In an increasingly aggressive battle for market share, big-name stores are squeezing independents hard, writes Ben Bentley.

The Tesco Extra supermarket in Shrewsbury

There is a war going on along the aisles. And it’s being fought with lipstick, powder and paint.

Non-food items such as cosmetics, DIY and electrical equipment on supermarket shelves have become a reality as stores increasingly become one-stop shops, or are even considered to be a whole high street under a single roof.

And as supermarkets try to outdo one another and boost profits at what is currently an economically tricky time, Tesco Extra in Battlefield, Shrewsbury, has recently admitted to inadvertently having had more than its fair share of floor space given over to non-food items, which might include products such as leisure goods and cosmetics. At least, more floor space than it originally agreed to on its planning application.

The chain has had to apply to vary a condition of its planning permission to allow it to stock 152 square metres more so-called “comparison goods” – including clothing, DIY, household and recreational goods – after admitting the blunder.

But the case begs the question: are supermarkets boosting their sales and maximising their floor space in non-food areas because this is an area that yields greater margins? And are we going to see still more space given over to non-food goods, thus potentially affecting trade still further in already hard-hit town centres?

Paul Delves, managing director of independent family run supermarket Harry Tuffins which has numerous outlets in Shropshire and Mid Wales, says: “Some supermarkets are increasing non-food because there’s more margin.

“It only applies to new applications and they have to submit a retail assessment survey to say it’s only going to be say 10 per cent of space for non-food, but when it turns up it’s different and it puts half the other businesses out of business.”

“It’s exploiting planning rules. They use all sorts of tricks to get in and once they are in that’s it. The council love them because they put in things like new roads.”

And the race for space is only going to get worse. According to a recent report, appropriately called How Much Space?, non-food expansion is now the main driver of demand for more supermarket space.

Figures published by UK-based retail organisation BCSC, which predicts retail development, indicated that the proportion of non-food space in super- and hypermarkets will increase to 25 per cent by 2015 – up from 21 per cent in 2005 and 12 per cent in 1999 – driving demand for a dramatic increase in additional floorspace which would not be justifiable based on food sales alone.

Report author, Dr Neil Blake says: “The increase in super- and hypermarket floorspace over the past 20 years has been entirely due to the increase in non-food sales and the trend for grocers to give over an ever bigger share of their floorspace to non-food sales. This is unlikely to abate.”

Ultimately, because the proportions of floor space allocated to food and non-food are specified and agreed upon on planning applications, the issue of enforcement is necessarily one for the planning authorities which have power to take action against supermarkets that overstep the mark.

Stuart Thomas, head of planning for Shropshire Council, explains: “Each application coming forward has to assess retail impact for a particular type of store in a particular area and whether it would have an impact on the town centre.

“It might conclude that ‘x’ amount of floor space is for food and ‘x’ amount is for non-food.

“There are no hard-and-fast rules but there is guidance for planners to broadly use so that town centres are not adversely affected.”

Factors governing how much non-food space can be given over might depend on whether similar stores already exist nearby.

Stuart adds: “A retail impact assessment is conducted by the applicant and the authority tests it, analyses it and says ‘Yes we agree with this recommendation’ or “No, we take a different view’.”

Permission is granted or the supermarket can seek variation, but as Stuart says, “It’s a moveable feast. You might have a particular set of economic circumstances and those might change.”

Ultimately, however, supermarkets can be made to stick to their originally agreed levels of floor space assigned to food and non-food goods.

Stuart adds: “We have enforcement officers and teams and we have to look into deciding if enforcement action is required, but it’s open for the store to submit an amended application.

“And depending on the outcome of that the authority evaluates the next step.”