Discount supermarkets opened a record number of stores in 2017, but according to new research, a slowdown could be on the cards.
However, they submitted planning applications for 128 new stores, which was a 40 per cent drop from their peak in 2015, when they submitted 205 applications. The lag time from application to new store is around 18 months.
"The data suggests their growth appetite could be starting to wane," said analyst Daniel Ekstein. "Stricter capital allocation would be unsurprising in a context of sharply declining investment returns."
Ekstein said the supermarket price war, which took place following an expansion of supply between 2010 and 2013, could have had an impact on the rate of expansion of the discounters.
In addition, UBS found the Big Four supermarkets may not have to worry about Amazon Fresh, which many speculated could steal sales from established players.
"We do not expect Amazon to have a meaningful impact on UK grocery over the short or medium term," Ekstein said.
"We see the competitive threat as one that plays out more gradually, impacting consumables more than fresh and we do not expect a signifiant roll-out brick and mortar stores. Our geospatial data shows the postcodes where Amazon Fresh has launched has by far the highest competitive incidence crossover with Little Waitrose."