Memorandum by CB Hillier Parker (SC 19)
THE ENVIRONMENTAL IMPACT OF SUPERMARKET COMPETITION
CB HILLIER PARKER
1. CB Hillier Parker is part of CB Richard
Ellis, the largest global real estate advisor in the world. In
the UK, CB Hillier Parker advises the public and private sectors
on all aspects of retail agency, investment, planning, development
2. The firm's Planning and Public Sector
Group is closely involved in the planning and development of new
foodstores. The firm has advised most of the major food retailers
on a range of property and planning matters and regularly acts
for a number of retail developers across the UK. CB Hillier Parker
has also acted for more than 250 local planning authorities throughout
England, Scotland and Wales, and advised on the effects of in
excess of 50 new stores or store extensions in the last few years.
3. CB Hillier Parker was responsible for
preparing the research into the Impact of Large Foodstores on
Market Towns and District Centres on behalf of the DETR which
was published in September 1998, and is currently engaged on a
research project into the effects of the sequential approach on
retail development, commissioned by the National Retail Planning
Forum. The results of this research will be published early next
4. Dr Brian Raggett is a Senior Director
of CB Hillier Parker, and is head of the firm's Planning and Public
Sector Group. He is also currently the President of the Royal
Town Planning Institute. Chris Goddard is a Director of CB Hillier
Parker, and is responsible for the firm's retail planning consultancy
advice. He was the principal author of the DETR Market Towns research.
5. The views expressed in this Memorandum
are the personal views of the authors.
6. This evidence focuses on the planning
issues raised by supermarket development.
7. The evidence summarises the growth of
large foodstores and the decline in local independent and co-operative
grocers over the last 30 years, and identifies more recent trends,
including the continued pressure to create larger stores through
store extensions, and the introduction of smaller local "convenience"
foodstores by the major retailers.
8. The evidence reviews the general principles
and specific policies for the planning of new foodstores contained
in Planning Policy Guidance 6, and concludes that the central
thrust of planning policy guidance is not to regulate competition
between retailers or different retail formats, but to focus new
development into the most appropriate locations.
9. Finally, the evidence summarises the
effects of large foodstore development, and the role which such
developments play within town and district centres, and considers
whether there is any case to suggest that the current planning
policy guidance framework for assessing proposals for new or extended
foodstores should be reviewed.
10. The growth of large foodstores and the
main multiple operators are described in our research into the
Impact of Large Foodstores on Market Towns and District Centres.
11. Research undertaken by Verdict quoted
in our Market Towns research shows that the proportion of total
grocery spending attracted by superstores (conventionally taken
to be stores with in excess of 2,500 sq m sales floorspace) increased
from 29.9 per cent in 1987 to 53.7 per cent in 1996. Total grocery
superstore turnover grew from £9,188 million to £34,055
million over this period (in current prices).
12. This growth went hand in hand with the
development of new superstores over this period, incorporating
a wider range and diversity of products (ie fresh meat and fish
counters), catering particularly for those undertaking bulk food
shopping by car.
13. Concurrent with the fall in market share
of independent grocers and the growth of multiples, there has
been a more general decline in the number of outlets. Research
quoted in our Market Towns study indicates that the total number
of grocers fell from 147,000 in 1961 to only 58,070 in 1980. The
number of multiples, co-operatives and independents were all in
decline long before the major period of food superstore development
in the late 80's and early 90's.
14. In terms of absolute numbers, the independents
have witnessed the most closures, falling from 116,000 in 1961
to only 20,900 in 1997. However, there has also been substantial
rationalisation amongst the multiples and Co-ops of their older
smaller stores. This is consistent with analysis undertaken by
Goad, which shows that the number of convenience retailers as
a proportion of total town centre units (as defined by the Goad
Plan) fell from 12 per cent in 1990 to approximately 9 per cent
15. Although store numbers have fallen,
the average size has increased significantly to accommodate a
broader range of products. Our Market Towns study quotes research
suggesting total grocery superstore floorspace increased from
about 1.6 million square metres in 1987 to about 3.6 million square
metres in 1996. Over this period, the proportion of all grocers
outlets accounted for by superstores grew from 24 per cent to
nearly 40 per cent.
