Sainsbury says UK supermarket space race is not over

LONDON Wed Jul 10, 2013 3:41pm BST

A shopping trolley is seen at a Sainsbury store in London May 8, 2013. REUTERS/Stefan Wermuth

A shopping trolley is seen at a Sainsbury store in London May 8, 2013.

Credit: Reuters/Stefan Wermuth

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LONDON (Reuters) - Britain's No. 3 grocer J Sainsbury has countered a claim from market leader Tesco that the race to expand supermarket space is over, saying it saw plenty of opportunities to open stores.

Tesco Chief Executive Phil Clarke last year called a halt to the race among British supermarkets to open new space, in reaction to the growing importance of internet shopping.

"It may be that one or two of our competitors have chosen to leave that race," Sainsbury CEO Justin King told the group's annual shareholder meeting in central London.

"But that's not quite the same as saying the space race is over, because for Sainsbury's there's still much opportunity to grow our business into the future," King said.

In the 2012-13 financial year, Sainsbury added 14 supermarkets, 87 convenience stores and made eight extensions - adding a total of just over 1 million square feet and in line with its target of around 5 percent gross space growth.

King said the company, which on Wednesday opened its 592nd store, in Bicester, central England, would continue to open traditional supermarkets, with a development pipeline in parts of Britain where it is under-represented.

It would also add space to existing stores through extensions.

That investment would complement the development of its estate of smaller local convenience stores.

Sainsbury's is currently opening convenience stores at a rate of one or two a week and their number will surpass the number of traditional supermarkets later this year.

Online and convenience stores are the two fastest-growing areas in the grocery industry as shopping habits change.

Consumers are increasingly using the Internet to shop as high fuel prices are discouraging trips to town centres and out-of-town malls.

Last month Sainsbury's posted a 16 percent rise in online sales in the 12 weeks to June 8, its fiscal first quarter, while convenience store sales were up 20 percent.

Those channels drove a 0.8 percent rise in the firm's sales at stores open over a year, excluding fuel.

(Editing by David Holmes)

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