Talking Tesco: UK Competition Commission

Why are we publishing these comments?

Tesco has been reading with interest the third party comments on the Groceries Market Investigation that the Competition Commission has been publishing on its website. Our formal submissions have addressed many of the issues raised by these comments, particularly those of some of the professional lobbying organisations. However, a number of submissions on the Competition Commission's website contain more specific comments about Tesco which we have not covered in our formal submissions.

Some of these specific comments are inaccurate and misleading, and we are providing a series of short notes in order to put the record straight. In the interests of transparency we are today publishing the first such series of notes.

Stockport

The issues we have had regarding our store in Stockport have been well documented elsewhere. Some customers have raised this issue in submissions to the Commission and we would like to take this opportunity to respond to them.

Working through the complexities of the planning regime is not easy, and we do not always get it right. This was the case in Stockport, which is in no way a typical situation. It is a rare and isolated incident and we have worked with the Council there to find a solution. We publicly apologised for this mistake which we acknowledged to the All-Party Parliamentary Group for Small Shops. We did not lie to the Committee. On the contrary, we were completely frank. We said:

"Perhaps I can explain the Stockport situation, which is something we would not want to repeat. It is a regeneration store and obviously we were keen to get on and do that. The people who were fitting out the store decided that they needed more space, mainly for back room operation, and so therefore built the store bigger than the original planning permission, I do not know quite why, but they did.

When we discovered, we put in an application to get an approval for the bigger size store. It is not an excuse, it was a regeneration store, which obviously is a local partnership, so that we can bring in the long-term unemployed."

The store as built has the same physical appearance in terms of design, height and material used as the one we had permission for. The key issue is that additional storage area, and some additional trading space, was built.* Tesco eventually resolved matters in the interim period by cordoning off and not trading from the extra space, thus providing certainty for our 500 employees and our customers.

Our retrospective application was recently approved.

We regret this course of events. It is not how we wish to operate, or how we normally do.

Benefits Tesco has brought to Stockport

The success of the dot.com business, which was not envisaged at the time of the original application, now means that an additional 45 people are employed at the store, many of whom were recruited under the Regeneration Partnership.

In total, 120 staff, most of whom were previously unemployed, were taken on through the Regeneration Partnership scheme. The Stockport initiative has been one of the most successful. Whilst unemployment in Stockport compares favourably with the national average, there are pockets of deprivation and unemployment and Tesco’s scheme targeted such areas. More than a third of these Regeneration Partnership jobs went to single parents, who can take advantage of the flexible hours and still look after their children.

One fifth of those employed through the scheme were on benefits other than unemployment, 16% were 25 and over and had been unemployed for more than six months and 11% were returning to the labour market. Seven of our employees are on our Options Management Training Programme, five are about to complete the Retail Apprenticeship Scheme and six are ready to start this year.

The regeneration programme is therefore an important feature of our store in Stockport. Through our Regeneration Partnership programme we work with local community groups, agencies such as Jobcentre Plus, colleges, stakeholder groups and local authorities, delivering guaranteed jobs to long term unemployed, single parents, people with disabilities, older people who have been made redundant and young people who have never worked before.

Additional significant physical, social and economic benefits have already been delivered for the Tame Valley and the wider Stockport area. These include:

  • 500 jobs (including the 120 jobs through the Regeneration Partnership)

  • £6.2 million has been spent on improving public transport, pedestrian and road access to the town centre

  • Regeneration of a formerly derelict site

  • Improved food offer and shopping experience supporting lifestyle and healthy eating initiatives

As part of the new application – now approved – we also undertook to provide the following additional benefits:

  • Extended support for a 5 year period for bus routes 380 and 381 (local bus services linking Stockport town centre and supermarkets with Bredbury, Woodley, Greave, Romiley and Brinnington shops)

  • Extending the town centre shuttle service including introducing a new Sunday service and introducing new greener buses with lower emissions

  • New bus interchange and turning area at the store

  • Further improvements to pedestrian links including better safety and security measures

The history of the development

Tesco acquired the existing site towards the end of 2003 together with planning permission from Stockport Metropolitan Borough Council to erect a retail store. The site was in an area in need of regeneration, and the store was incorporated into the Tesco Regeneration Partnership Scheme providing training and creating jobs for long term unemployed people living in the Stockport area. The store opened in November 2004.

During the construction phase it became apparent that, in providing accommodation for on-line shopping and additional storage, the store had been built to a larger specification than that provided for in the original consent. The store’s design had been finalised in 2001, but our Tesco.com business had developed since then such that more space was needed for the store to be a base for Tesco.com operations. We had also constructed approximately 7% more sales area space than we had consent for. We notified council officers of the problem. As is encouraged by Government policy in these circumstances, we submitted an application to ensure compliance. However, acting on advice received from the Council, it was agreed to submit a full retrospective planning application to gain approval for the store as built.

In order to ensure that Tesco was compliant with the permission in force we cordoned-off the 7% additional trading space.

Whilst it is not unusual to apply for retrospective planning permission to accommodate minor changes to the original plans necessary as part of the on-site construction process, Tesco fully accepts that it is not normal to exceed the size of the overall building that has been granted consent.

* We had permission to build a store of 9,430 sq m (gross) with sales area of 6,130 sq m sales area. The store as built was 11,095 sq m (gross), with 6,549 sq m sales area. As we told the Committee when apologising for this mistake, the extra space was therefore mainly for back room operations.