Discounters buck retail trend with construction programme

The pressure on high street consumer spending and the move by the established supermarkets chains to rein in their new store-building programmes in recent years has taken its toll on retail-related construction. But the sharp increase in new work retail starts – up 44% in the fourth quarter on a year ago in the latest Glenigan Index - suggests that some major retailers are maintaining significant building programmes.

The low cost supermarket groups Lidl and Aldi are not only increasing market share - as reflected in their recent upbeat Christmas trading reports – but also investing significantly in new space. German-owned Lidl, which now operates 690 stores in the UK, says it wants to double its portfolio and is reported to be aiming to open one store a week in the UK.

Glenigan data reflects Lidl’s busy construction programme. It shows that detailed plans have been granted and work is set to start in July on a £3.4 million A1 retail foodstore in Bedford where Lidl is the client on the 2,125 sq m scheme.  Plans have also been approved for a new £2.6 million Lidl store covering 1,794 sq m at Mansfield in Notts with work also set to start this summer. Meanwhile, Lidl is also planning to open a new 1 million sq ft regional distribution warehouse at Luton close to the M1, partly to service its growing market in London.

Aldi is also investing heavily in its estate. Having doubled sales and market share over the past four years, the company recently said that its growth has accelerated in 2017 and it is planning 70 new supermarkets in 2018 as part of a plan to reach 1,000 stores in the UK by 2020. Meanwhile, its £300 million ‘Project Fresh’ investment programme to create more space and simpler lay-outs will involve work on a further 150 stores this year.

Glenigan data highlights a new £1.8 Aldi store at Brigg in Humberside, where work is set to set to start on a 1,744 sq m store in April. Meanwhile, contracts have been awarded and work is set to start next month on a £1.2 million Aldi store at Coleshill, Birmingham.

A major refit programme is a key part of the food strategy at the Co-op, which has recently unveiled some ambitious expansion plans. It is investing £160 million to open 100 new stores and refurbish a further 150 stores with ‘makeovers’.  The group’s plans include 20 new stores in London, 18 in Scotland, 10 in Wales as well as new stores Blackpool; Bristol; Chesterfield; Crewe; Leicester; Manchester; Nottingham; Plymouth; Southampton and York.

However the business climate for mainstream retailers remains tough and Christmas trading statements from the likes of Tesco, Sainsbury’s and M&S do not point to any early revival in their development programmes. But bright spots in the sector do exist and after an expected 4% fall in starts last year, the latest Glenigan forecasts point to 1 per cent rise in new starts in the sector in 2018.