By Emanuela Barbiroglio

Boom in retail parks anchored by grocery discounters

The number of out-of-town (OOT) retail schemes anchored by discount grocery retailers has rocketed in recent years, Savills research reveals.

Grocery discount schemes

There are currently 423 OOT schemes anchored by Aldi, Lidl, Iceland or Farmfoods, up 78% on 2011, when just 238 were anchored by discount grocers.

“Strong shopper demand for discount grocery retail has seen landlords and developers welcome the sector at OOT retail parks in recent years, increasingly as anchor tenants,” says Sam Arrowsmith, research associate at Savills.

The performance of grocery-anchored schemes has also improved since 2011, with vacancy rates falling from 12% to 8%.

Other types of discount retailer are increasingly attracted to parks anchored by one of the discount grocery brands. For example, Home Bargains has 76 stores on parks anchored by Aldi, Lidl, Iceland or Farmfoods. Six years ago, that figure was 32.

However, some more upmarket brands, such as Marks & Spencer and Next, are also increasingly choosing to be located alongside discounters. For example, M&S, which currently has 23 stores on schemes anchored by discount grocery retail brands, had only nine back in 2011.Savills links this trend to the way discount grocery retailers have sought to appeal to more affluent shoppers.

“Perceptions of discount grocery retailers have changed among landlords and developers as well as shoppers, highlighted by a growing number of non-discount brands such as M&S and Next choosing to sit alongside them on OOT schemes,” says the firm’s OOT retail director, Ian Hare.

He predicts that discounters will continue to seek out space on OOT schemes. “Ongoing demand for OOT space from both food and non-food discount sector retailers looks set to continue, fuelling the development pipeline,” he says.

Savills’ research shows that grocery discounters increasingly favour smaller schemes. Some 22% of all schemes with grocery discounters are below 20,000 sq ft, up from 18% in 2011, while the proportion in schemes larger than 100,000 sq ft has fallen from 21% to 19%. 9