Convenience store specialist McColl’s has joined retailers including Ao.com, Poundland and Pets at Home with its ambition to float on the stock market.

Convenience store specialist McColl’s has joined retailers including Ao.com, Poundland and Pets at Home with its ambition to float on the stock market.

Bosses at the 1,300-store retailer, which is run by chief executive James Lancaster, were understood to have been encouraged to seek a listing after seeing the successful AIM flotation of Bargain Booze owner Conviviality Retail. McColl’s has since hired Numis Securities as its advisor, and is expected to be valued at around £200m.

McColl’s is in a strong position. The convenience sector is one of the fastest-growing areas of grocery. Most of the major supermarkets, including Tesco and Sainsbury’s, are clamouring to add convenience stores to their portfolio.

And even those late to the market, such as Morrisons, are now fast getting in on the act.

The race for convenience space is not surprising. Industry body IGD expects the value of the sector to top £46bn by 2018, up from £36bn at present, representing a compound annual growth rate of 5.3%.

McColl’s, which reported sales up 5% to £844.7m in the year to November 25, clearly knows convenience is where the big bucks are. While it operates in both the convenience and newsagent sectors, it is focusing its efforts on its convenience arm. It has nearly 700 c-stores at present, and wants to reach 800 by 2015. Retail Week Knowledge Bank estimates that sales densities for its convenience stores are around £200 per sq ft higher than those of its newsagents.

But convenience is one of the toughest areas in grocery, and McColl’s needs to highlight its USP to potential investors. And it does have USPs. About a third of its stores - mainly in the convenience store network - now have a Post Office, and it has rolled out PayPoint terminals to all its stores. Both initiatives have driven footfall and sales.

It’s tough competing with the big boys, and potential investors will want to make sure McColl’s range, service and offer can be favourably compared with the likes of Tesco. But there is clearly investor appetite for floats at the moment, and McColl’s won’t want to miss the boat.