Sports Direct has opened concessions in some of Tesco's larger stores. Photo Elliot Brown (Flickr)
Sports Direct has opened concessions in some of Tesco's larger stores. Photo Elliot Brown (Flickr)
A view from Peter Veash

Sports Direct and key cutting just the beginning for innovative use of store space

The space race of retail super stores is a thing of the past, says Peter Veash, CEO at The BIO Agency - the challenge now...

Popping to the shops to pick up some food for dinner? Well, now you can also get a new set of keys cut or buy some sports gear, or even pick up your mail.

This trend of diverse services under a single roof doesn’t stop at supermarkets, though – Barclays bank has recently started offering customers the option of picking up their Click & Collect parcels in branch, while the Post Office announced last month that it was planning to move a further 61 branches into WHSmith stores over the next year.

What our industry is now witnessing is the fallout of years of property consumption; supermarkets are left with huge amounts of space which urgently need to be profitably filled and made good use of, which is why we are seeing some unexpected tie-ups between grocery brands and other types of services.

But what has motivated this drive to fill empty space – and where is it likely to end up for our bricks-and-mortar stores?

From the 1990s onwards, the Big Four supermarkets greedily bought up all the property they could muster in the ‘Space Race’. An unprecedented number of new stores were opened up and down the country, because in a pre-online shopping era, ‘convenience’ was defined as how close – and how large – your local branch of Tesco was.

But as the internet age dawned, the ‘big weekly shop’ became an outmoded concept for many. Now even the supermarket giants haven’t managed to escape unscathed.

Large-scale bricks-and-mortar space is no longer seen to be as crucial to financial success as a slick online operation and a multitude of smaller, ‘little and often’ convenience stores.

Consumers’ gradual migration to these new destinations has had a significant effect on the bigger operations. This became apparent early last year when Tesco announced the closure of over 40 stores around the UK, and continues to be illustrated in early 2016, with Sainsbury’s finally bidding for Argos after trialling concessions in 10 of its stores.

What’s more, figures recently released by property consultancy CBRE predict that in the financial year 2015-2016, large supermarket openings will be down by 50% compared to the previous year.

This trend is a sign of huge changes in both the way people are choosing to shop and how retail brands are attempting to meet this need. But I don’t necessarily see this upheaval as the end for big supermarkets; rather as a sign that the mentality among retail bosses is shifting towards convenience and savvy partnerships over sprawling supersized stores.

We’re heading towards a consumer climate in which the lines between instore and online are completely blurred – as attested to by BRC figures released just this week which show that sales in both channels are slowing.

This means that big retailers must strive for the new definition of convenience, above all else. I believe that in the coming years we can expect to see plenty more in-store concessions, as well as a greater number of retailers looking to buy smaller spaces which establish their brand presences – rather than dominate thousands of square feet.