I reckon this saturation is part of a long-term strategy.
Open as many small local shops as you can, run them at a loss for as long as it takes; local shoppers slowly begin to abandon independent shops and start to use the big brand shop instead. This is driven by aggressively competitive pricing, especially effective in a time of austerity and increased poverty. Small independent shops are driven out of business, leaving behind only the big brand guys. Then the myriad big brand shops close, leaving only one or two larger outlets where all local people are now forced to shop for lack of choice.
This was a proven Starbucks strategy, I think.
One of the unlooked for outcomes for Starbucks was that the increased profile of coffee and coffee outlets led to a desire for more choice and more independence, so it went in a circle: Starbucks saturated an area, put local coffee shops out of business, created an increased local demand for good coffee, which triggered the opening of pioneering independents and anti-Starbucks feeling. I wonder if a similar thing will happen with the supermarkets.
Anyway, this current store war between the big retailers seems a bit sudden and rather determined to simply be coincidental. Looks deliberate to me, which means there has to be some kind of strategy behind it.