Tesco PLC (LSE:TSCO) and J Sainsbury PLC (LSE:SBRY) are currently enjoying a "supportive environment" from a pace of new discounter store development well below historical averages, according to a new research note from UBS.
Using geospatial data from the UBS 'Evidence Lab' unit, UBS retail analysts observed that industry-wide space growth is running at around 1.0%, significantly below the pre-Covid average of 2.6%.
Discounters Lidl and Aldi continue to expand, but at a multi-year low pace of 1.7% and 2.6% respectively in the third quarter of 2025, both multi-year lows.
UBS pointed out that Aldi plans to open 80 stores over two years, and Lidl recently secured funding for 17 new UK sites, both below historical average store openings.
Cannibalisation within the discounters’ networks has increased to 87% for Aldi and 85% for Lidl, making further expansion more difficult.
Meanwhile, Tesco and Sainsbury’s are holding or improving key consumer metrics. Aldi price-match schemes at both chains now cover around 650 items at Tesco and 800 at Sainsbury’s, supporting customer satisfaction.
Finally, UBS also noted structural tailwinds in online retail could weigh further on discounters’ share.