Convenience stores across Britain are cutting back investment and increasingly turning to automation as rising taxes and business costs place growing pressure on one of the country’s most resilient retail sectors.
The warning comes in the 2026 Local Shop Report, published by the Association of Convenience Stores, which found that investment by convenience retailers has fallen sharply since reaching record levels in 2024.
Retailers invested more than £1billion in their businesses that year. Annual investment has since fallen back to around £900million in both 2025 and 2026, as the sector absorbed higher Employer National Insurance Contributions and the withdrawal of hundreds of millions of pounds in business rates relief.
The figures underline the increasingly difficult economics facing local retailers, whose sales are forecast to reach £49.1billion this year — an increase of just 0.6 per cent on 2025.
With inflation averaging 2.9 per cent over the past 12 months, the modest rise in sales represents a real-terms squeeze on retailers already struggling to protect their margins.
The pressure is also accelerating the adoption of labour-saving technology.
One in five convenience stores now has self-service tills, while 14 per cent use electronic shelf-edge labels, according to the report.
The shift reflects a wider effort by retailers to reduce staffing costs as employment taxes and wage pressures increase.
In its submission to the Government ahead of next month’s Budget, the ACS warned that many retailers had already begun taking difficult decisions to keep their businesses viable.
These include cutting staff hours, requiring business owners to work longer hours themselves, postponing investment and, in some cases, putting businesses up for sale.
The organisation warned that further increases in the cost of trading could threaten the long-term viability of stores that play a central role in local communities.
Ed Woodall, chief executive of the ACS, said: “Local shops are incredibly resilient, but they can only absorb so much before difficult decisions have to be made. It is clear that tax increases and new regulations are impacting retailers’ ability to invest and grow, which could in turn make them less able to adapt and continue to deliver the services and support that communities rely on.
“Retailers are gathering in Parliament this week to send a clear message to the Prime Minister that the cost of trading needs to be addressed. Local shops have spent decades embedding themselves in their communities, supporting local people and providing hundreds of thousands of jobs. We’re not looking for handouts, what we need is some breathing space to be able invest, innovate and keep delivering for the communities we serve.”
The intervention adds to growing pressure on the Government ahead of the Budget, with business groups warning that repeated increases in employment and property taxes are weakening investment across the economy.
For convenience retailers, the concern is particularly acute. Unlike larger supermarket chains, many independent stores operate on narrow margins and have limited capacity to absorb higher costs.
The ACS argues that this is forcing businesses into a defensive strategy focused increasingly on survival rather than expansion.
The decline in investment from more than £1billion to around £900million may appear modest in the context of Britain’s wider economy, but for a sector built around thousands of small and family-owned businesses it represents a significant retreat.
With sales growth now running well below inflation, the report suggests that many local shops face a choice between further automation, reduced staffing and scaling back investment — unless ministers offer the sector what retailers increasingly regard as a desperately needed reprieve from the rising cost of doing business.
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