16. Modern grocery superstores increasingly
include a wide range of non-food products such as clothing, health
and beauty, housewares and home entertainment. Many include services
such as a pharmacy, opticians, post office, dry cleaners, photo
processing and cash point banking facilities. Improvements to
supply chains have reduced the area needed for storage, and this
has been replaced by more sales space with a wider range of goods.
17. Since the introduction of the 1996 version
of PPG6, the pace of new superstore development has slowed markedly.
This in part reflects the current planning climate, which makes
it more difficult to pursue proposals which do not accord fully
with Government guidance. It also reflects some major retailers
re-appraisal of their trading formats.
18. Retailers like Sainsbury and Tesco in
particular are pursuing smaller store formats. Tesco developed
its Metro format before the publication of PPG6. These typically
locate in urban areas, for example Covent Garden, and cater for
lunchtime and top-up trade, and an affluent, young urban catchment
fuelling the demand for a different type of retail offer from
the conventional family oriented superstore.
19. Outside the conurbations, the Tesco
Compact format, typically comprising stores of 1,400 square metres
sales space has been developed in smaller centres, eg Hook, Princes
Risborough. Sainsbury's has also developed "Country"
and "local" store concepts. After the success of pilot
local stores, such as Fulham Palace Road in London, Sainsbury
recently announced plans to open 200 new convenience stores of
about 300 square metres each, in suburbs, small towns, and public
20. Another illustration of the major retailers
change of focus towards the "convenience" end of the
market is forecourt shopping. The major superstore operators have
secured a significant share of petrol sales, traditionally sited
alongside superstores. However, the development of forecourt food
sales has moved on, to include the development of freestanding
forecourt/convenience stores, eg Tesco Express and joint ventures,
eg Somerfield/Elf, replacing the traditional role of the "corner
21. While attention has focused on the dominant
position of major food retailers like Tesco and Sainsbury, the
last 10 years has also seen the growth of discounters like Aldi,
Lidl and Netto. These have injected significant price competition
in the core convenience goods sector.
22. At the other end of the spectrum, Tesco
has developed its "Extra" format, typically comprising
stores of circa 10,000 square metres, selling a wider range of
goods including clothing, books/records. These stores are akin
to the Sainsbury's "Savacentre" format, and the larger
Asda stores which have traditionally sold a wider range of non-food
goods, eg the "George" clothing range.
23. Notwithstanding the reduced pace of
new superstore development over the last three years, most food
retailers have continued with ambitious store expansion plans.
Tesco, for example, is particularly active at the present time
in pursuing extensions to existing superstores, which are promoted
on the basis of the need to improve congested and over-crowded
conditions in such stores, and/or in order to extend the range
of goods sold, for example to include clothing or other comparison
goods. Most of the other major food retailers are promoting similar
24. While the number of consents granted
for new edge of centre or out of centre large food superstores
has fallen, there is evidence that retailers in partnership with
local planning authorities are continuing to secure opportunities
within town centres, or within existing or as part of proposed
new district centres. However, despite the Government's advice
to encourage such development, practical difficulties and planning
concerns relating to highways and design issues continue to present
obstacles to new foodstore development, and proposals to extend
existing town centre supermarkets.
25. Recognising the key role which large
foodstores can play as an anchor in smaller centres, there seems
to have been a small increase in the number of authorities that
are using their compulsory purchase powers to assemble suitable
sites for large foodstores as part of a regeneration strategy
for their centres. A good example is Eccles.
