The knives are out for once mighty supermarket chains Tesco (LSE: TSCO), J Sainsbury (LSE: SBRY) andMorrisons (LSE: MRW).
You already know about falling sales, disillusioned customers, dwindling market share, Aldi and Lidl, Tescos 263m black hole, and the general sense of sectoral decline.
Thesehave taken huge chunks out of the supermarketsshare prices over the last year, withTesco down 53%, Sainsburys down 37% and Morrisons off42%.
The latest woundis a huge increase in business rates from next April, as revised valuations could hike ratesby up to 40%, further squeezing the business model of their out-of-town superstores.
Thats not all. As if the big supermarkets didnt have enough on their plate, they now stand accused of cannibalising their own sales.
The Inconvenient Truth
Convenience stores, once seen as a saviour, are largely to blame, according to a supermarket expansion report from CBRE and Retail Locations. While convenience store sales have grown strongly, this has come at the expense of the supermarkets larger stores.
CBRE says the spread of convenience store openingshasencouraged repetitive top-up shopping that cannibalises main grocery sales and weekly one-stop shops at superstores, changing consumer behaviour.
Autumn Cannibalism
Aldi and Lidls aggressive expansion activity is also partly to blame, naturally. Their store numbers have jumped more than 300% since1998, withtheir market share leaping from 2.1% to 8.3%, according to Kantar Worldpanel.
But CBRE says this doesnt explain the sudden drop in the big supermarkets share of main grocery sales since 2011. Convenience stores and growing online sales, have proved heavily margin diluting.
One problem is that it takes up to 15 convenience stores to generate the sales of one major supermarket, and they only sell a limited range of products, which limits sales.
It also erodes the concept of customer loyalty. The clue is in the name: shoppers simply go to the most convenient.
Eaten Alive
With Sainsburys, M&S Simply Food, Waitrose, Tesco, Morrisons, Asda, Aldi and Lidl all expanding their small format stores, the pressure willonly grow. What some saw as a saviour for the supermarket model, could be quite the reverse.
The big supermarkets wont go down without a fight. Morrisons has just posted a 6.3% drop in like-for-like sales in the third quarter, although markets were happy thatthe pace of decline had slowed.
But survival will be even harder if they continue totake a big bite out of their own growth prospects.
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Harvey does not own shares in any company mentioned. The Motley Fool owns shares in Tesco.
