Grocers look to Scotland for expansion

By Anita Awbi

- Last updated on GMT

Related tags: Supermarket

Despite the saturation of the UK's grocery market and a gloomy
Scottish retail price index, Sainsbury's and Waitrose have
announced expansion plans north of the border.

As Scotland's urban centres become more prosperous, with increasing numbers of people forking out more on weekly shopping bills, English retailers are starting to take notice of a new opportunity on their doorstep.

The region has always provided the UK's supermarkets with fresh produce, but until now Morrisons, under the old Safeway banner, maintained a retail monopoly.

Planet Retail's Bryan Roberts told FoodandDrinkEurope.com​: "It's a fairly new market, and definitely an area of interest for major grocers. There are a few fairly affluent cities, new jobs springing up and a rising population - making the region more attractive to large food retailers."

"In Edinburgh and Glasgow there is a lot more food spending going around. And entry by English chains will really fit in with regulators who want to see more competition in the region,"​ he added.

Waitrose, part of the Berkshire-based John Lewis Partnership, hopes to capitalise on a new interest in quality grocery shopping by opening two stores in the wealthy Edinburgh suburbs of Morningside and Comely Bank this June.

The openings mark a major milestone for the company that last month reported growing sales in the well-off English home counties of Surrey, Berkshire and Hertfordshire.

But its track record for quality and premium goods over bargain prices is yet to be secured outside this safety net however.

The new Scottish stores are among five recently acquired from Somerfield, including one in Buxton, Derbyshire, and two in greater London, as the company tries to position itself as a national supermarket brand.

Managing director Steve Esom said he is "confident that the stores will prove popular in these new areas",​offering a different level of food quality and service.

Meanwhile Sainsbury's has vowed to source more products from Scotland, where it currently only operates 24 stores. The new sourcing policy will see the UK's third largest retailer add a further 2000 Scottish suppliers to its list this year.

But recent figures published by the Scottish Retail Consortium (SRC) reveal retail prices are declining by 0.46 per cent, compared to the national consensus of 0.36 per cent.

This represents a return to the falling prices that marred the new year, sparking concern among retailers. In January the SRC Shop Price Index recorded 0.65 per cent lower prices than December, not including sales and promotions.

Mike Watkins, of analyst firm ACNielsen, said: "With Scotland beginning to mirror the national trends in price deflation there is clearly a timing effect for retailers in Scotland and the market continues to be challenging for both food and non food retailers."

Related topics: Market Trends

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