*** Tesco Swingers Club ***

The Sunday Times December 31, 2006


Tesco in ‘mind-boggling’ grab for shop space
Jenny Davey



TESCO snapped up half of all the new shopping space in Britain this year once store closures were taken into account, according to data obtained by The Sunday Times.
Richard Hyman, the leading retail analyst who carried out the research, described the statistic as “mind-boggling”.



Verdict Research, the company he chairs, calculates that Tesco opened 2m sq ft of space this year — more than the Bluewater shopping centre in Kent — equivalent to half of the 4m sq ft net increase in shopping space opened in 2006.

The revelation is likely to spark renewed controversy about Tesco’s increasing dominance in the retail sector as the Competition Commission prepares to unveil next month its initial thoughts on its latest probe into supermarket retailing.

Sandra Bell, supermarkets campaigner at Friends of the Earth, said: “Here is another indication of the extent to which Tesco is taking over our towns and cities. If the company is allowed to carry on expanding in this way unchecked, independent shops, suppliers and customers will all suffer. The only choice we will have is Tesco in-town, Tesco edge-of-town or Tesco out-of-town.”

Analysts at Planet Retail estimate that Tesco finished 2006 with 21.6% of the grocery market — well ahead of rivals J Sainsbury and Asda, which were expected to account for 11.8% and 10.1% respectively.

A spokesman for Asda said news of Tesco’s success added further fuel to its calls for an overhaul of the planning system to take better account of competition in a local area. “The rules as they stand at the moment are not working in favour of competition. If you are dominant in a local market there is nothing to stop you becoming more dominant,” the spokesman said.

Tesco’s rivals have ganged up on the market leader in their submissions to the Competition Commission. Sainsbury told the watchdog that Tesco could account for more than 40% of all grocery shopping within four years unless the planning laws were rewritten to rein in the country’s biggest grocer.

Speculation is growing that the Competition Commission may suggest adding in a “competition test” to planning regulations.

Tesco successfully opened more space this year than it has done for at least five years. Its biggest previous haul in recent years was in 2003-4 when it opened 1.8m sq ft of new space. Tesco said more than 650,000 sq ft of the 2m sq ft of new space this year was from extensions to existing stores.

A Tesco spokesman said: “Tesco has been successful in acquiring new space because of its flexible and innovative approach to store development and willingness to invest in locations ignored by others such as town centres or deprived areas.”

The spokesman sought to play down the significance of Verdict’s findings and insisted it was not a good indicator of available retail space because it did not include existing retail space that had closed but was available to other retailers for redevelopment.

Hyman robustly defended his statistics. “Our floorspace figures are meant to represent floorspace that is open for business, not floorspace that might theoretically be open for trading but isn’t.”

He insisted, though, that Tesco’s performance should be celebrated, not criticised.

“There is a political-correctness bandwagon that has it in for Tesco, which is utterly pathetic. Why should we crucify a company for being bloody good? It isn’t Tesco’s fault that other retailers aren’t as good as it is. Tesco’s biggest challenge is how to justify its success.

“Tesco has been one of the biggest single contributors to lowering inflation in the UK. But there is an absolutely asinine idea that you can clip its wings without diluting the outstandingly positive impact it has on the consumer economy,” said Hyman.

This month, in the face of the growing consumer backlash, Tesco sought to dispel fears that it was becoming too powerful by publishing its response to concerns voiced by shoppers, MPs, suppliers and rivals on a website called “Talking Tesco”.