With a raft of new regulations on the way, retailers must look forwards and get ready to face their challenges head on.
The colossal rise in employee costs, the disposable vape ban, and the ongoing nightmare of retail crime made 2025 a turbulent year for the Scottish convenience sector. But will 2026 offer any glimmers of hope?
The Scottish budget being delayed until 13 January as a result of the late Autumn Budget (which will have been released after SLR’s December issue goes to press) certainly isn’t the best of starts to the new year.
“I’m dreading the budget and what’s going to be announced,” says Wendy Stephen, owner of Spar Condorrat in Cumbernauld, who has already been forced to reduce staffing levels to keep her business viable. “That’s the biggest thing hanging over your head.”
The Employment Rights Bill, which has just been in the “ping pong” stage in the UK Parliament could well give retailers a new staffing headache. From April 2026, it is expected that statutory sick pay will become payable from the first day of illness, instead of the fourth day, and the lower earnings limit is set to be removed – currently, workers must earn a minimum amount to be eligible for statutory sick pay.
Unfair dismissal rules will also be overhauled, although these won’t come into force until 2027. The House of Commons wants employees to have the right to claim unfair dismissal from their first day of work, whereas the Lords have been pushing for the current two-year qualifying period to be reduced to six months.
“If I’m being brutally honest, I don’t think this new Labour government is helping small businesses,” says Jamie Wood, Company Director at St Michael’s Services in Dumfries. “Obviously, their first port of call is to raise taxes when they need more money and they’re always looking to soften employment law in favour of employees. Some of the proposals they’ve got coming forward are going to make it more difficult to hire and retain good staff and sack staff that aren’t performing. I wouldn’t object to [the] unfair dismissal [qualifying period] being reduced to one year, but day one is a recipe for disaster.”
HFSS on horizon
Of course, it’s not just back-office issues that will impact retailers in the coming year. Having been laid before the Scottish Parliament as part of The Food (Promotion and Placement) (Scotland) Regulations 2025, legislation surrounding restrictions on products high in fat, sugar and salt (HFSS) will come into force on 1 October 2026.
The restrictions will affect businesses with 50 or more employees, but symbol groups are not exempt. Promotions on pre-packed HFSS products will be restricted and there will be no multi-buy offers allowed.
The legislation also includes restrictions on where HFSS products are located in store, although stores measuring under 2,000sq ft will be exempt from this.
The good news is that similar restrictions are already in place in England and Wales, so there are plenty of learning opportunities from south of the border, and national symbol groups and wholesalers are already clued up on how to handle the new rules.
Many manufacturers are equally well prepared with healthier offerings. “In 2025, the latest trends include the growth in popularity of healthier biscuits,” claims Susan Nash, Trade Communications Manager at Mondelez International. “As shoppers are increasingly looking for healthier snacks while out, we’ve seen a 6% year-on-year increase in on-the-go missions within healthier biscuits [Nielsen Discover, Total Coverage inc. Discounters, Total Biscuits, Healthier, 52 w/e 11.07.25].
“In 2026, we expect the healthier food & drinks category to expand further as brands look to meet the growing demand for healthier alternatives from consumers.”
The entire Belvita Soft Bakes range is now non-HFSS, after transitioning the firm’s bestselling Choc Chip and Choco Hazelnut SKUs to non-HFSS formulas at the end of 2024. The firm has also launched a Cadbury Brunch Light non-HFSS range.
As we wait with bated breath for a very late Autumn budget and look forward to a busy and abundant festive season, 2026 looks likely to be another challenging year for the sector… and retail in general.
While this year has highlighted remarkable progress bringing new technology and innovation into stores, there is no shortage of issues to contend with. Inflation may have levelled out, but food inflation remains a key factor driving up living costs. Employment and business costs are now higher than ever, exacerbated by the hugely damaging impacts of retail crime.
We also expect new regulation from the Scottish Government in 2026 on the sale of less healthy food & drink, and at a UK Government level, new packaging obligations, and tighter controls on the sale of nicotine products. Despite a lack of resource to enforce new restrictions or clamp down on the growing illicit market.
