Foodstores: Paradise Regained - the state of the UK grocery market

The proposed merger between Sainsbury’s and Asda has returned the grocery market to the spotlight and foodstore investments generally are back on the menu for an increasing number of funds.

The enduring resilience of the Big Four has been clearly demonstrated over the last three years – each has achieved a remarkable turnaround, which has proved beyond a number of non-food retailers.

Investing in prices and customer service, getting the right products on the shelf, refurbishing stores and providing a joined up multi-channel purchasing platform has paid dividends.

We explore how the retailers have pulled off this recovery, assess where the discounters fit in now and going forward and examine how the sector could evolve, particularly if the Tesco/Booker and Sainsbury’s/Asda deals come to pass. This is a huge and complex market, seemingly with more winners than losers at the moment.

Margins and therefore rental values may be lower, but the security the assets provide has been reconfirmed and investors are now taking advantage.

At Knight Frank we have expertise covering all aspects of this sector from acquisition/development, funding, investment, valuation, professional and research.

We would be delighted to discuss any issues with you.