Save our Sheringham - Say NO to Tesco

Tuesday, January 16, 2007

Is there a limit to Tesco's horizons?

Britain's biggest retailer owns enough land for another 175 superstores, but the Competition Commission is about to step in, writes Nick Mathiason in the Observer.
With revenues of £43bn and profits of £2.5bn, Tesco has a war chest to fund land acquisitions that is the envy of the corporate world. More than anything, land is key to creating a retail giant - without stores, there is no business. So it ought not to be surprising that the country's most powerful retailer is also among Britain's most powerful real estate companies; its portfolio is conservatively valued at £14.2bn.
Tesco has 550 supermarkets and 700 smaller stores. Last year it opened another two million square feet of space, half of all new shopping in Britain, and has a landbank that could add 145 supermarkets. Tesco's control of Britain's grocery market could rise from 30.4 per cent today to 40 per cent in five years.
A former Tesco executive says the company will also have arm's length understandings with property companies to buy sites. This is significant because it is unclear if these agreements are included in the list of sites Tesco has admitted to the Competition Commission it has an interest in. The 145 potential sites could be even more.
The way Tesco plays the planning system has attracted much attention over the past 18 months. With its army of legal advisers, it can wear down cash-strapped local authorities which lack both the finance and personnel to battle against repeated appeals. On occasion, Tesco has built larger stores than councils allowed, then retrospectively applied for new permissions, and the company has faced 'conflict of interests' allegations. These involve planning consultancies, which have worked for the supermarket giant, being commissioned by councils to undertake independent retail impact assessments to determine whether Tesco stores should be built.
There are no suggestions Tesco or the consultants have done anything illegal but campaigners claim that these incidents appear to show the supermarket is 'trampling' over planning law. One of Britain's most respected property tycoons said: 'It has just pushed the boundaries as far as they can go.'
Its size also means it is a more efficient use of capital for Tesco to own strategic sites than allow rivals to compete against it