Magazine article Marketing

Amanda Aldridge on Retail: Supermarkets' Local Drive Is Eradicating Choice

Magazine article Marketing

Amanda Aldridge on Retail: Supermarkets' Local Drive Is Eradicating Choice

Article excerpt

You would have had to have been on another planet to miss the news about the incredible results posted by Tesco last month. Annual profits were up 22% to pounds 1.7 bn and the oft-used statistic of British consumers spending pounds 1 in every pounds 8 in a Tesco outlet was trotted out.

There seem to be conflicting views on what this means for consumers.

Many simply may not care. But virtually all of us use supermarkets for our main weekly or fortnightly shop and there is increasing evidence that we also use them as top-up shops in between. It is the impact this has on convenience stores and local communities that forms the basis of the debate to which many of us keep returning.

In her latest book, Shopped: The Shocking Power of British Supermarkets, Joanna Blythman bemoans the rise of the supermarket. She says any sizeable location in the UK can now be described as 'Asdatown, Tescotown or Sainsburytown'. She adds: 'You'll search long and hard for anything approximating to a small greengrocer, fishmonger or butcher. They've all gone bust.'

Blythman's view may seem a touch extreme to some, but for those who agree, to see those same big corporates moving into the convenience store sector - the domain of the localised, independent operator - must prove particularly galling.

This is when the role of the Office of Fair Trading (OFT) is most often called into question. This is especially true of its stance on treating supermarkets and convenience stores as separate market segments.

The Association of Convenience Stores is pushing hard for the two to be considered together to slow the march of multiples into the sector.

It's easy to understand its frustration. While the OFT's deliberations on the Safeway takeover rumbled on for months, Tesco's purchase of 450 TNS stores in 2002 was waved through with the minimum of fuss. It may not have brought Tesco's share of the convenience store sector up to levels to worry the OFT, but it did add 1% to its overall grocery market share.

Not that all the smaller independent players will be complaining. With supermarkets eyeing up the convenience sector, there may never be a better time to sell up. It is what one of my corporate finance colleagues calls a 'frothy market'; a time when vendors can command a premium price. …

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