Asda plans to open 300 new convenience stores in the next four years as part of its quest to supplant J Sainsbury as the UK’s second-largest grocer.
The supermarket chain, owned by TDR Capital and brothers Mohsin and Zuber Issa, is currently number three with a 14 per cent share, according to Kantar data. But it lacks the large convenience store estates of the two leading players because its previous owner Walmart prioritised big-box stores.
The retailer has so far opened two standalone Asda Express stores, which are a similar size to Tesco Express and Sainsbury’s Local formats and sell around 3,000 product lines plus other brands from the Issa brothers’ stable, such as food-to-go chain Leon.
It will target areas that are not well served by its existing supermarket estate, many of them in the south of England. The move is expected to create 10,000 jobs by the end of 2026.
Separately, Asda is also opening smaller Asda on the Move stores at many of the forecourts owned by EG Group, the fuel station operator that is also owned by TDR and the Issa brothers, and is awaiting regulatory clearance for its acquisition of another 132 filling stations from the Co-op.
The expansion drive comes six months after EG narrowly missed out on McColl’s, the listed convenience store operator that went into administration after a series of operational setbacks.
That auction was won by Wm Morrison, which also had a limited presence in the convenience sector. It has revealed plans to convert the majority of McColl’s substantial store estate into the Morrisons Daily format and close around 130 unprofitable stores.
The overall convenience market is set to grow by 13 per cent in the coming five years, double the expected pace of sales growth at larger supermarkets, according to forecasts from the Institute of Grocery Distribution. It is characterised by small average transaction sizes but premium pricing.
Neighbourhood stores prospered during the Covid-19 lockdowns as eating out was banned and shoppers remained wary of travelling far and mixing with others in larger, busier stores. But sales growth reverted to more normal levels as the pandemic eased.
National chains increasingly dominate the sector, either through directly-operated stores or “symbol” brands such as Premier or Nisa, owned by Tesco and Co-op respectively, which supply goods and provide support services to independent owners.