26. The first version of PPG6 (Major Retail
Development) published in January 1988, afforded limited guidance
as to the role or the preferred location for new foodstores. The
generally "laissez faire" policy approach at that time
provided a clear presumption in favour of new development, unless
it would be likely to cause harm to interests of acknowledged
27. A more substantive version of PPG6 was
published in 1993. This advised that the planning system should
facilitate competition between different types of shopping by
avoiding unnecessary regulation, and stressed the need to secure
a suitable balance between town centre and out of centre retail
28. The guidance acknowledged that retailing
is constantly adapting to changing conditions, and highlighted
the trend towards larger shops to increase efficiency and extend
the range of goods available on one site, offering the potential
to pass on benefits to the consumer in convenience, choice, value
for money and comfort.
29. Acknowledging the difficulties of accommodating
larger stores within centres, the guidance indicated that the
role of large foodstores both in and outside town centres was
well established and understood. This is borne out by looking
at the scale of superstore development which took place prior
to the publication of PPG6. By 1993, superstores accounted for
just under half of total grocery sales, and represented 35 per
cent of total grocery floorspace.
30. The 1993 guidance restated the general
prinicple that it is not the function of the planning system to
preserve existing commercial interests or to inhibit competition
between retailers or between methods of retailing. The guidance
advised that retailing should generally be able to respond to
consumer needs and demands and enjoy the benefits which may flow
from competition provided by new retail developments, (with the
proviso that such competition should not be such as to deny access
to retail facilities for significant sectors of society).
31. As commercial competition as such is
not a land use planning consideration, the guidance stated that
the effects of new retail development on existing individual retailers
would not normally be a relevant factor. Impact considerations
were confined to effects on the vitality and viability of any
nearby town centre as a whole. However, food supermarkets
in smaller towns and district centres are acknowledged as playing
a vital role in maintaining the quality and range of shopping,
and the guidance advised local authorities to consider carefully
the effects of new development on such stores.
32. The current version of PPG6 published
in June 1996 maintains the Government's objectives to secure an
efficient, competitive and innovative retail sector, and ensure
the availability of a wide range of shops and other facilities.
The principal change of emphasis is the objective to focus new
development on existing centres, by the introduction of the sequential
approach, (foreshadowed in PPG13) and deleting the reference to
securing an appropriate balance between town centre and out of
33. Within town centres, the current guidance
gives clear continued support for the important role which large
foodstores perform. It recognises that large foodstores and supermarkets
often play a vital role as the anchor store in maintaining the
quality and range of shopping in smaller towns and district centres,
and are essential for less mobile members of the community. As
the major retailers have developed more efficient distribution
networks, they have been able to reduce the size of store needed
to provide a full range of convenience goods, enabling more flexibility.
34. More qualified support is given to edge
of centre stores. The guidance acknowledges these may be the best
solution in many small centres, particularly in historic towns,
provided the links between the store and the rest of the centre
35. Our market towns research highlighted
the critical importance of linkages and effective integration.
We have suggested that the current guidance should be clarified,
to emphasise the need for effective integration between "edge
of centre" development, and to consider the impact of such
proposals on the economy and environment of the town centre. We
have also highlighted the need for more research into the functional
linkages and relationships between town centres and edge of centre
stores arising out of our current research into the sequential
approach on behalf of the NRPF.
36. The guidance recognises the role of
supermarkets in district centres. It refers to district shopping
centres as "groups of shops, separate from the town centre,
usually containing at least one food supermarket or superstore,
and non-retail services such as banks, building societies and
restaurants". In practice, following the incorporation of
additional services within large modern superstores in many cases,
such stores can legitimately be argued to perform the role of
a district centre in themselves. In commercial terms, of course,
the potential to achieve competition between retailers within
the centre is lost.
37. The guidance qualifies the role of supermarkets
in district and local centres. Local authorities are advised to
encourage "appropriately sized" local supermarkets and
seek to retain post offices and pharmacies. No indication is given
as to what constitutes an "appropriate" size. If the
development can be physically integrated properly within the centre
in question, in our view, there should not normally be grounds
for concern about the impact on other retailers within the same
centre, provided that there is no real risk that the food retailer
will be able to establish a monopoly position.
