Will Supermarket Cut Backs Damage the Industry?
Posted on: 21/01/2015

Tesco have recently announced the cancellation of almost 50 store development projects leaving communities and the construction industry concerned over the future of these unwanted sites.

The supermarket giant told the stock market recently that they have reduced their expenditure budget by almost half to just over £1bn, meaning that development opportunities of the 300 sites they currently own are now under question.

A study released by Goldman Sachs last year advised that supermarket chains spent around 75percent of their capital budget on buying new sites and developing the stores. Meaning that Tesco investment into store construction can be expected to fall this year by around £750,000, of the four biggest UK retailers (Tesco, Asda, Morrisons and Sainsbury’s) only Asda has upheld their budget and proportion of store openings.

These cutbacks have been caused by the rising competition of internet shopping and budget retailers such as Aldi and Lidl. Before Tesco made this announcement, the development expectations for grocery outlets were down to a two year low of 46.6 million ft².

Luckily the construction market has not suffered greatly at the hands of this situation; however it has left communities of the development sites disappointed as their regeneration hopes are left unattained. A Tesco spokesperson said: “we will work with local communities to do all we can in terms of the use of those sites in the future. We will make sure that those sites are used properly.”

Whilst it remains unsure what the supermarkets are intending to do with the sites (selling on for residential projects, use as distribution centres, etc.) in terms of the stability of the construction industry it is hoped that something is made of these sites, rather than allowing them to lie dormant.

We are currently recruiting for a Structural CAD Technician to work in the London area on a permanent basis. The suitable candidate must have AutoCAD experience, a background in structures and have experience in retail and commercial projects. If this sounds of interest please call us on 02392 603030, and for more information on this role please click here.

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