Tesco accused of being a threat to small shops

Tue, 03 Jan 2006
 
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Supermarket giant, Tesco, went on the defensive after accusations mounted that they are a threat to independent retailers such as corner-shops and newsagents.

They claim that an enquiry into the retail sector by MPs had exaggerated this alleged threat.

The report called ‘The High Street Britain 2015’ warns that food wholesalers and independent newsagents could ‘not expect to survive’ for more than another ten years by which time supermarkets will have squeezed them out of business.

The all party group of MPs who conducted the report found that the grocery sector will be altered dramatically by 2015 if Tesco, Asda, Sainsbury’s and Morrisons were not controlled.

The report was leaked in advance of the outcome of a separate study by the Office of Fair Trading as to whether or not the industry should be investigated by the Competition Commission.

A spokesman for Tesco said the company did not accept what the MPs found. They claim that the Institute of Grocery Distribution carried out their own research which showed that independent shops are surviving as a result of offering franchising schemes or they have become specialist shops. Companies who have done well from franchising are Londis and Spar.

The spokesman said, "There are certainly things in the report that we would not accept. It paints a bleak picture. No business can afford to stand still and not innovate and that's what is needed."

However the 2015 reports counters the above by saying that due to the huge buying power of supermarkets, the is a danger of a ‘collapse’ in the supply chain as independent wholesalers who sell to small stores will not survive. The report warns that the traditional corner shop will disappear affecting the number of people employed in small to medium businesses in Britain. There is also a threat to niche magazines which many supermarkets do not stock.

Supermaket groups have also been slammed for where they locate their stores as they stay away from city centres that are not profitable, so creating a ‘food desert.’ The report says, "This will have a devastating effect on the health of the population’s low earners and the elderly."

Another area of concern is the planning process. Stores will get permission to build if they agree to finance traffic improvements and a council led environment scheme.

The inquiry by the group of employees started last summer with the final report due at the end of this month or early February.

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