Strategy​

Our investment strategy is simple. We seek to own and actively manage a leading portfolio of handpicked, high-quality supermarkets which deliver low-risk and growing income returns that are resilient through economic cycles. This is achieved through a focus on omnichannel stores, critical to the operations of the UK’s leading grocers.

The grocery market is changing. The developing online market adds a new dimension to the long established, traditional grocery market. Fulfilment of online orders relies on a network of existing, omnichannel stores. These act as distribution hubs for online business, enable click and collect and also fulfil traditional in-store shopping.

For the operator. The economies of scale resulting from a near doubling in online grocery penetration has halved delivery costs from omnichannel stores. Store picking productivity (pick and pack rates per hour), is approaching equivalence to highly automated centralised fulfilment centres (CFCs). However, the distributed nature of the omnichannel stores means that they are usually far closer to customers than CFCs, resulting in increased delivery efficiency and lower delivery costs. Omnichannel stores facilitate seamless integration across both online and offline sales channels and can adjust capacity rapidly to cater for changing consumer behaviour.

For the customer. Adding online fulfilment to a store also creates a better in-store experience for the customer. Increased turnover (from online) leads to much fresher produce on the shelves. Picking in-store to send for delivery also means there are more staff members on the shop floor to help customers. Omnichannel stores tend to score higher on customer satisfaction surveys. This increase in satisfaction can eventually lead to an increase in physical store sales.

This virtuous circle effect of an omnichannel supermarket is driving the global convergence towards omnichannel being the optimal future model of grocery.

We aim to own supermarkets that we believe will be sustainable as grocery sites for the long term. We characterise these ‘future-proofed supermarkets’ by the following features:

• Aligned with long-term market trends. Predominantly omnichannel supermarkets, operating as both physical stores, online fulfilment centres and offering click and collect.
• Up to Date. Modern, flexible buildings adapted to the omnichannel format, accommodating multiple loading bays, refrigeration units and home delivery vehicles.
• Viable. Large floor areas, capable of housing a full range of goods and providing economies of scale for the operator.
• Reliable. Let to tenants with strong covenants and established positions in the UK grocery sector.
• Strategically located. Situated in population centres close to consumers. Proximity to major road networks allows for efficient stocking of inward goods and distribution of home deliveries. It also offers convenient access for in-store shopping and click and collect.
• Truly Sustainable. Meeting the ESG criteria embedded in our investment decision-making policy.

We target tenanted standing assets – existing stores with a multi-year track record of performance. The investment is thereby income producing from the point of purchase, with the tenant remaining committed to the existing lease terms.

We aim to provide investors with a long-term and secure income stream. We acquire supermarket property with long, inflation linked leases, targeting a portfolio average of 15 years to expiry or first break. The resulting income profile of the assets allows us to target a progressive dividend – we have increased our dividend every year since IPO.