As a steady stream of job losses plagues the rest of the retail sector, supermarkets have spread rare cheer in recent weeks with the creation of about 30,000 jobs. Anna Blackaby looks at why the sector is so upbeat.
Supermarket chain Asda said last week that it would create 7,000 jobs this year with the opening of 14 new stores, including a new site at Chelmsley Wood.
Despite its slowing sales figures, Tesco has also announced that it will add up to 10,000 jobs over the next financial year while J Sainsbury, which had record Christmas sales last year, announced the addition of 5,000 jobs in a recent trading update.
Discount supermarket Aldi is set to plough £30 million into new Midlands stores with its plans to open at least four new sites in the region next year, creating 120 jobs. It has also revealed longer-term plans to double the number of stores in the Birmingham area while Wm Morrison is adding 5,000 new jobs across the United Kingdom.
The expansionary mood in the supermarket sector contrasts sharply with that in other parts of the retail sector which faces one of its gloomiest periods in recent memory, with names such as Woolworths and Zavvi disappearing.
Looking for reasons why the sector is still buoyant, analysts have pointed to the fact that food is an essential purchase, even in a recession, while people are cutting back on the perceived luxury of eating out. Retail analyst Jonathan Pritchard, partner at Oriel Securities, also said the bullishness of the supermarkets was down to the more long-term nature of expansion plans in the sector, which are not readily derailed by the recession.
“They are still growing profits and sales, expanding their businesses and they have got long-term space-opening plans,” he said.
“Whilst they may be reining these plans back in tough times a little and accelerating them in better times, they still keep on going with their expansion as it takes anything between two and 12 years to get a site.”
Many of the new openings planned by the big names are in the non-food area, such as Asda’s five newly-announced Asda Living stores selling furniture and homeware. Freddie George, retail analyst at Seymour Pierce, said new store openings would increase competition in the sector, having a knock-on effect on stores and smaller grocers in the area.
He added: “They are opening up new space and also adding convenience stores and non-food stores. What’s happening is there is a lot more competition in the sector. The independents are being clobbered and there is also a ripple effect - supermarkets down the road from where the new one is opened will see an effect on their sales.”