Tuesday, April 25, 2006

Death Of The High Street

Tesco underlined its dominance of the retail sector today by reporting annual profits of £2.21bn - almost 17% higher than a year earlier. It now commands almost 30% of the market and its position seems unassailable.

Six years ago, we moved to a small town on the outskirts of Wigan, and at the time there was a thriving High Street. There were shops of all kinds, including a super-market which housed the local Post Office, but 3 years ago, the super-market closed, Tesco bought the site and put up a mediumn sized super-market in its place. Of course, with the prices that Tesco is able to charge, there was no competition from the high street, and now a third of the shops are closed and boarded up. The local diversity that once existed has been destroyed, and will probably never return.

But it is their tactics that seem very mercenary and preditary. For example, they have bought large tracts of land in prime locations with the sole purpose of stopping rivals and local competitors from getting a foot hold. These "land banks" have recently been criticised by the Office of Fair Trading and is considering taking it to the Competition Commission. In other places, they swamp the area, again, with the objective of killing off any meaningful competition. Aberdeen has four Tesco super stores around it's perimeter, with a couple of Tesco Metro's and Expresses within the city for good measure.

In response to Tesco's "booming" profits today, Friends of the Earth (FoE) said it was "time to put the brakes on the Tesco juggernaut". An FoE campaigner, Sandra Bell, said: "The government and competition authorities must recognise the value of small shops to local communities and create an environment that allows retail choice to flourish."

I'm not against super-markets in principle. They do have a role to play, but I feel that it is dangerous when one company has such a stranglehold in the market, and is openly searching for ways to increase that share. There has to be room for diversity, or we will all be living in Tescoland!


sandegaye said...

As we all here in the US live in 'WallyWorld' (WalMart). Sad, sad, sad.. the end of mom&pop stores everywhere.

Jay said...

I agree with the problem....but I place the solution squarely with the consumers. It's all a matter of how much we are willing to pay for what we want. Many people SAY that they hate the large retail giants and want small local shops....alas, few actually put their wallets where their principles are.