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Supermarkets must close ‘one in five stores’

The UK’s biggest supermarkets must close 20% of their shops to return to profitable growth in the face of changing shopping habits and the growth of discounters, according to analysts at Goldman Sachs.

The analysts said closing stores is the “only viable solution” for Tesco, Sainsbury’s, Morrisons and Asda to grow profits again.

The Goldman Sachs report names Tesco as having the biggest problem on its hands, with 56% of its stores bigger than 40,000 sq ft and these are the shops that represent the greatest problem for the grocers, The Guardian said.

If current trends continue, the analysts warned sales in large out-of-town supermarkets will fall by 3% every year until 2020, reported The Telegraph. This equates to sales in larger stores falling by 18% over the next six years.

It comes after Waitrose boss Mark Price told The Telegraph it was “incredibly hard to call” whether all of the UK’s food retailers would survive these tumultuous shifts in shopping habits.

In recent weeks Tesco has shelved two supermarkets despite actually building the stores.

These closures could have significant implications for the supermarkets’ clothing businesses, which have been outperforming the grocery sector.

Readers' comments (1)

  • The future - and not just for supermarkets - is less stores and making the better ones more profitable. In a world where more and more people are shopping online, we have too many shops for too fewer people. My home city of Norwich is a classic example of this.

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