Last week we learned that internet retail sales now account for almost £1 in every £10 spent in the UK, according to new ONS data. Internet retail sales grew by a mere 30% year on year in September.

At about the same time a survey emerged from the IGD showing that 40% of adults expect to shop on line in the next five to ten years compared with the 20% that currently do so.
Then a recent survey for HSBC reported that more than 1 consumer in 8 intends to do all their Christmas present shopping online this year.

Meanwhile the major supermarket groups continue their space race. According to the IGD there’s over 190m square feet of food store selling space currently, and whilst the size of the new store pipeline is uncertain, due to the unpredictable pace of development, some estimates put the figure as high as 41m sq ft.

Much-quoted retail analyst Dave McCarthy at Evolution Securities graphically describes this as “a new Tesco in the planning“.

What’s all this floorspace going to be used for?

The grocery market is already struggling to achieve same store sales growth, even without the addition of potentially 20% more space.
Yet the standard of in-store food-store catering is at best moderate, at a time when the main shopping mall developers are fast upgrading their foodservice offering, and publicly emphasising the contribution it makes to the destination appeal of their centres.

I will eat my crystal ball if the grocers don’t move beyond the coffee shop and bring ‘proper’ branded foodservice into their stores in the next 5 years. That’s a cheap dare, because Domino’s are already on test in a new Tesco in the West Midlands.

It’s the thin end of an inevitable wedge.