MARKS & Spencer and Aldi serve two extremes of the grocery market – or do they? Business Editor Andy Richardson looks at how supermarkets are ringing the changes.

THE latest idea in supermarket shopping is on its way to the North-East.

If plans are given the go ahead then Darlington will become the first place north of Huddersfield to trial what is known in the trade as the QVRC (quality, value, retail, concept).

In simple terms it sees a discounter - such as Aldi or Lidl - and a premium operator – Marks & Spencer or Waitrose - build stores next door to one another.

The idea, which planners predict is set to become the next big thing in supermarket retailing, aims to give cost-conscious shoppers a single site where they can stock up on basics as well as pick up a few luxury items.

The development is the latest sign of a sea change in supermarket retailing which is seeing the 'Big Four' operators - Tesco, Sainsbury's, Morrisons and Asda - ditch plans for 24-hour megastores, where you can pick up everything from prawns to prescriptions, and react to the growing public appetite for smaller, niche developments.

This month, Tesco cancelled plans to build new branches in Peterlee, Stanley, County Durham, near the Metrocentre in Gateshead and at the seaside town of Amble in Northumberland as it became increasingly nervous about investing in major store developments. In addition, Britain's biggest grocer is closing 49 branches - many of them large stores.

Sainsbury’s is looking to axe 500 head office jobs and cut costs by £500m over three years as part of a strategic review in which the grocer abandoned 40 new supermarket projects as it squares up to competition from Aldi and Lidl and changing shopping habits. It is cooling plans to build a flagship store on the Middlehaven development in Middlesbrough.

The move followed this month's decision by Tesco’s new boss, Dave Lewis, to close its Cheshunt head office, where 3,000 staff are based, and cut the number of store managers. Asda and Morrisons have already shed thousands of staff by trimming management jobs in stores and behind the scenes.

If you aren't convinced that things are changing than consider this: since 2009, seven of the 11 supermarket developments across Durham and the Tees Valley that have been approved or are going through planning have been made by Aldi or Lidl. If you don't have one of their branches near to where you live then the chances are that you soon will.

The discounters are growing their market share. More than half of all British households visited Aldi or Lidl over Christmas, as the German businesses grew by 22.6 per cent and 15.1 per cent respectively to finish the year with market shares of 4.8 per cent and 3.5 per cent. By contrast, sales at Sainsbury's were down 0.7 per cent in the 12 weeks to January 4, which was the best performance of any of the Big Four.

Roman Heine, group managing director of Aldi UK, says: "We keep prices constantly low while keeping product quality consistently high, which is exactly what shoppers want.

"They had become used to thinking you have to pay more for better products. We've shown them this doesn't have to be the case."

Aldi sold caviar for the first time at Christmas, at £9.99 for 20 grammes. It also introduced a super premium range of wines and spirits at less than a quarter of the price of comparable bottles at high-end retailers such as Selfridges.

Lidl sold a whole cooked lobster for £5.99, which would usually cost around £20. It is clear that the days are gone when there was a stigma attached to doing your weekly shop in a discounter.

The major supermarkets are also losing market share to premium players Waitrose and Marks & Spencer, both of which have ambitious plans to open new stores.

The concept of an unofficial partnership between retailers at the two extremes of the grocery trade has been noticed by Chris Newsome, who recently joined property firm Lateral to lead its North-East operations.

Lateral has earmarked a site at Faverdale, in the west end of Darlington, as the ideal location to build what will be the first QVRC development in the North-East. The Northern Echo understands that the aspiration is to build an M&S Simply Food and an Aldi store, as well as a petrol station.

Whereas Tesco, Asda et al have fought tooth-and-nail to beat one another to the most prized locations, the M&S - Aldi tie-up suits both parties because neither regards the other as a direct competitor, and each of them benefits from the other in terms of increased footfall, choice and product range.

Mr Newsome explains: "The likes of Aldi are very happy to sit next to the likes of M&S and vice versa. Both are quality operators but one clearly sells at a discount and one works on a more premium side. It is a fascinating concept that puts the two extremes next to each other.

"They have already done some of these joint developments around the UK - one is being planned for Liverpool - but as yet none are in the North-East. I am convinced there will be one here soon and it would be marvellous if Faverdale was the location. It would be a real coup for Darlington."

Firms like Lateral analyse areas in forensic detail before submitting a planning application. It may surprise you to hear that their research indicates many parts of the North-East are poorly served by supermarkets – at least when compared to the rest of the UK. In Durham and Tees Valley there is an average of 5 sq ft of supermarket space per person, compared to a national average of (WAITING FOR NUMBER) sq ft. Bishop Auckland is the best served with a whopping 12.5 sq feet whereas the lowest averages across this region are in Middlesbrough and Darlington – with about 2.7 sq ft per person.

“There has been so much focus on the South-East in recent years but with the economy now improving the retailers see the North as a growth area," adds Mr Newsome.

"The last year or two has been very difficult for the Big Four. The race for space is over. It's now very much about quality, value and having the right size.

"The consumer has decided that value and having access to a community shop is crucial. It is fascinating how these things change in such a short space of time."

He added: "It would be wrong to say that the Big Four have stopped looking at new developments. We still firmly believe it is the right size and site you will get the right occupier.

"But the Big Four are very concerned about the rise of Lidl and Aldi," said Mr Newsome. "In terms of new developments it's a completely different landscape from five years ago and a very exciting time for the customer.”