Big grocers circle 40 Co-op stores in drive for larger share of £32.1bn c-store market.

The Co-operative Group has put 40 shops up for sale, sparking a space race among grocery giants desperate to expand their convenience estates.

Big grocers including Tesco and Sainsbury’s are thought to be eyeing the stores and a feeding frenzy may result as they jockey for greater exposure to a £32.1bn market.

Upmarket grocer Waitrose is also hunting for smaller stores for its fledgling convenience chain, and Morrisons aims to kick-start a convenience store trial this year. A value retailer is also thought to be keen on several of the Co-op properties.

The fast-growing convenience market is expected to continue to outperform the rest of the food and grocery sector, excluding online, according to industry body IGD. Convenience sales are forecast to grow 5.8% per year and be worth £42.6bn in 2015.

Any good c-store space that comes to market is typically hotly contested as Tesco seeks to strengthen its grip and its competitors seek to play catch-up.

Tesco gained a lead by moving into the convenience sector early and snapping up chains such as One Stop. In December it bought 77 stores from Mills Group under its One Stop banner, sparking calls from rivals for a competition inquiry. There are now relatively few chains the big grocers could buy, making the Co-op disposals especially interesting.

Morrisons is likely to take a close look at the Co-op shops as it prepares to begin its trials to start this year. The supermarket group is close to signing for its first convenience store, and is thought to be looking at sites in Manchester, Leeds and Liverpool. It is considering names including M Local and Morrisons Local.

A Co-op spokesman said the retailer keeps its 3,000-store portfolio “under constant review” and “at any one time there will be disposals and acquisitions, at various locations, as part of normal store churn”.

He said the Co-op, the fifth biggest food retailer following its acquisition of £1.57bn acquisition of Somerfield in 2009 and the largest c-store group by store numbers, wants to acquire more than 300 shops over the next three years.

According to the IGD, the Co-op had 1,749 convenience stores at the end of last year. Tesco had 1,662 including 1,142 Express stores and 520 One Stops. Sainsbury’s had 342.

It is understood property agency Jones Lang LaSalle has been hired to sell the 40 Co-op stores, but declined to comment.

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