Retailers add value for the Nineties

Britain's largest supermarket groups are showing how they intend to adapt to the retail challenge of the 1990s.

If the 1980s were the era of headlong growth in large out-of-town superstores, with large car parks, dry cleaners and creches, the Nineties are about countering the twin threat of stricter planning on superstores and the in-roads made by the discount groups such as Aldi, Netto and Lidl that have invaded from the Continent.

There are more than 1,500 discount store groups in Britain offering a cheap, no-frills service on a limited range of goods. Having started in the Midlands and the North, the big discounters are moving further south and into London.

Although the number of superstores continues to grow - there are 930 compared with only 578 in 1989 - future growth lies elsewhere. In January, Sainsbury's showed one way forward when it diversified further into the DIY market with the £290m acquisition of Texas Homecare. Tesco showed yesterday that its strategy is also working.

Two or three years ago, Tesco was spending about £1bn on new openings, nearly all superstores. This year it will spend £600,000, halfon other formats.

Tesco Metro has proved a success, offering "added value" items such as sandwiches and ready-made meals to office workers. The Express format of a convenience store alongside a petrol station has enjoyed a successful test and will be extended. This is not a wholesale return to the high street but a move to take advantage of opportunities on busy city-centre locations.

In superstores all the big supermarket operators have respondedwith their own budget lines.The message is that if customers want to save money they can.