decline
and it is through diversification that many operators have managed to maintain
and improve sales.
The recession had less of an impact on the CTN
sector than many other areas of the economy, primarily because the items sold
are fairly low priced in nature and habitual or impulse purchases. However,
many operators face tough trading conditions due to the competition they are
facing in key markets from other retailers. The rise of the convenience store
and petrol forecourt retailing have impacted on the target markets of the local
CTN. The trend towards one-stop supermarket shopping and the drift towards
out-of-town retail developments have also decreased customers for the smaller
outlets. The result has been an increase in the number of business failures in
recent years and this seems set to continue in the short term.
There
have been significant developments in the sector during 1993/1994. In November
1993, the MMC released the results of its investigations into the supply of
newspapers. The final outcome of this has yet to be decided, but it is likely
that the CTNs' traditional control of the newspaper retailing sector will be
lost.
The tobacco trade continues to come under pressure and a new
voluntary code agreed between the Government and the tobacco manufacturers will
mean a reduction in the level of product advertising. Part of this deal is the
removal of tobacco fascias from retail outlets by the end of 1996. It seems
likely that the manufacturers of other key core CTN products will fill the gap
this leaves in shop front advertising. The high levels of tax levied on UK
tobacco products are encouraging the purchase of goods from elsewhere in the EC
following the removal of trade barriers and there is increasing concern that
this will further reduce sales by UK retailers.
The long-term outlook
for the sector is positive. Sales of traditional CTN lines are being lost to
supermarkets and other retailers, but diversification into the convenience
market will ensure continued survival for many operators. The ageing nature of
the UK population will contribute towards ensuring the survival of the local
outlets, which form the backbone of the sector.
Text © 1994 Key Note
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