Small format supermarkets drive growth

A raft of smaller supermarket openings in the UK has sparked an increase in grocery store competition. In the last year, Morrisons, Sainsbury’s and Waitrose have challenged the position of UK’s number one grocery store, Tesco, according to CACI’s annual report on the UK grocery market.

“For once, things are not all going Tesco’s way,” says Paul Langston, associate director for Location Strategy, adding, “while it remains the UK market leader, it is being challenged on several fronts by the emerging smaller store format.

“Sainsbury’s, Morrisons and Waitrose are likely to pursue this [smaller format] strategy in the coming year, opening up a new front in their battle to claw back ground from Tesco.”

Sainsbury’s has opened 22 stores averaging 17,000 square feet in the north of England, previously an area which was underrepresented for the supermarket while Waitrose has also increased its presence outside of its south east of England heartland, by opening 14 new stores which average more than 5,000 feet below a typical Waitrose store size.

Moving in the opposite regional direction, Morrisons’ has purchased 39 ex-Somerfield stores which are, on average, 10,000 square feet below its own typical store size, a move which has brought Morrisons to south east England and London.

Langston added that grocers are also taking advantage of high street closures to return to town centres in smaller stores and that smaller format stores may become the new fashion, just as out-of-town stores were popular in the 1990s.

He concluded: “For the first time, Tesco, the master of multi-format retailing, faces competitors that have proved they can also trade from multiple formats and that are trading with increased confidence after riding out the recession.”

Jane Parkinson, 12.10.2009