British Grocery Chains Losing Market Share – to Themselves

November 4, 2014
NACS Online
Increase in grocery-owned c-stores has changed the traditional shopping model.
​LONDON – The biggest problem for supermarkets in the United Kingdom these days seems to be their own convenience stores. The nation’s largest grocers may be cannibalizing their own business by opening small convenience stores across the country, says The Telegraph.
According to recent data from property agent CBRE, Tesco, Asda, J Sainsbury and Wm Morrisons have effectively eaten into their own sales and exacerbated changes in shopping habits by opening smaller, High Street stores, perhaps leading to a sudden contraction in the big four’s share of grocery sales since 2011.
In the report, CBRE points to the “startling increase” in convenience store numbers over the last decade. Since 1996, the number of convenience stores run by the “big four” has tripled. These stores store include Tesco Express, Sainsbury’s Local and M Local.
CBRE said in the report: “Following the introduction of ‘town-center-first’ planning guidance in 1996, the attention of Tesco and Sainsbury’s turned increasingly to convenience store expansion. The proliferation of convenience store openings, in tandem with both online grocery sales growth and the aggressive expansion activity of discounters generally, has meanwhile progressively altered consumer shopping behavior, encouraging repetitive ‘top-up-shopping’ that cannibalizes some main grocery sales previously captured in the course of weekly ‘one-stop shops’ at superstores.”
Overall, shoppers seem to be taking advantage of the smaller range of items in convenience stores, but this narrower inventory also means that it can take 10 to 15 convenience stores to generate the same sales as a supermarket, so the companies that own both traditional stores and convenience stores may be losing out overall.
“Consumers have not rejected range as such, they are simply taking advantage of discounted goods where they are available, even if that means extending the grocery shopping trip to visit a number of different grocery outlets,” said the report. “Convenience shopping has morphed into comparison shopping.”