Though not quite convenience-sized, Asda is moving into smaller developments, with a minimum floor area of 10,000ft 2, since its purchase of 147 Netto stores in April. Morrisons will launch its first convenience store in Ilkley, Yorkshire this summer under the M Local brand. Sainsbury’s intends to open at least one of its “Local” stores a week, with M&S planning similarly aggressive growth of its Simply Food brand, and Tesco fighting to maintain the position of its Express stores. People are trying to spend less, but it’s also driven by demographic trends, such as the growth of one-person families.” We’re seeing more top-up shopping, where people make more frequent purchases with a smaller basket size. Gray says that the major supermarket brands still have only 15% of the convenience sector market. Meanwhile, the high street represents a great untapped market for the chains’ more traditional product lines. Before that, it didn’t have the range to fill 100,000ft 2.” “Sainsbury’s launched its online non-food range at the end of 2009, which helped it build up its product line. Gray points out that supermarkets are cleverly blurring the line between online and real-world shopping, using the power of the internet to drive growth in-store. Last autumn, it doubled the floorspace of its Crayford branch in Kent to 100,000ft2, to make space for a 46,000ft2 non-food offer. “Supermarkets are extending stores, and leveraging their out-of-town developments by building a dedicated clothing area, for example.” Sainsbury’s is one of the most ambitious, carrying out 21 extensions last year, with another 15-20 in the pipeline. “Development is moving onto non-food and services,” says David Gray, retail analyst at Planet Retail. The big chains are not only competing to draw more customers through their doors, but to secure an ever-greater proportion of their total spending, offering growing ranges of clothing, electrical goods, homewares and financial products. So what are supermarket clients building? The race for space is sending supermarkets in two, polar-opposite directions, to the biggest stores they’ve ever built and also the smallest. If everyone else is growing, you’ve got to as well.” The downside, as Davis Langdon’s head of retail, Paul Zuccherelli, points out, is that: “Customers are more savvy now and they tend to shop around - as stores get to saturation point, it’s easier to do that because they’re sitting cheek-by-jowl.” Think big. Because there’s weaker consumer spending, the big guys have got to protect their market share. “The major four players are all pretty strong at the moment, and they generally have large amounts of cash. “There is actually still a lot of room for growth,” he says. Turner says that France and Germany have nearly twice as much supermarket space per capita, and in the US there is nearly three times as much. In fact, the UK is still relatively underserved in comparison with the rest of Europe and the US. If you think there are few places left for the major supermarket chains to expand into, you’re not looking hard enough. This means that limited development opportunities are fiercely contested. So are Waitrose and Marks & Spencer, and while the established names have fought off the threat from discount retailers such as Aldi and Lidl, those newer entrants retain ambitious growth plans of their own. The UK’s grocery shopping is still dominated by the big four - Tesco, Asda, Morrisons and Sainsbury’s - which are all committed to aggressive expansion. For firms that can demonstrate they can deliver, that they can stick to a price and, crucially, that they understand retail, it’s a big opportunity. But their loyalty is tempered with a roving eye for ever-lower costs, and they often introduce new suppliers to keep the old ones on their toes. Food retailers are in robust health, and the next few years should be good for those in construction who can adapt.”Īll the major supermarkets have well-established supply chains and frameworks of tried-and-trusted contractors and consultants. At EC Harris, Colin Turner, head of retail, performs a quick back-of-an-envelope calculation: “If you take an average figure of £150 per square foot, that’s a construction spend of £2.25bn. So even the hungriest contractor should be thankful for the supermarket sector - a steady, albeit very demanding, client in a difficult market.Īccording to Verdict Research, the UK’s major supermarkets will add more than 19 million ft 2 of new space to their combined footprint between 20. Retailers’ driving obsession is where people are buying that food, and it has given them a seemingly unquenchable appetite for new space to increase or protect their market share. However bad things get, people still have to eat.
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