Aldi to open more stores than Tesco, Sainsbury’s and Morrisons combined

Aldi to open more stores than Tesco, Sainsbury’s and Morrisons combined

Alid is planning to open more new shops in the UK this year than Tesco, Sainsbury’s and Morrisons combined according to comprehensive new supermarket research that lays bare the dramatic changes in the industry. 

The German discounter, which celebrates its 25th anniversary of opening in the UK this year, plans to open 1.02m sq ft of shop space in 2015, the equivalent of roughly 60 shops. 

This compares to just 450,000 sq ft for Sainsbury’s, 220,000 sq ft for Morrisons, and is almost ten times more than the 170,000 sq ft Tesco intends to open. 

The findings from IPD, the commercial property industry’s leading research body, and Colliers, the property agent, show how the grocery industry has been turned on its head by the rise of the discounters and a slump in sales for the “big four”, which includes Asda as well as Tesco, Sainsbury’s and Morrisons. 

The “big four” have expanded rapidly over the last two decades but have been forced to scrap new store openings to shore up their battered balance sheets. 

Tesco announced earlier this year that it was scrapping 49 stores as new chief executive Dave Lewis responded to a fall in sales and the discovery of a £263m blackhole in retailer’s accounts. The search shows that the amount of space Tesco will open this year is down 76pc on 2014. 

In contrast, the German discounter Aldi, which now has more than 500 shops in the UK, is ramping up its expansion plans as it grows market share. After Aldi, Marks & Spencer has the most ambitious store opening plans and intends to open 600,000 sq ft of space. Asda plans to open 550,000 sq ft while Aldi’s rival Lidl wants to open 340,000 sq ft, double the amount of Tesco. 

Overall, 3.9m sq ft of space is due to be added to Britain’s grocery industry this year. However, in a shift from recent patterns, just 29pc of this will be traditional supermarkets. Instead, 54pc will be small supermarkets of between 3,000 sq ft and 15,000 sq ft, which is Aldi’s favoured size, while 17pc will be convenience stores such as Tesco Express and Sainsbury’s Local. 

James Watson, head of UK investment at Colliers, said the grocery industry has “rebooted itself” as the biggest chains look to fightback against a change in consumer habits towards smaller and more frequent shops rather than one weekly trip to an out-of-town supermarket. 

He added: For all operators, it is the consumer’s increasing predilection for online delivery topped up by convenience basket shops leading to the demise of the super profits generated by the traditional trolley shop that is at the heart of their problems. Grocery delivery is not an area where the operators can make profits – yet.” 

The report also highlights that Britain’s pension funds could take a hit from the pressure on the industry because they own supermarkets across the UK. 

In 2014, 86pc of all the supermarkets bought were by UK institutions such as pension funds, which is in line with the historical average. 

The value of supermarkets is now under pressure as the profitability of the industry falls and demand to develop new sites slows. 

The value of supermarkets bought and sold in the UK dropped by 27pc year-on-year during 2014 to £1.3bn. The report said there was £500m of deals in the second quarter of the year but then the “depth of problems facing the operators became increasingly obvious”. 

Mr Watson the industry was likely to become split between prime and secondary supermarkets, with stores in the busy locations still likely to perform robustly. 

He said: “Operator difficulties are being offset by an improving economic situation and a more constrained supply of new supermarket assets. 

“However, there is now a more clearly defined primary and secondary market for assets.

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Posted on March 23, 2015, in #international, #retail, #uk. Bookmark the permalink. Leave a comment.

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