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Tesco demolishes Co-Op store

News

17th January, 2007

Tesco is bulldozing a Co-Op supermarket in Slough despite being ordered to sell it to a rival by the Office of Fair Trading.

Instead Tesco will replace the store with one that is half the size, thus reducing service to local residents and,  rivals fear, compelling them to shop at the next nearest supermarket - another Tesco's – a little over a mile away and one of the largest in the country. The rest of the land on which the Co-op was built will be developed into a 'retail park'.

Tesco and the other large supermarkets are currently under investigation by the Competition Commission. An initial report is due latter this week. Areas that the report is expected to cover include the stock piling of land to prevent rival development, optioning of land, where a supermarket has the right to the site if a competitor tries to buy it, and acquiring small strips of land to stop others from building on it.

An example of this 'land banking' was raised yesterday when Tesco confirmed that it was in talks to develop unused land it owns in the Norfolk market town of Diss.

Diss is one of three towns in Britain to hold Cittaslow status for its emphasis on good quality, local produce. Campaigners fear that a new 'retail park' will take people away from the town’s local shops and services.

Tesco currently owns £14.2 billion worth of land across the country. It has 550 supermarkets and 700 smaller stores. In 2006 it opened 2 million square feet of space. It has the land for another 145 supermarkets.

To acquire land Tesco will rarely make a direct approach in order to avoid inflating prices. More commonly it forms a shell company that will aim to become the local authority’s favoured developer on a site, thus giving the company leverage over planning in the desired area. Alternatively Tesco will approach a local developer who is well versed in the region’s local politics.

Recently, a former Tesco executive claimed that Tesco also has understandings with property companies to buy sites. It is unclear if these sites or agreements were included in the list submitted to the Competition Commission.

In Slough a Tesco subsidiary Spen Hill instructed the bulldozers to begin work clearing the land despite the fact that the discussions with the OFT were not finished.

Nick Spears from the OFT says that they are "concerned" and "frustrated" with Tesco's actions. He admits that there is not much left to negotiate over in Slough and that the OFT is likely to recommend that Tesco either merges one of its nearby stores or sells it. However he also admits that the chances of this happening are close to nil and that the only course of action then left to the OFT will be to refer Tesco to the Competition Commission, possibly in the same week that it publishes its findings on the company’s anti-competitive practices.

 

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