Local convenience has once again proved that it is the beating heart of our communities and, as always, SGF will be here to promote and represent our wonderful sector through 2026 and beyond.
DRS decisions
Whilst it doesn’t come into force until 2027, The Deposit Return Scheme will also demand retailers’ attention over the coming year as decisions are made on how to handle returns of single-use plastic and metal drinks containers. There’s a lot to consider, but if you read last issue’s DRS feature, you’ll see we’re already learning lots from Irish retailers who implemented the scheme in February 2024.
The 2024 Annual Report from Re-turn, the Irish scheme administrator, revealed that Ireland’s recycling rate for plastic bottles and aluminium and steel cans has jumped from 49% to 91% since the introduction of DRS. Of this, around 76% is directly captured by the DRS – a true nod to the scheme’s success.
And retailers who are ready to embrace the changes are likely to reap the benefits. Mo Razzaq, former President of the Federation of Independent Retailers and owner of Premier Mo’s Blantyre in South Lanarkshire, will be trialling Tomra’s new reverse vending machine (RVM) next year. “We’ll have retailers come out and have a look at it and ask questions,” he says.
Mo urges other retailers to use the coming months to research and prepare for the changes ahead. “In all honesty, I don’t think retailers have awareness of it, it’s not on their radar and I’m a bit worried about that. They need to pull their finger out! They’re doing refurbishments without factoring in an RVM, so that’s where I’m a bit concerned that they’re spending a lot of money and then they’ll need to retrofit them afterwards. They need to start doing some homework, because if they don’t, they’ll come a cropper!”
Pouch push
Planning ahead was the key to navigating this year’s single use vape ban, as far as Racetrack Retail Manager Guna Sud was concerned. He was quick to introduce new eligible products into his store and transition customers over to non-disposables ahead of time. While new restrictions loom with the forthcoming Tobacco and Vapes Bill, which will come into effect in 2027, he plans to make hay while the sun shines in 2026 and capitalise on the smoking alternatives category. He has already been working closely on promotions with a range of different vape brands and has just invested in a new chilled display cabinet to offer customers a different way to enjoy oral nicotine pouches. Guna claims to have plenty up his sleeve to keep momentum going in the new year. “From what we’ve seen in the past, retail sales tend to dip in January, but I’ve got a lot in the pipeline to push momentum and make sure we see some sort of growth in the next few months,” he says.
The next 12 months will undoubtedly hold numerous challenges for the convenience sector, but those who remain open-minded, innovative and quick to adapt will survive and thrive in 2026.
- Cybersecurity becomes retail’s frontline: we expect cybersecurity to shift from a siloed IT function to a board-level strategy priority.
- AI as the engine of the retail revolution: retailers will continue to use AI to drive profitability and efficiency through advanced strategies.
- Retail media comes of age: the next five years will see certain retailers in certain markets reach a level of retail media maturity.
- Retailers race to capture the world on their shelves: globalised flavours going further, with clearer segmentation; strategies that reflect diverse communities; and curating more authentic ranges supported by storytelling and seasonal events.
- The convenience revolution: specialist convenience operators will increasingly focus on food and drink to be consumed in minutes, not days, gradually eroding take-home grocery assortments.
- Playing a meaningful role for more health missions: retailers will serve a broader span of health missions, and do so in deeper and more meaningful ways.
- The war on waste: in the coming years, we expect retailers to increasingly prioritise reducing food and packaging waste both in the supply chain and within stores.
Toby Pickard, Retail Futures Senior Partner at IGD, added: “Retailers around the world face evolving consumer preferences, technological advances, and market disruptions, and they are responding to these shared challenges with bold, relevant solutions. The seven trends we have identified show how global forces are reshaping strategy, and why agility, relevance, and execution will define the leaders of tomorrow.”
IGD’s Retail Futures team helps businesses prepare for what’s next, navigate challenges, and identify opportunities. For a free consultation about specific circumstances, retailers can email igdconsulting@igd.com.
