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.

Fakenham And Sheringham (Consumer No. 43)

Fakenham

Ms French raises concerns about the impact of our new store in Fakenham on other local retailers, including a Budgens' store (which closed before our store opened) and a Co-Op "Rainbow" store that has closed recently. She also claims that we do not offer the high quality and fair trade lines offered by the Co-Op.

The location of our store in Fakenham reflects our interest in being part of a thriving town centre.1 The more reasons there are for people to visit a town the better it is for all retailers – being part of a thriving town centre means that we can attract more customers to our stores and hopefully our stores will attract new customers to the town so that existing retailers also benefit. The vast majority of our new stores are built in or on the edge of town centres and our intention is to bring more choice and a better food offer to customers, increasing the attractiveness of the town as a place to shop.

The closures of the Budgens' and Co-Op stores

The Budgens store in Fakenham closed in September 2005 – long before the opening of our store in July 2006. Our store is located very close to the town centre, providing three hours free parking for customers and town centre shoppers and is an example of our approach of working with the grain of the government's "town centre first" planning policies. We are not aware of any evidence that suggests that Budgens' decision to close was related to our approval for a store, and indeed Budgens continues to trade in Fakenham from its Budgens' Local store less than 400 metres from our store.

Rather than remain empty, the former Budgens store has since reopened as an Argos Extra store – bringing a new and different kind of retail provision to the area. Over a period of time the mix of retailers in any town will change, and this kind of churn of retailers is in no way unusual – in towns with or without a supermarket.

The reason the Co-Op closed seems to be the subject of some dispute between the store and the Council – the Co-Op has cited the Council's refusal to permit a redevelopment, which the Council denies. Ms French notes that the Co-Op is set to reopen as a Lidl – evidence that Fakenham is an attractive investment opportunity for food retailers. As one resident notes:

"The Co-Op that is closing has sold the site to Lidl. They are going to re-build the site and open in 6 months. So perhaps the Co-Op should be targeted for not investing. Lidl can see the future potential why can't the Co-Op (Rainbow)?"2

Ms French's main concern regarding the loss of the Co-Op is that the town will lose a store selling high quality and Fairtrade lines. The Co-Op is indeed recognised for its Fairtrade range but many other retailers, including Tesco, are also increasing their ranges of Fairtrade products. We offer our customers the widest fair-trade range available in the UK, with 137 product lines, including 29 of our own brand. Fairtrade guarantees that developing world farmers are paid a fair price, i.e. one that covers the cost of production plus a premium to be spent on community projects such as better healthcare, sanitation, education or housing.

Sheringham

Ms French comments on our proposed store in Sheringham, expressing concern about its impact on local shops. She feels the town has adequate provision of grocery retail.

Our proposed Sheringham store has received a lot of media coverage, and we have provided a detailed explanation of our proposals on our Talking Tesco website. While we appreciate that Ms French may feel well-served by the existing Co-Op and Budgens stores in the town this is not a view shared by all Sheringham residents:

"there is an army of us out here who want the luxury, nay necessity, of Tesco in town to help get some value from our pound in the availability and purchase of a few basic items, and not have to travel to, at least, Cromer for them."3

As well as the comment cards we received at the public exhibition in July which showed that 69 per cent of attendees were in favour of our proposed store, we have also undertaken two comprehensive telephone studies of over 1,000 residents. While we acknowledge that many people have voiced concerns about the store, in each of these surveys there were more people supportive of our proposals than against. An independent local radio poll also showed that 84 per cent of residents are in favour of the proposal.4

Among those to have supported the new plans is Icarus Hines, who runs a butcher's shop in the town. He has said, "at the moment the town does not have a decent supermarket. The majority of people want the store".5 Mr Hines is well placed to comment since he has another butcher's shop in nearby Cromer, which he runs as a successful business alongside healthy competition from a large Morrisons. His example shows that small, efficient businesses who deliver what customers want can thrive, whether or not there is also a supermarket in the town.

One former resident of Fakenham (who now lives in Sheringham) welcomes our proposal for a new store. He comments:

"From being a dead town on a Saturday, Fakenham is now alive as people enjoy the benefits of the new store."6

Support for our proposals, voiced on many websites and at our July 2006 public exhibition, has come from many residents of the town:

"my weekly grocery bill gets spent outside the town anyway. The local traders can supply my fresh needs but Budgens and Co-Op cannot even come close to offering the range and more importantly the pricing that I require."7

"Tesco's won't spoil Sheringham. It'll bring people like myself back to local shopping and boost local shopkeepers' tills. And definitely save me and loads like me, petrol money and travelling time. It'll create jobs, bring people in from the villages and outlying towns. Especially Saturdays with the market on hand. These people will likely check out the local shops for a better selection of fruit and veg, a better cut of meat, a nick nack or two, or perhaps a special gift."8

"I think the proposals you mention for Sheringham now - July '06 - are all excellent - and should be a great asset to the town - I think the "little shops" will be fine as they were when the market came. PLEASE, PLEASE COME - & Good Luck!"9

Poultry

Ms French also complains about the quality of chicken purchased in our Kent and Isle of Wight stores, suggesting that we bought poultry from 'crooks'.

We are always interested in feedback, and we are sorry to hear about Ms French's concerns regarding our chicken. If it was in any way related to poultry bought at Tesco we will of course investigate and would be grateful for further details.

We do not buy any poultry products (or any product for that matter) from anyone other than professional, approved suppliers. All of our poultry comes from approved sources that comply with Tesco and UK agricultural and technical standards. All of our poultry is Class 1 and is of a consistently high quality.

1 In planning terms it is an “edge-of-centre” location.

2 Comment on the weblog, iandale.blogspot.com.

3 http://www.northnorfolknews.co.uk/cs/forums/764403/ShowPost.aspx

4 513 people responded to a North Norfolk radio poll in 2006, with 429 voting in favour of the store.

5 Tesco submits revised Sheringham plan, The Telegraph, 6 February 2007.

6 http://tescno.blogspot.com/2007/01/welcome-to-sheringham.html

7 http://www.sheringhamtown.co.uk/grocery.htm

8 http://www.at-sheringham.co.uk/issue19/page12.htm

9 Comments received at our public exhibition held in July 2006.