New supermarket growth slows as grocers focus on small stores, CBRE research shows

New research from CBRE reports that the total grocery pipeline is down 1.7% in 2013 with projects under construction down 34.8%.

The move reflects the grocers’ move away from hypermarket stores as non-food sales shift online. The pipeline for out-of-town stores is down 2.3% while town centre developments rose 1.1%.

CBRE said supermarkets now account for 42% of all shopfloor space in the development pipeline, up from 25% four years ago. Although the bulk of new grocery space is accounted for by superstore development, the number of small stores is considerably larger.

Overall, the grocery pipeline has grown by over 18.9m sq ft or 66% since the onset of the credit crisis in September 2007. The amount of new grocery space under construction in March 2013 was 3m sq ft.

CBRE director Chris Keen said: “The grocery superstore space race has eased as the capital expenditure available for supermarket development is squeezed with investment increasingly diverted to both convenience stores and improving existing stores. 

“Tesco and Sainsbury’s continue to increase their convenience store market share but Morrisons and Waitrose have created c-store formats too while Co-op has moved away from supermarket development to concentrate on c-store formats. Meanwhile, Asda is trialing a new c-store format in petrol stations.

He added: “Even Aldi opened its first small town centre store earlier this year, which is the start of a new c-store chain. As independents and symbols have a 70% market share still, the convenience store side remains a major opportunity for the big grocery chains, which they will continue to mine. Tesco and Sainsbury’s are leading things, in part boosted by their multichannel offer.”

CBRE said planning opposition to out-of-town developments will result in a “significant chunk” of the 17m sq ft of out-of-town grocery space added to the pipeline since the onset of the downturn failing to come to fruition.

Earlier this year, Tesco wrote down £804m worth of planned developments after chief executive Philip Clarke admitted the retailer did not need as much space following the growth of online retail.