YOUR MONEY
Reaching their sell-by date
The ‘big four’ food retailers are losing ground as Britain’s supermarkets become increasingly polarised
W
hat does it take to be a food retail success in Scotland? Not all that long ago the formula seemed simple: build
an out-of-town shed, pile the shelves high and sell at a price you can get away with. Today the picture is a lot more complex. We
are seeing not just a remarkable polarisation of the food retail sector, with stores at the most affluent and deeply discounted ends tearing at the customer loyalty of the middle-market giants. Within store groups themselves, there’s a drive to appeal simultaneously to high-end and bargain-hunting customers. Some blame quantitative easing for this
WORDS BILL JAMIESON
polarisation, suggesting it has driven up assets already held by the affluent while depressing returns for the less well-off. Others point to changes in social habits, saying the big weekly or fortnightly family shop is losing ground to in-town convenience stores. And there is our own restless quest as consu-
‘We want our supermarkets to be familiar but we also want them to be different and surprising’
Opposite page: More food retailers are positioning themselves to appeal to both affluent and bargain- hunting customers at the same time.
mers for something different, something new. We want our supermarkets to be familiar but we also want them to be different and surprising. Food tastes are changing as well. A growing number want something distinct from the alcohol and sugar-filled obesity emporiums that many food stores have become. If you wonder why so many of us are overweight, a visit to the superstore will soon supply an answer. Competition on price is still the dominant
force, but other forces are at work. Tesco, which not so long ago seemed an unstoppable retail force, is struggling to maintain market share. But with the squeeze on household incomes,
what possible space can there be for an upmarket retailer – particularly when the number of people forced to use food banks in Scotland is estimated to have risen fourfold in the past year? Yet upmarket food retailer Waitrose is in the
midst of an ambitious expansion in Scotland and across the UK, pulling customers away
from Sainsbury’s and Tesco. From a standing start in 2006 it now has six stores in Scotland: Edinburgh (two), Byres Road in Glasgow, Newton Mearns, Helensburgh and Stirling. It has secured planning permission for a seventh branch in Milngavie, due to open next year, and has announced plans to open an eighth, in Ayr, subject to planning consent. And far from this being the end of the story,
group development director Nigel Keen hopes to have a total of 20 supermarkets and small convenience stores in Scotland by 2015. That will be good news for many: no sooner does Waitrose open a store than it is showered with requests to open in other towns. With such appeal, Waitrose is travelling from
niche towards mainstream. The expansion is likely to amount to millions of pounds in invest- ment and will lead to the creation of hundreds of jobs north of the border. It is also heartening for Scottish farmers, as Waitrose prides itself on sourcing local produce. All this is part of a greater plan to open 25 to
30 stores across the UK in the next 12 months, with the aim of doubling its stores to 600 over the next decade. In an era of static to falling real incomes and the onward march of discount retailers such as Aldi and Lidl, what can explain this phenomenon? Lidl’s story contains some answers. Since it
arrived in Britain 20 years ago, the privately owned German retailer now has 88 stores across Scotland, with a multi-million-pound investment plan in hand. Is it fair to call it a low-price discount store?
As the grocery sector becomes more polarised, Lidl itself is building a bi-polar appeal, with the proportion of so-called ABC1 customers soaring from 25 per cent in 2011 to 41 per cent last year. Market researcher Kantar Worldpanel now reckons the group has a 3 per cent share of the grocery market as it continues to win
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