Supermarkets could start to close, warns Waitrose boss

Graham Ruddick
Telegraph UK
The ‘Big Four’ grocers may be forced to close existing stores as the industry struggles to cope with falling sales and profits
Supermarkets in Britain could start to close as the grocery industry struggles to cope with an unprecedented slide in sales and profits, the head of Waitrose has warned.
Mark Price, the managing director of the upmarket grocer, said it was “incredibly hard to call” whether all of Britain’s food retailers would survive tumultuous shifts in shopping habits.
The “Big Four” supermarket groups have been forced to dramatically rein in plans to open new stores in UK in order to save cash to shore up their balance sheet. In recent weeks Tesco has scrapped two supermarket openings despite actually building the stores.
However, Mr Price warned that food retailers could be forced to go a step further and close existing stores, just as non-food retailers have done in Britain since the onset of recession.
He was speaking in the week that rival J Sainsbury slumped to a £290m pre-tax loss, scrapped plans to open new stores, and warned that sales in supermarkets will be falling “for the next few years”.
Mr Price said: “This is as fundamental as supermarkets coming into the UK in the 1950s and reinventing what food shopping was all about.
“I think we are at one of those inflection points where customers are acting differently and retailers are going to have to respond to it.”
In an interview with The Telegraph at a Waitrose in Salisbury, which has been revamped to respond to the shift in shopping habits, Mr Price compared the plight of supermarkets to the DIY retailers B&Q and Homebase, which recently announced it will close one in four stores.
Mr Price said: “Look at B&Q. Look at Homebase. I think that food is probably four or five years behind non-food. What you have seen over the last five years is 12pc of non-food space taken out of the market. You have had no food space retired over that period. In fact what you have been seeing is food space growing by 3pc to 5pc. So, more and more space has been added at a time before you get the impact of internet, convenience shopping and all the other shifts that we talked about.”
The Waitrose boss said that British supermarkets would have to reinvent themselves in order to survive a shift in spending from out-of-town stores to convenience shops, online and the discounters Aldi and Lidl. Mr Price said: “It [survival] depends what they become. It depends on your powers of reinvention really, because the model has changed. So you could say ‘I am going to reinvent my shops so it is half a fashion retailer’. Through their various strategic reviews, they are going to have to decide what their space becomes.”
A strategic review of Sainsbury’s by new chief executive Mike Coupe got a mixed review from the City last week.Mr Coupe said Sainsbury’s will lower prices by £150m and improve the quality of 3,000 products. This will be funded by cutting capital expenditure to between £500m and £550m in each of the next three years, compared to just below £900m at present, as well as a cut to the dividend and Sainsbury’s removing £500m of costs.
Mr Coupe also warned that one in four of Sainsbury’s supermarket will have “underutilised space” within the next five years.
David McCarthy, retail analyst at HSBC, said: “Mismanagement of the industry by Sainsbury’s – and others – for the last five years or more and an unwillingness to recognise the fundamental changes in retailing has resulted in Sainsbury’s not being positioned well for the future, hence the decline in profit.”