The amount of new grocery space proposed in the UK has fallen sharply as strong demand for online shopping drove down an appetite for hypermarkets.
There was a 17.7 per cent year-on-year fall in proposed floorspace from 18.51m sq ft to 15.22m sq ft this year, property consultants CBRE found, as grocers shifted their attention from big-box stores to the growing convenience market.
Tesco, Morrisons and Sainsbury’s have taken a significant hit on the value of their property portfolios as they attempt to use the millions of square feet of land they no longer need for stores.
A separate study for a Channel 4 Dispatches documentary found that 25 per cent of UK grocery stores were being mothballed or cancelled.
Chris Keen, a director at CBRE explained: “The reason for the shift to smaller stores is in part a response to changing consumer shopping patterns but also because they are require less capital expenditure to deliver, have less impact on trade of existing stores and are easier to secure planning.”
Aldi and Lidl, who are aggressively expanding stores across the UK, have 1,135 branches of 8,000 sq ft on average, less than half of the big five (Tesco, Morrisons, Sainsbury’s, Asda and Waitrose) which arguably place them in a stronger position to benefit from changing consumer behaviour. Aldi’s 25.3 per cent growth rate has now lifted its share above Waitrose, according to analysts Nielsen.
Keen said: “The discounters will continue to chip away at the big-five with their continuing aggressive expansion but at a rate too slow to pose a significant threat to the main grocery players.”