Tesco’s decision to scrap 62 large out-of-town stores could drag down the market share of its clothing arm F&F, industry observers have warned.
The supermarket has cut costs by scrapping plans for 62 developments over the past five years, according to data compiled for The Sunday Telegraph by construction industry data firm Barbour ABI.
Of those, 28 were to be more than 60,000 sq ft and therefore large enough to contain sections for F&F.
The average space given to F&F within a large format Tesco is 16,000 sq ft, which means it has potentially scrapped around 450,000 sq ft of clothing retail space.
Michael Dall, economist at Barbour ABI, said this could hit Tesco’s share of the supermarket clothing market. In 2015 Tesco held the second largest share (30%) behind George at Asda (43.7%) and ahead of Sainsbury’s Tu (21.2%), with smaller rivals such as Lidl making up the rest, according to data compiled by research firm Verdict.
“Tesco is not building stores that can accommodate F&F,” said Dall. “The big out-of-town stores are most likely to contain clothing so the decision to scrap these developments will reduce its clothing market share; they are not expanding that part of the business.”
Retail consultant Richard Hyman said: “Over the coming five years we will see a material editing down of grocers’ floorspace and non-foods, like clothing, will take a disproportionate hit.”
He added: “It is amazing that even in the post-Lehman’s, much lower growth years, physical space in grocery has continued to expand significantly. Old habits die hard. Now reality is beginning to sink in and all of them have far too much. It’s going to be a bumpy ride for quite some time yet.”