Expansion will create up to 500 jobs

The group, which was bought by Sainsbury's for £22m in Feburary and opened its first rebranded shop in Peterlee, County Durham, yesterday, plans to expand from 54 stores to 80 by the end of next year.

The new stores will be concencentrated in the north of the region, in County Durham and Tyneside, where Bells has fewer outlets.

All Bells Stores will be rebranded to Sainsbury's at Bells Stores by next year, and will stock more than 500 of the supermarket's brands, as well as keeping many of its own offers and goods.

Fresh fruit, vegetables and chilled foods will be supplied by Sainsbury's, as well as bread and milk, which will keep prices low on those items.

David Graham, managing director, said the group did not yet know exactly how much the rebranding exercise would cost.

Bells, based in East Cleveland, employs more than 1,000 people in the region, and is expected to increase its workforce by more than 50 per cent.

The 2,200sq ft Peterlee store is the first Bells shop to receive Sainsbury's own-label products. The range will help to maintain Bells Stores' strengths in news, alcohol and impulse buys.

Steven Bell, chief executive of Bells Stores, said: "Hundreds of prices have been cut, which will increase our ability to provide our customers across the North-East with high-quality products and excellent prices on key items across the store."

The Peterlee store has been given a new layout, with 15 metres of chill cabinets together with new lighting and flooring. The orange and blue facia incorporating the Sainsbury's at Bells Stores logo completes the new look.

The next Bells store in line for the Sainsbury's treatment is Bishopsgarth, in Stockton.

Justin King, chief executive of Sainsbury's, said: "This is an important step in developing our presence in the convenience store sector.

"This is the start of making Sainsbury's products accessible to more customers via neighbourhood stores."