Sainsbury’s is in negotiations with suppliers over the future of nearly 250 in-store locations being vacated by the ill-fated Lloyds Pharmacy chain.

The company announced in January it was closing all 237 of its outlets in Sainsbury’s supermarkets by the end of the year, in response to “changing market conditions”.

The Grocer understands suppliers have been contacted by Sainsbury’s as part of a move to use the space and attract investment as it negotiates CPI requests in the cost of living crisis.

One source said: “Sainsbury’s has been speaking to suppliers asking them what they would do with this space in store, in return for the investment of six-figure sums.”

It is believed the move is part of a strategy billed as Food First 2.0, the latest incarnation of plans revealed by CEO Simon Roberts in 2020 to give suppliers a “key say” in its food first proposition.

Suppliers have been challenged to provide ideas for innovation and store layouts. This last year saw the supermarket roll out a beauty hall format in more stores, improve layout of fresh ranges, improve bakeries and increase its offer of world foods.

One supplier familiar with the latest negotiations said Sainsbury’s also hoped to use the excess space being created by the departure of the pharmacies as a bargaining tool to negotiate with suppliers on price.

“Food First 2.20 is effectively an ask for money, in the form of a cost price reduction, in return for increased distribution and listings.

“One of the carrots is extra space, which obviously comes from the Lloyds deletion.”

It is believed the use of the pharmacy space may differ from store to store.

Sainsbury’s request for investment from suppliers is the latest since Roberts introduced the food first strategy. In 2021, The Grocer revealed all major suppliers were contacted by the retailer as Sainsbury’s looked to rationalise and reduce prices.

However, like other supermarkets, its moves to EDLP to try to compete with the discounters has been made more difficult by the cost of living crisis.

Lloyds entered the hands of private equity firm Aurelius last year, having bought Sainsbury’s 280-store pharmacy chain in 2015 for £125m with 2,500 transferring to its business.

The group said it was making the closures – which are thought to affect about 2,000 jobs – “in response to changing market conditions”, adding it was “currently exploring options for each individual branch”.

It has since put all its high street stores up for sale.

Sainsbury’s declined to comment.