The rise of the value supermarkets

The proposed new ALDI supermarket in St Ives sees Michael Beardall of Barker Storey Matthews – now part of Eddisons – in Huntingdon consider why the value chains have gained ground in the supermarket sweepstakes.

The rise of the value supermarkets

Who doesn’t love a bargain? Yet it can be argued – and often has been – that since the credit crunch of 2008, shoppers’ expectation of ongoingvalue and affordability has, in the main, replaced the one-off bargains a few seasonal sales a year used to satisfy.

While fast fashion and flat-packed, high-stacked homewares characterise our search for value in what we put on our backs and in our homes, when it comes to comestibles, the rise and consolidation of the value supermarkets during the past decade chart our appetite for value when it comes to grocery shopping.

Chief among this type of prevailing supermarket are Lidl and ALDI. There are two Lidl stores in St Neots and one ALDI. Huntingdon hosts a Lidl and an ALDI store and a new ALDI is planned for St Ives. This proposed ALDI on Stocks Bridge Way, St Ives will be less than five minutes’ walk away from Parsons Green, off Harrison Way where Morrisons opened just over a year ago (08 March 2018).

Julian Welch is Barker Storey Matthews now part of Eddisons national lead on retail agency and he’ll confirm that the locations in which the value supermarkets trade in our area conform to the supermarkets’ very formulaic business model. Namely, they are just out of town centres on sites which, at the time the land was acquired, would be considered ‘unfashionable’.

Key to each of their locations is that they are easily accessible to areas of substantial residential population. That the Huntingdon, St Neots and St Ives areas of Cambridgeshire have seen unprecedented residential development and the opening of a number of value supermarkets there in the past decade is no coincidence.

My colleague contrasts the value supermarkets’ choice of site and store footprint – usually between 14,000 sq ft to 26,5000 sq ft outside of London – to that of the conventional ‘Big Four’ supermarkets of ASDA, Tesco, Sainsbury’s and Morrisons – although the latter to a lesser extent – rolled out in the 1990s and early 2000s.

Although there are local exceptions, the Big Four’s formula saw these established supermarket names pursue and secure land to establish massive units on either out of town retail parks – where they are often one of the anchor occupiers – or stand alone, large shop formats which can be anything from 40,000 sq ft to 100,000 sq ft.

Along with such sites and sizes come fixed costs to which they are committed long term and rising running costs.

Meanwhile, we have seen the demise of the traditional, weekly ‘big shop’ and the advent online shopping to ‘click & collect’ or for home delivery. We have changed the way we shop and also what we want from our shopping experiences. Responding to the way we live our lives now, has seen two of the Big Four turn to smaller units in town or city centres trading as Tesco Express, Sainsbury’s Local and Central.

The value supermarkets always have just one style of store and trading template to service. Their business model supports compact stores with an equally compact grocery offer. With a reduced number of lines and products, the value supermarketst are not wedded to holding ‘big brand’ products. With stores of their size, the aim is not to hold stock but to ship it in and ship it out through the tills in short order. This means they can be responsive to the fluctuations of fast moving consumer goods (FMCG) on the world market, with such a strategy and buying power, savings are passed on to the customer.

Yet they can keep customer interest with seasonal promotions on ambient – ie non-grocery – products such as pop-up hot tubs or sturdy walking boots. Similarly, customer interest is piqued by themed food promotions such as high-end Spanish meats or French charcuterie.

While these occasional promotions might see high ticket items within any one store, they are popular because they are perceived by customers as still offering value.

But whether it’s hot tubs or jamón ibérico, customers know these items will only be available for a short period of time because there is no surplus space for storage in the value supermarket model.

For more information about retail opportunities in the Huntingdon, St Ives or St Neots areas, contact Michael Beardall, tel 01480 451578, [email protected] or for the national retail property picture, contact Julian Welch, tel 01733 897722, [email protected]