News that the leading supermarkets are allegedly buying empty high-street shops and pubs for new stores suggests that landlords, the multiples and the Government could have found a politically correct way of growing the multiples' share of trade without being in breach of competition legislation…
Essentially, according to the Observer, Tesco and Asda are committed to opening 2.5m sq. ft. of new space this year, while Sainsbury's wants to add 2.5m sq. ft. - 15% of its floorspace - by March 2011. Morrisons is on track to open 1m sq. ft. by January 2011.
If these increases in retail space are achieved, I believe that the multiples' relative balance of power/share will be relatively unaffected, which means there will be little issue for the Competition authorities.
Meanwhile, landlords will have received a 'good' price for distressed properties, and the government will have avoided a permanent High Street reminder of recession-reality for voters....
And all of this increase in trade concentration at the expense of those inefficient smaller retailers that couldn't stand the pace….with additional competition for those that have 'survived'
Think about it:
The above ambitions add up to 8.5m sq ft and at say 15,000 sq ft per outlet, this means approx 560 additional multiples' stores, maximum.
Time for a couple of what-ifs on a little extra buying power, combined with a little less distribution in niche categories?
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