Job losses in the convenience store sector numbered 20,000 last year, despite an increase in sales and investment by businesses.
Over the past year, the number of jobs in local shops across the UK fell from 390,000 to 370,000, a drop of just over five per cent, according to figures from the Association of Convenience Stores (ACS).
Sales in the sector increased by £500m in the year to £38bn, a contribution to the economy comparable to industries such as recruitment and defence.
The sector makes up more than one fifth of the total grocery market, and by the end of 2017, sales are expected to reach £40bn.
However, ACS said store owners had been forced to trim staff numbers due to rises in the national living wage.
ACS chief executive James Lowman said: "Convenience stores provide flexible employment for over 370,000 people across the UK, but this number has fallen as a result of significant increases in the national minimum wage and the national living wage, as well as other associated employment costs, alongside rising costs in other areas like business rates."
He said that store owners were often cutting the number of hours given to staff and working the extra hours themselves to save money. Nearly a fifth (19 per cent) of store owners take no holiday during the year.
Increased competition from online retailers, and other businesses such as coffee shops, has motived store owners to invest in their shops and expand the range of services offered to customers.
ACS found store owners collectively invested more than £858m in their businesses over the year, with the majority using independent reserves to fund purchases.
And, it seems the sector has widely adopted contactless technology, with 71 per cent of store offering this form of payment.
However, most customers still pay in cash, and the average spend is £6.28.