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The last eighteen months have appeared to signal a sea change in the fortunes of the big-5 full-line grocery majors: Tesco, Sainsbury’s, Morrisons, Asda and Waitrose. After almost three decades of unbroken market share growth, peaking at a startling 81.4% in 2011, the big-5’s market share has finally begun to slip.
Overall, the grocery pipeline has grown by over 18.79m sq ft (65%) since the onset of the credit crisis in second-half 2007.
The amount of new grocery space under construction in March 2014 was 2.47m sq ft, marginally down on the 2.95 sq ft in March 2013.
Convenience store openings continue apace but are still dwarfed, in aggregate floorspace terms, by superstore development.
The industry-wide shift away from very large hypermarket –style units continues but grocery superstore development (much of it out-of-town), remains buoyant. The main growth inhibiting factor, as always is planning but schemes are also being shelved at an increasing rate as the big-5 take account of the seeming inexorable market share shifts occurring.
UK GDP levels have returned to pre-Credit Crisis levels but GDP per capita levels have not. Wage inflation is still well below RPI. Until economic improvement feeds through into a sustained real increase in household incomes, shop expansion activity and shopping centre development will remain at a low ebb. Currently, a sustained recovery in consumer spending still looks to be a number of years away.
Shopping centre proposals have almost halved from 30m sq ft in 2009 to just 15.5m sq ft today. We expect the overall shopping centre development to continue contracting, falling from 48m sq ft currently to circa 40m sq ft in 2016/2017.
The current pipeline still contains a large number of shopping centre schemes that continue to be rolled-forward but that remain unviable.
Shopping centre construction levels have lifted marginally but are still at just 40% of 2007 levels. The low level of shopping centre development activity in provincial markets has resulted in acute shortages of new large-store anchor stock.
The retail warehouse park development pipeline has been in almost continuous decline since H2 2004 (a decline of just under 50%). Proposal levels have declined by over 70%.
The long-run retail park development pipeline contraction looks set to continue because of sluggish expansion activity in bulky goods market in tandem with continuing planning opposition to A1/fashion park development.
By far the largest number of schemes remaining in the pipeline currently are extensions to existing schemes, a relatively safe development option. Just 76 (24%) of schemes currently in the pipeline are entirely new parks.