Why UK Grocers Are Betting on Smaller-Format Stores for Growth and Innovation

Grocery remained a resilient category in the UK last year, driven in part by the rise of smaller-format convenience store expansion. In 2024, major UK grocery chains increasingly prioritized smaller store formats over full-sized supermarkets, which, according to PwC, were the third fastest-growing outlet type the year before.

Early in the year, global grocery giant Asda revealed plans to expand its UK network with 110 Express stores, including one newly launched location – the other 109 stores were conversions from former Co-op and EG Group sites.

Waitrose also plans to open up to 100 new convenience stores over the next five years as part of a £1bn investment. Meanwhile, Morrisons aims to open 400 more Morrisons Daily stores with a longer-term target of reaching 2000 smaller stores by 2025. Market leader Tesco is well-established in the convenience game, with over 2000 smaller-format Express stores now in its portfolio.
Though smaller in format, these stores carry their weight by enhancing fulfillment capabilities, elevating the shopper experience, and leveraging digital innovations to expand grocers’ reach in the ‘phygital’ landscape. In an earlier piece, we explored how smaller-format stores in the US are growing in popularity in the post-COVID landscape – offering greater personalization, lowered costs, and opportunities for AI innovation on a more manageable scale.

Here are a couple of ways UK grocery stores are tapping convenience locations in innovative ways.

Omnichannel Convenience

According to Grocery Doppio’s State of Digital Grocery: Evolve to Improve Profitability report,

omnichannel shoppers are the most valuable shopper segment, spending 1.5x more than single-channel shoppers and demonstrating a 25.6% average margin.

 Perhaps sensing a shift in the tides, convenience stores are becoming more and more tech-enabled. In 2019, for example, just 3% of UK convenience stores had self-service checkout machines. In 2024, the figure rose to 17%, according to ACLS data. Other tech advances that many convenience stores are incorporating include in-store wifi (37%), electronic shelf-edge labels (12%), and store websites (57%).

All of these capabilities equip convenience grocery stores to better reach the all important omnichannel shopper – a crucial demographic to steer growth and profits. Grocery Doppio’s Shopper Holiday Outlook: Convenience, Indulgence, & Dietary Diversity report shows 36% of omnichannel shoppers planned to increase their spending last holiday season, as compared with just 15% of “online only” shoppers and 28% of “store only” shoppers.

Fulfillment Hubs

A recent Grocery Doppio report, 2025 Digital Grocery Outlook: Profitability, Fulfillment, and Personalization, reveals that 71% of grocers are prioritizing advanced fulfillment technology improvements. Fulfillment remains a key profitability hurdle, with 83% of grocers citing picking and fulfillment costs as a major challenge.

Smaller format stores give grocers a physical foothold in both urban and rural areas without the high overhead costs of larger spaces. Speaking at NRF 2025, Morrisons’ CEO Rami Baitieh highlighted that 80% of the UK population lives in urban areas, making it essential to reach these shoppers both online and in-store. Smaller stores also support nearby online pickup in city centers. Baitieh stated, “We need to get closer to the customer. That’s why we push online. We push the app. We push the proximity.”

Digital innovations are accelerating this push. ACLS reports that 21% of UK convenience stores surveyed offer click-and-collect services for groceries, while over a third (37%) provide broader click-and-collect options, such as Collect Plus. These capabilities also open up space to reach the all-important omnichannel shopper.

In-Store Activation

Over a third (34%) of UK convenience stores now feature digital screens in-store, according to ACLS, reflecting a growing push toward retail media and in-store customer activation—even in smaller formats.

Retail media investment is a priority for 59% of grocers, according to Grocery Doppio research, as they look to monetize digital engagement and strengthen consumer brand partnerships.

Co-op, the UK’s largest convenience retailer, is leading the charge. In 2024, it launched its own retail media network for convenience stores, delivering strong returns for both brand partners and surrounding grocery stores. A Circana study with Co-op found that convenience retail media doesn’t just drive sales in Co-op stores – it triggers a ‘halo effect’ in nearby grocers of up to four times the amount of the immediate sales.

A global beer brand campaign analyzed in the study saw a 12% brand sales uplift in Co-Op stores, while Circana identified an additional 3% boost in non-Co-op halo stores.

Pricing Innovations

Historically, smaller-format stores’ products were known to be a little more expensive than their full-size counterparts. However, as convenience locations continue to grow in favor among the bigger grocery retailers, there are signs this may be changing too. Last year, the grocer Sainsbury's extended its Aldi Price Match scheme to its Sainsbury’s Local stores. The scheme aims to offer the same price for certain products as discounter Aldi –  a move that will no doubt appeal to price conscious shoppers.

Late last year, Tesco also rolled out price cuts at its Express stores, with household essentials such as milk, bread, pasta and coffee among the 222 branded and own-brand products lowered in price by an average of more than 10%.

Looking Ahead

Retail real estate strategy is shifting, and smaller-format convenience stores are emerging as the new space for UK grocery retailers to establish themselves. Digital transformation, fulfillment networks, omnichannel fluidity, and price recalibration are reshaping consumer expectations in these hubs. As grocers compete to balance accessibility with affordability, the convenience store’s role in the UK market is no longer just about proximity, it’s about reaching and meeting the needs of consumers wherever and however they choose to shop.