Rivals seek to take on Tesco's small store dominance

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The Independent Online

The UK grocery sector has been transformed over the past 12 months by the biggest players opening smaller format stores, according to CACI. The location analyst also revealed that Tesco has lost its leading market share position in three postcode areas of the country, but is still the dominant force in 84 – equal to 70 per cent.

The shift to smaller format grocery retailing was driven by the Co-operative Group, which acquired Somerfield this year, selling stores to Morrisons and Sainsbury's. As a result, both grocers opened more stores than Tesco for the first time in many years over the past 12 months. Morrisons and Sainsbury's have opened a total of 45 and 28, respectively, compared to Tesco's 24 in the UK. Waitrose, which acquired 14 stores from the Co-operative Group, was just behind the sector heavyweight, opening 22.

However, CACI said that other factors, notably cheap rents, a large number of empty units and planning resistance to large out-of-town formats were also driving a resurgence in smaller shops on the high street.

Paul Langston, the associate director of planning at CACI, said: "A new battlefront on the high street had been opened up." He added there had been an increase of more than 25 per cent in competing fascias in the UK's retail centres. Mr Langston expected the shift of grocers to the high street to continue after the Competition Commission recommended a test in the planning system to prevent grocers from opening larger stores above 10,000 sq ft to gain a dominant position in certain locations. Helped by strong sales during the recession, Asda has improved to become the number one grocer in 16 areas, while Sainsbury's had taken pole position in 13 of 121 postcodes, said CACI. Mr Langston said: "For once, things are not all going Tesco's way."

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