Supermarkets focus on smaller stores as consumers shop differently

Supermarkets are opting to build smaller stores and move away from the hypermarket format in response to changing consumer behaviour, new research suggests.

The research, from property consultants CBRE, found that the amount of proposed retail floor space from grocers is now at its lowest level since the beginning of the credit crisis. Floorspace at the pre-planning consent stage has fallen to 15.22m sq ft from 18.51m sq ft a year ago, and is at its lowest level since 2008, the study found.

Chris Keen, director at CBRE, says grocers were opting for smaller store formats instead of larger hypermarkets as they adapted to changing consumer behaviour. “The reason for the shift to smaller stores is in part a response to changing consumer shopping patterns but also because they are require less capital expenditure to deliver, have less impact on trade of existing stores and are easier to secure planning,” he said.

The research ties in with moves from the UK’s largest supermarkets, including Sainsbury’s , to focus on convenience stores and online shopping as they adapt to the way that consumers now prefer to buy.

Research published last week by the University of Southampton found high streets adapting in the face of this change. Today’s research suggests changes to the evolution of out-of-town shopping as well.

The CBRE analysis found discounters Aldi and Lidl were continuing to gain market share, up from 2.1% in 1998 to 8.3% now, but that their rise was more due to “the vigour of their opening programme than shoppers trading down during recession.” Between them, the two have opened 779 additional branches since 1998.

But CBRE had a warning that the search to deliver convenience could harm the big five supermarkets. “Continuing margin dilution from their online investment activities and trade cannibalisation from their convenience store opening programmes currently looks to be a much bigger problem for the big five going forward,” it said.