The Co-operative is to open 54 shops on pub sites over the next two years as it looks to step up expansion of its 2,000-strong convenience store estate.

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Most of the new stores will be built on car parks and other land next to the public houses, with the rest coming from converted pubs to help the mutual grow its estate by 150 in each of the next five years.

The deal involves around a quarter of the 202 pub sites that retail property group NewRiver bought from Wolverhampton-based brewer Marston’s in November for £90 million.

Most of the sites are located in central, eastern and northern England and the first shop is set to open its doors early next year. Each store will be between 3,000 sq ft and 4,500 sq ft, with almost 200,000 sq ft of new retail space set to be developed in total.

Steve Murrells, chief executive of the Co-op’s retail division, said: “Our focus is on convenience stores and a move away from larger stores, as we look to highlight our strengths and consolidate our position as number one in the competitive convenience market.”

Larger players in the food retail market such as Tesco and Sainsbury’s have also been pulling back from an earlier ‘space race’ to focus on smaller convenience stores.

NewRiver is the third-largest owner of shopping malls in the UK by number. Its property portfolio includes Hillstreet Shopping Centre in Middlesbrough and The Forum Shopping Centre near Newcastle.

According to analysts at Liberum, NewRiver’s deal with Co-op will generate around £13 million in development profit, assuming an average rent of £16.25 per sq ft in the 15-year lease agreement.

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