38. The impact of new foodstores within
town and district centres on neighbouring town, district or local
centres may be a legitimate planning issue. However, there is
little guidance on the circumstances where it is relevant to take
account of the impact of new development in one town centre on
any neighbouring centre(s). This comment applies equally to non-food
39. We consider that current PPG6 correctly
focuses on the location of new development, rather than regulation
of the scale and form of development, (for example, to regulate
the size of foodstores or to reduce competition with other town
centre retailers). We do not consider it is desirable, or practicable,
to use land use planning powers to regulate supermarket operators,
or any other town centre retailers to restrict competition within
40. We have highlighted, particularly in
our Market Towns research, the need to ensure that where new edge
of centre development is promoted, both the physical links and
functional relationship between the new development and existing
centre require careful consideration. A poorly located edge of
centre store is unlikely to offer any benefits to the nearby town
41. Where development is proposed outside
existing centres, the guidance sets out a range of tests, including
requirements as to accessibility, effects on travel and car use,
and the environmental effect. Detailed consideration of these
issues falls outside the scope of this evidence. However, our
Market Towns research demonstrates the vast majority of shoppers
using out of town superstores arrive by car, and that town centre
stores generally attract more shoppers arriving on foot, or by
public transport, and achieve a higher proportion of linked trips.
This analysis clearly supports the continued preference for town
42. Three key tests are applied to proposals
for new and extended foodstores:
Needevidence of a need for
the development is a requirement when seeking a Local Plan allocation,
and, as clarified by the Minister on 11 February 1999, is also
a requirement for the grant of planning permission for proposals
outside existing centres which are not provided for in the Local
Sequential approachthe onus
rests with the applicant to consider central locations for the
proposed development having regard to their suitability, viability
and availability. Recent Ministerial clarifications confirm that
this approach applies equally to store extensions.
impact ie the effect on existing town and district centres.
43. We broadly welcome the Ministerial clarification
that the need test should apply to applications as well as Local
Plan allocations. This addresses an inconsistency in PPG6 as currently
44. The key issue is how need is defined.
The Minister has to date declined to provide further guidance
on what constitutes need, although he has indicated that commercial
demand, or theoretical capacity, do not in themselves, constitute
45. In principle, we concur with the view
that what constitutes need is best left to the local decision
maker. However, we would welcome some clarification. We believe
that qualitative shortcomings in the existing provision, limited
choice, and evidence of significant "leakage" of expenditure
are all indicators of retail need.
46. There may be circumstances where the
imposition of the need test can run counter to the Government's
desire to see competition in the supermarket sector; for example,
where a single operator secures a dominant, in effect, monopoly
position in a small town or District Centre. Provided an existing
retailer meets the "need" as defined, the guidance may
have the effect of inhibiting competitionat least from
any edge of centre or out of centre store.
47. The need test should help prevent the
environmental consequences of wasteful competition; in its simplest
form, developing two stores where only one is required. However,
if the threat of competition is reduced, the guidance should make
it clear that the responsibility rests on local authorities and
retailers in established town centres to continue to invest and
(ii) The Sequential Approach
48. We endorse the principles of the sequential
approach, and the general onus on the developer to consider alternative
sites. However, as PPG6 makes clear, we believe local planning
authorities have a critical role to play in the identification
and assembly of sites of new town centre supermarket development.
In this respect, the current review of the use and effectiveness
of these measures, and how the process can be streamlined is timely.
49. Of all the provisions of the June 1996
version of PPG6, the sequential approach has given rise to the
greatest level of confusion and uncertainty. Our ongoing research
on behalf of the NRPF points to clear inconsistencies in the interpretation
of what constitutes "town centre" and "edge of
centre". While the introduction of the sequential approach
has had an impact on the way both local authorities, developers
and retailers are considering proposals for foodstores, the early
indications from our research for the NRPF are that the approach
is being applied inconsistently.
50. For the most part, those promoting new
food supermarket development appear to acknowledge that the onus
rests on them to demonstrate that they have thoroughly assessed
all potential town centre and edge of centre options. The confusion
arises when deciding which sites should properly be considered
as being "suitable, viable and available within a reasonable
timescale", taking the criteria set down in PPG6.
