Convenience stores from the big four grocers, Tesco, Sainsbury’s, Asda and Morrisons, continue to dominate sales growth but at the expense of some their own bigger stores, according to the latest
supermarket expansion report from CBRE and Retail Locations.

The spread of convenience store openings, in tandem with both online grocery sales growth and aggressive expansion activity of Aldi and Lidl, has progressively changed consumer shopping behaviour, encouraging repetitive top-up shopping that cannibalises some main grocery sales and weekly one stop shops at superstores. The proliferation of convenience stores began to accelerate in 1996 following the introduction of ‘town-centre-first’ planning guidance. The convenience store outlets of the Big-four have since trebled in number.

Aldi and Lidl have sustained a high rate of new store openings, and steady market share growth, for many years. Their store numbers have jumped by more than 300% since 1998, increasing their market share from 2.1% to 8.3%, according to Kantar Worldpanel. However this steady rate of growth doesn’t explain the sudden drop in the big four’s share of main grocery sales following 2011.

One contributing factor, also cannibalising store grocery sales, is the growth of online sales (which the discounters are not burdened with) which is proving heavily margin diluting.

Whilst hypermarket popularity is waning, superstore development activity shows no serious signs of slackening and will continue to capture the bulk of main grocery sales going forward.

Chris Keen, Director of Supermarket Landlord Advisory, CBRE, comments:
“We expect the big four’s current trading difficulties to suppress demand for large grocery superstores
in the short term, but demand pressures for small-format stores look unlikely to be affected. Sainsbury’s, M&S Simply Food, Waitrose, Asda, Aldi and Lidl all remain on the expansion trail for small stores.”

“Housing growth generally is stimulating a lot of ancillary grocery development activity, as are mixed-use developments and major infrastructure schemes such as Crossrail. The government’s ambitious plans for new towns and enlarged suburbs will further boost grocery space demand. And competition from grocers will push rents in catchments with growing populations. With net population migration set to remain high, pressure on UK grocery space – particularly space in southern markets – will inevitably remain strong, exerting a knock-on upward impact on demand over the medium term.”read more