Stores put 
expansion 
on back 
burner

Supermarkets have put the brakes on their race for space and downsized plans for new sites to their lowest level since the 2008 financial crisis.

Grocery retailers proposed 15.2 million sq ft of new shopping space at the end of March, compared with a high of more than 18 million sq ft in 2010, when giant out-of-town stores were seen as the future for the industry.

But the big four supermarkets have since come under increasing pressure from discounters such as Lidl and Aldi, which plan to double the number of their smaller retail stores in the next decade as they enjoy record sales.

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The figures from property agent CBRE also show the amount of new shopping space with planning permission and under construction fell 30 per cent on the year to 2.5 million sq ft, with retailers scaling down their sites to meet changing customer habits.

CBRE retail director Christopher Keen said: “The reason for the shift to smaller stores is in part a response to changing consumer shopping patterns, but also because they are lower capital expenditure to deliver, have less impact on the trade of existing stores and are easier to secure planning permission for.”

Despite reining in their expansion plans overall, supermarkets are still sitting on nearly 30 million sq ft of space that has been given permission to become a grocery store but is not under construction, up around 14 per cent on the year.

Meanwhile, sales at Aldi and Lidl, both based in Germany, have jumped 32 per cent and 19.5 per cent respectively over the year.

CBRE said the two companies have rolled out 779 additional stores since 1998 and will continue to chip away at the other supermarkets with their expansion plans, but at a rate that is still too slow to pose a significant threat to the main grocery players.