CBRE – Supermarkets plan to increase trading areas by 50%, 80% of increase out-of-town
Food retailers aim to increase trading space by almost 50% as biggest store opening programme in history gets under way
It may feel like there’s already one on almost every street corner, but Britain’s supermarkets are planning to open enough new stores in the years ahead to cover 500 football pitches.
The nation’s food retailers are building or planning to build 44.4m sq ft of shopping aisles – 7m sq ft more space than Tesco‘s current vast store estate – according to an analysis of planning applications across the country. If all the plans are approved the UK’s supermarket chains’ trading space will increase by almost 50% to about 1,200 hectares (3,000 acres).
Despite the economic downturn and falling consumer spending, supermarkets’ expansion plans are at their most ambitious since records began. More than 80% of the new space will be in out-of-town developments, the analysis by the commercial property adviser CBRE says, casting doubt on attempts by government retail adviser Mary “Queen of Shops” Portas to revive the high street.
“It is the biggest store opening programme in the history of retailing,” said Dave McCarthy, a retail analyst at Evolution Securities.
In its report, the CBRE said: “The scramble for grocery space looks set to run and run not least because current economic conditions – combined with a dearth of jobs in more deprived areas – is forcing local authorities in the worst affected areas to be much more supportive of commercial development activity generally.
“With speculative development at a recessionary low, grocery development is often the only game left in town and could well remain so for a very lengthy period.”
Almost 4m sq ft of new grocery retail space is under construction and the nation’s big retailers have already won planning permission for another 21.4m sq ft – enough space for more than 16,000 new supermarkets.
On top of that, applications have been submitted for a further 19m sq ft of space, CBRE’s research shows. The chances of these stores being given the go-ahead is likely to increase if Greg Clark, the planning minister, succeeds in his planned reform of planning laws giving a default “yes” to development.
The CBRE, which collated the figures by poring over local council planning applications, said the “pipeline” of new space has grown by a “startling 54% since the collapse of bankers Lehman Brothers”, which sparked the 2007 credit crunch and recession. It expected the surge in development to continue.
In Scotland, the north-west, Yorkshire, the West Midlands, greater London and the east of England grocers are building more than 1sq ft of new floorspace per person, according to the report.
Scotland is on course for the biggest increase, with plans for 16.7m sq ft of space, followed by the south-east with 11.6m and the north west with 10.9m.
Tesco alone is already opening new UK shops at a rate of almost three a week. Britain’s biggest retailer, with 2,700 stores, is on the verge of expanding its supermarket footprint to every postcode in the UK mainland after a hard-fought battle for planning permission for a new store in Harrogate.
Supermarkets and grocery stores already account for 36% of all planned shopping developments, compared to one in four in 2007.
The report will be dire reading for Portas, whom the prime minister drafted in to help save Britain’s dying high streets.
More than 25,000 shops have closed since the millennium, and in her highly anticipated review earlier this month Portas warned that the situation was getting worse. “Many [high streets] are sickly, others are on the critical list and some now are dead,” she said after a seven-month investigation.
“They have reached a crisis point. Unless urgent action is taken much of Britain will lose, irretrievably, something that is fundamental to our society.”
Portas said there were “too many” supermarkets, but said little could be done to reverse their expansion, which has resulted in more than 97% of grocery sales being rung through the tills at supermarkets. “I would stop it [supermarket expansion],” Portas said earlier this month. “But to a certain extent the horse has bolted. We have let supermarkets do this.”
Andrew Simms, author of Tescopoly, a book that charts Tesco’s rise to dominate the high street, said the scale of supermarket’s ambitions “will send a chill down the spine of Britain’s independent retailers”.
Simms, who is also a fellow of the New Economics Foundation thinktank, warned that “unless the power of supermarkets is restrained they will continue to suffocate the life out of other shops”.
He added: “The outstanding problem with retailing is that there is too much power in too few hands – and it’s clearly going to get worse unless there is intervention from regulators.”
There are no plans at present to curb the growth of the major supermarkets despite a number of Competition Commission inquiries into their growing dominance.
Despite the surge in supermarket construction Clive Black, a retail analyst at Shore Capital, said Britain was “lagging behind” its European cousins. “Britain actually has one of the lowest per capita [supermarket] ratios in Europe,” he said. “To say Britain is one big supermarket, or going to become one, is nonsensical.”
Black said retailers are building for an expanding population expected to hit 65 million by 2020, compared to 61 million today. “Supermarkets and superstores are built for 20-30 years, we expect the buying of food in Britain to remain strong. The market outlook for food is actually quite robust in the UK, with growth of 4-5%” He expects most of the growth to be in smaller convenience stores and reckons most retailers will pare down their plans from the 44m sq ft of applications lodged.