Tesco and the Co-op maintain the largest store networks, but discounters are showing the fastest growth.

RankRetailerStore countRate of change
1 Tesco 3,590 +32
2 The Co-op 2,774 -28
3 Arcadia 2,766 -268
4 Boots 2,509 -2
5 Sainsbury’s Argos 2,273 +54
6 Lloyds Pharmacy 1,545 -2
7 AS Watson 1,425 +29
8 McColl’s  1,375 +23
9 WHSmith 1,193 +5
10 Dixons Carphone  1,042 -111
11 M&S 979 +65
12 Iceland 884 +20
13 Card Factory 865 +51
14 Poundland 843 +296
15 Kingfisher 812 +25
16 JD Sports 738 +100
17 Holland & Barrett 715 +21
18 Aldi 689 +65
19 Lidl 674 +21
20 Asda 637 +8
21 New Look 592 +17
22 Sport Direct 541 -15
23 Clarks 539 -10
24 Next 538 -2
25 Morrisons 491 -7
26 Halfords 479 +7
27 Home Bargains 448 +40
28 Pets at Home 442 +15
29 Carpetright 426 -9
30 Wilko 398 +15

Physical stores seem to have become less relevant as retail spend continues to shift online.

A mix of business rates, the apprenticeship levy, the national living wage and economic uncertainty has also made many retailers think twice about the size of their domestic store networks.

However, Retail Week’s ranking of the UK retailers with the largest store networks shows that there are still plenty of retailers for which stores form a central part of their business model.

Store networks remain robust among leading retailers

The top 10 all operate over 1,000 stores, while 24 retailers have a store count of over 500.

Two-thirds of the retailers across the top 30 have expanded their store network in the most recent financial year – despite well-publicised threats such as increased business rates.

Rumours that the business rates hike will be lower than originally expected in the autumn Budget will be welcomed by retailers, but spiralling rental and staff costs are still a cause for concern.

Tesco comfortably leads the pack and is the only retailer in the top four whose store count grew in its most recent financial year.

Most of the grocers in the list – namely Sainsbury’s Argos, Iceland and Asda – are also continuing to expand their presence, although the number of store openings have been reduced in recent years as many grocers are focusing on improving the performance of their existing network.

Discounters continue aggressive expansion

Aldi and Lidl are continuing to forge ahead, with economic uncertainty and entrenched demand for discounters ensuring a steady stream of footfall.

Similarly, discounters outside the grocery sector including Card Factory, Home Bargains and Poundland have also bolstered their networks. The latter grew its network by 296 stores in its most recent financial year, which was supported by the acquisition of its discount rival 99p Stores.

These retailers have lower operating costs and primarily trade through cheaper locations, which helps to justify such expansive networks.

The likes of Aldi and Lidl also place a strong emphasis on staff training and development to bolster efficiency, meaning rising wages and the apprenticeship levy might have a more limited effect on their expansion plans.

Store cuts

Not all retailers in this ranking are in expansionist mode though, and the size of store networks have come under the spotlight for a variety of reasons.

Arcadia’s 10% drop in its store count in 2015/16 was largely down to the sale of the ill-fated BHS business.

Dixons Carphone’s store count fell by a similar rate, reflecting the rollout of its 3-in-1 store format in favour of stores under a single fascia.

Meanwhile, Sports Direct recently announced it was slashing its Debenhams concessions network in half, while its UK store network fell by 15 outlets last year as it closed smaller stores in favour of larger flagships.

Not yet reflected in this ranking are Lloyds Pharmacy’s plans to shutter 190 stores as its battles with falling prescription reimbursement levels and increased business costs.

Given the current climate, it would not be surprising for more retailers of this scale to start shedding stores.

Altering store strategy can help protect margins

For many retailers stores remain central to their proposition, but they are now under increasing pressure to adapt their strategies to manage their costs and sustain profitability.

Some retailers are looking to in-store automation to help manage the growing burden of maintaining a large physical presence by reducing staff costs.

Others are changing the way they work or have turned to partnerships with other retailers to better utilise their excess space. Initiatives such as the Game concessions in WHSmith stores show that this is not restricted to the grocery sector.

Either way, to thrive in the omnichannel era retailers will need to remain flexible about the role of the store and how their physical presence can best serve their customers.

Methodology

This ranking excludes buying groups, franchised formats and opticians. Outlets cover both standalone stores and concessions. All store counts relate to the 2016/17 financial year where possible.

  • Halfords includes Republic of Ireland stores.
  • Figures for Arcadia Group, Boots, Lloyds Pharmacy, McColl’s, Poundland and Holland & Barrett relate to the 2015/16 financial year.