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.

Slough Borough Council and Consumer No.34

The Strategic Director of the Green and Built Environment Department of Slough has written a letter to the Competition Commission referring to the general concerns and views expressed by some members of Slough Council, residents and retailers regarding the impact of some major supermarket operators in the Slough area. A resident of Slough (Consumer No.34) has also expressed their views about retailing in Slough in a letter to the Commission. We would like to address these concerns below.

There was some concern that the retail sector in Slough is struggling, especially non-food retailers and they were concerned about declining use of the town centre. They also described the detrimental effect of free Tesco parking on Council run car parks in the town centre.

During the process of applying for planning permission for our replacement store in Slough, we worked with the Council and went to considerable lengths to ensure that people could make linked trips to the town centre i.e. when they shop at Tesco they also visit the town centre. When we opened the Extra on Wellington Road, we built a footbridge to the town centre and offered three hours’ free parking to encourage shoppers to visit the High Street. Our customers tell us that the free parking has resulted in many people using the car park to make trips to the town centre. Customers are really impressed with the Tesco offer and are choosing to shop with us. This is the very nature of competition. We recognise that if we do not maintain our high standards of service and quality customers will choose to shop elsewhere.

Overall the vast majority of Slough residents are very satisfied with their shopping experience.

Competition is working and customers are voting with their feet. It is true that Slough has been through a difficult period of urban decline, but following our development the future of Slough looks good. The Council are shortly to invest £4m in rejuvenating the town centre and British Land have some significant development plans for the town. We are redeveloping the Uxbridge Road site and including a new grocery store which we are intending to dispose to another retailer. We also hope that we can continue to provide our customers with a great shopping experience in our stores.

Slough Borough Council acknowledged that they had not carried out any formal consultation with residents in Slough regarding Tesco’s presence, but claim that they were aware of a range of views.

We are glad that the Council has made clear its lack of consultation with residents on this subject. Since we were aware of some concerns we commissioned a resident survey in Slough to establish the facts.

The survey was conducted by Marketing Sciences using telephone interviews and asked the views of 338 residents of Slough. 94% of the people we questioned were satisfied with their overall experience of grocery shopping. 88% are also happy with the choice and variety of food stores in Slough. We also asked residents if they thought shopping for Halal products had improved since the butcher opened alongside our store. 69% of those who shopped for Halal products believed that it had improved and 72% were happy with the butcher located with our store.

We understand that some people have expressed concerns about local choice, with particular reference to Halal butchers, and how it may have been affected by our store on Wellington road. The letter from the Strategic Director of the Green and Built Environment also alleged that our store represented a third of the total convenience store space in Slough.

There is keen competition in grocery retailing in the Slough area. In addition to our own Extra store on Wellington Street, Sainsburys, Asda, Lidl, Iceland, Somerfield and Marks & Spencer have stores in the Slough area, and Waitrose has a large store in nearby Windsor. There are also many smaller grocery retailers easily accessible to shoppers in Slough.

Rather than build a store on the edge of town we worked with the council to develop our existing town centre site. The store was designed in accordance with the planning guidance given in PPS6 aimed at promoting the development of town centres. Whilst a significant proportion of this store is used for non-food retail, the remainder represents much less than a third of the total convenience floorspace in Slough.

The Halal butcher operates as a concession in our store. He does not open 24 hours and does not trade at all on Sunday. Customers say they really value the service offered by the butcher – he is the only Halal butcher that offers fresh organic meat locally. There is plenty of local competition with a further seven Halal butchers trading within three miles of the store. One of these opened in the last few months.

The success of our stores in Slough is a reflection of our success in the market place generally. We do all we can to find out what our customers expect from us in their grocery shopping and then work hard to satisfy our customers’ wishes in all their variety. Product range and quality, store amenities and service as well as price are all important dimensions of our offer to customers and important dimensions of competition between ourselves and other grocery retailers in the area.

There has been some suggestion that because we already had a store on Wellington road and were applying for an extension it was more difficult for the Planners to oppose.

All retailers operate under the same set of transparent planning policies and regulations, which focus investment towards town centres. The government’s policy guidance (Planning Policy Statement 6, or PPS6) applies the same rigorous planning criteria to extensions as it does to newly built stores unless the extension is under 200 sq metres . Extending or replacing superstores to our Extra format (in this case it was a replacement store) therefore requires us to undergo exactly the same process in order to gain planning consent, so the fact that we were building a replacement store rather than a store on a new site made no difference to the process.

The submissions referred to our East Langley Express store. There is a concern that the store is too small for our operations.

Our East Langley Express store on Parlaunt Road is extremely popular with customers. They like the range and service we provide, and value the convenience of the store. Most of our customers live locally and appreciate the improved choice and quality we have brought to the area. The store has become so popular, with nearly twice as many customers, following conversion from a T&S “One Stop” that we are struggling to cope due to size restrictions in the back area of the store. We have worked hard to resolve this problem and have regularly met with local residents and the council to hear their views and work towards a solution. We have now changed the way we manage deliveries and tidied up the back area of the store. We also have plans for a new loading bay to take deliveries around the front of the store, which the Council has agreed to and residents are delighted with. At a recent public meeting the residents and Council thanked us for listening and responding to their concerns.

The former Co-Op site which we own was also mentioned.

We understand that the empty former Co-op store is a concern for the residents of Slough. We are pleased therefore to be able to confirm that we will shortly be developing the site. The development will among other things contain a grocery retailing unit, and this will be sold with OFT approval to another grocery retailer.

Regarding the specific accusation, Consumer No.34 mentioned a ‘For Sale’ sign erected on the site and was concerned that the telephone number on the site was invalid. We have not erected any such sign, but previously a sign was erected (without our knowledge) by a third party. We contacted the listed telephone number and having spoken to the person it was subsequently cut off and the sign was removed.