51. The question of suitability is normally
taken by supermarket operators and developers to mean suitable
for the size of store which they wish to develop. Local authorities,
on the other hand, typically highlight a need for compromise and
flexibility, and, quite reasonably, require the applicant to consider
sites which may be suitable for a smaller development which may
suit some, but not all, food retailers. In our view, the clarification
of the "need test" should go some way to resolving this
issue, by first defining what type of development is needed.
52. The debate on the suitability issue
broadly falls into two different interpretations of the guidance.
The stance taken by developers and retailers is to adopt the "built
form" approach ie, the size of unit required to meet the
retailer's own commerical and operational needs and aspirations.
Local planning authorities generally favour the "range of
goods" interpretation, which considers the extent to which
the proposed development can be broken down into its constituent
parts eg, foods sales, clothing sales, etc.
53. The "built form" approach
enables retailers to set their requirements as the basis for the
sequential approach. Given the dominant position of the major
superstore operators, and their continuing strategy to extend
their offer well beyond their traditional convenience goods function,
if the built form interpretation of the sequential approach is
accepted, it will be seen as offering superstore operators a significant
competitive advantage in the sale of a wide range of non-food
goods over and above traditional specialist town centre retailers.
Our concern is that this interpretation will only encourage retailers
to develop larger less flexible store formats in order to justify
out of centre sites. It must therefore be questionable as to whether
this would be consistent with Government policy to "put town
54. The second aspect of the sequential
approach which gives rise to significant uncertainty is the question
of availability. We do not advocate the interpretation adopted
by some that the suggested alternative site should be immediately
available. However, nor do we consider it is appropriate to oppose
new development on the basis of a more central alternative location
unless there is some realistic prospect for that site coming forward
for the proposed development within a reasonable period of time.
55. We would suggest that what constitutes
a reasonable period of time depends on the urgency of the need
as defined. However, if a local authority intends to rely on an
alternative more central site as a basis for opposing new supermarket
development, we consider that as a minimum, the authority should
be able to demonstrate its in principle support for development
on the site in question. It should also be able to indicate what
support it is prepared to offer in the land assembly process,
using its CPO powers if necessary.
56. The final aspect of the sequential approach
which is causing significant uncertainty and controversy at present
is the way in which it is applied to proposals to extend foodstores.
The Minister has confirmed that the sequential approach applies
to store extensions. Advocates of the "built form" interpretation
of the sequential approach argue that a store extension is indivisible
from the existing store, and therefore the sequential approach
cannot apply to such proposals.
57. We do not support this interpretation.
In circumstances where a supermarket or superstore performs an
important local or district centre function, and an extension
is required in order to meet the specific needs of its catchment,
there is unlikely to be any justification to consider alternative
sites. However, in the case of proposals for significant extensions
to stores, serving an extensive catchment overlapping with nearby
centres, we consider the analysis of alternative sites will be
justified. Many of the current proposals for store extensions
are advanced on the basis of the overcrowding and overtrading
in existing stores. Clearly, the development of a new competing
foodstore, or extension of existing facilities within a nearby
town centre offers an alternative solution to overcrowding in
out of centre superstores, which is likely to be more consistent
with the underlying objectives of PPG6.
58. In circumstances where superstore operators
propose major store extensions in order to extend the range of
goods sold, we consider the same underlying principle should apply.
If the effect of such store extensions is to create retail floorspace
which would not otherwise have been permitted, having regard to
the related tests of need, the sequential approach, and impact,
we do not consider that any distinction should be drawn in policy
terms to store extensions.
59. The relevance of the impact of out of
centre superstore development on established town and district
centres has always been recognised in policy. Our market towns
research was the first major research project to quantify the
effects of such developments, and their consequences for the vitality
and viability of nearby town centres. This suggested wide variations
in the level of impact, and its consequences, in different centres.
60. We consider there is a need to improve
further the consistency and objectivity of retail impact assessments,
for example, by the more extensive use of up to date survey material.
