UK RETAIL FOOD: We initiate coverage of the UK Food Retailers with a negative stance on the sector. We see few opportunities within a group that has historically misallocated capital, is faced with extreme competitive pressures and operates in a very low-growth environment. We initiate with Underperform ratings on Tesco (TP 169p) and Sainsbury (TP 219p) and a Neutral rating on Morrisons (TP 176p) and a Outperform rating on Ocado (TP 466p). Beside Aldi and Lidl that are disruptive and powerful, we see other competitors are nibbling (and chomping) away as well with Tesco and Morrisons have borne the brunt of rising competition. The weak operating environment could force consolidation within the industry, as we have seen in previous times of stress. In addition to the listed companies, The Co-operative (5.0% market share) and Iceland (2.2% market share) are large enough to matter.