The amount of floorspace at the pre-planning consent stage in the grocery development pipeline has fallen over the last year from 18.51m sq ft to just 15.22 m sq ft, the lowest since 2008. The amount of new store proposals has however continued to rise. The average size of store proposal is falling due, in large part, to a sharp reduction in the number of hypermarkets coming into the development pipeline, according to global property consultants CBRE.
Chris Keen, Director at CBRE, comments: “The retailer’s preference for smaller store formats is showing through now with the amount of proposed retail floor space (i.e. without planning consent yet) at its lowest level since the ‘race for space’ began at the onset of the credit crisis.
“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 are continuing to gain market share, up from 2.1% in 1998 to 8.3% now, but more due to the vigour of their opening programme than shoppers trading down during recession. The two stores have added 779 additional stores since 1998. The discounters will continue to chip away at the big-5 with their continuing aggressive expansion but at a rate too slow to pose a significant threat to the main grocery players. Continuing margin dilution from their online investment activities and trade cannibalisation from their convenience store opening programmes currently looks to be a much bigger problem for the big-5 going forward.