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Mon April 12 2021

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Supermarkets not building two-thirds of planned new stores

16 Jul 15 Only 32 per cent of projects submitted for planning permission from the big four supermarkets across the UK since 2010 have been built.

Tesco has built just one in five of its planned stores
Tesco has built just one in five of its planned stores

An analysis by construction research firm Barbour ABI, there have been 556 planning applications submitted for the construction of new stores by the big four supermarket chains ­­since January 2010, but only 179 have been built or are under construction.

Of the four– Tesco, J Sainsbury, Asda and Morrisons – Tesco has put forward the most planning application since 2010 with 206 and also has the lowest planning-to-construction ratio at just 21%, compared to Morrisons which has a ratio of planned completed construction at 56%.

The arrival of more competition from German discounters Lidl and Aldi has put pressure on the UK chains’ investment programmes. Aldi alone is estimated to be spending £109m in 2015 on construction, with a target of 1,000 UK stores open by 2022.

Barbour ABI lead economist Michael Dall said: “With the ‘big four’ already having a fairly solid foundation of stores across the UK, some may suggest that there isn’t a glaring need for them to build new stores at a significant rate. However, it is interesting to note that a planning approval does not necessarily indicate future development.

“Perhaps many of the supermarkets were competing for development options rather than actually building new stores. Defending market share was a key strategy of the ‘big four’ as the data suggests. However given the changing nature of the supermarket sector in the UK and the concentration on price competition from the ‘big four’ this may allow others to challenge their traditional dominance by increasing construction rates.”

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