We would also welcome the introduction of compulsory, post-opening
surveys, based on a consistent methodology, to measure objectively
the impact of new stores, and to assist retailers, developers
and local authorities to identify the likely consequences when
planning new developments.
61. There remains a clear need for accurate,
up to date information on floorspace and retail turnover; the
data available at present is wholly inadequate in some cases.
We welcome the efforts of the DETR to assemble reliable data on
floorspace and turnover, although without a comprehensive Census
of Distribution this task presents major practical problems.
62. Leaving aside these practical measures,
we do not consider that there is any justification for reviewing
the Government's Planning Policy Guidance relating to the economic
impact of large foodstores. This has been refined and developed
over time, and is well understood.
63. The final aspect of policy which we
consider warrants clarification is the role which superstores
can and do perform as district centres. Provided stores are well
located relative to the catchment they serve, and are readily
accessible by alternative means of transport, we consider there
is a case for considering designation of such stores as district
centres, (or stores in conjunction with adjoining facilities),
with all the policy consequences that such designation infers
ie "legitimate" protection from out of centre competition
and support for further investment.
64. We consider this support should also
apply to appropriately located new large foodstores where they
offer the potential to create a new district centre which meets
the needs of a particular catchment which is poorly served at
present. Local authorities should be required to consider which
stores or developments do now or could in the future fulfil such
65. We believe that superstores and large
supermarkets perform an important role, which has been consistently
recognised in Planning Policy Guidance. Such stores often provide
one or more of the anchors in smaller town centres, may provide
a catalyst for new development and investment to sustain the quality
of the environment, and can, in their own right or in conjunction
with other stores, provide the nucleus for appropriately located
66. The principal adverse impacts which
have arisen from supermarket development have occurred where inappropriate
development has taken place outside established town centres,
where by nature of its scale and cumulative impact, it has led
to a reduction in economic activity, and prejudiced the potential
for new investment, or led to dis-investment in existing high
67. We consider Planning Policy Guidance
should continue to focus on the key issue of location for new
retail development, as a legitimate land use planning consideration,
rather than to regulate competition between large supermarkets
and other forms of retailing. Where tension exists, it is a consequence
of pressure from superstore operators to extend further the scale
and range of their operations to a point where they are unable
to locate satisfactorily within existing centres.
68. The sequential approach recognises and
applies itself to this tension. It places on the one hand a responsibility
on local authorities to take a positive approach towards identifying
and assembling town centre sites, and on the other, urges retailers
and developers to be flexible about their requirements. There
is evidence that most retailers and developers and their advisors
are heeding this advice.
69. The decision by a number of retailers
to develop smaller town centre stores should be welcomed. We do
not consider there is any legitimate ground to oppose new town
centre supermarket development in planning terms, even if such
regulation was feasible and enforceable.
70. Overall, we consider that PPG6 and subsequent
Ministerial clarifications provide a coherent and relevant policy
basis for considering proposals for the development of new food
supermarkets and superstores, subject to further clarification
on the related issues of store extensions, need, the sequential
approach and the role of district centres.
71. We consider there is justification for
giving more explicit acknowledgement to the role which superstores
can perform as district centres in their own right, provided developments
are well located relative to their catchment, accessible by alternative
means of transport, and consistent in scale with the needs of
72. We recommend that local authorities
should be positively encouraged to use CPO powers so as to regenerate
declining centres and to plan positively for new retail provision.
Councils should, especially in identified Urban Priority Areas,
be afforded assistance by way of additional funding support, perhaps
via an appropriate regeneration "bank", to expedite
the land assembly and the urban regeneration process.
73. As advisers to retailers, developers
and in particular, local authorities, and authors of the DETR
Market Towns research, we are very familiar with the negative
economic and environmental aspects of superstore competition.
However, we consider that a balanced analysis of this issue should
also recognise the vital contribution which such development has
played in many town and district centres, and the role which such
developments should continue to perform provided they take place
in the right location.
Brian Raggett, Senior
Chris Goddard, Director