The Times
April 26, 2006
How Tesco will crumble and fallMagnus Linklater
The size and speed of the superstore’s growth may contain the seeds of its destruction
I DON’T KNOW whether Tom Douglas managed to get 1,000 people into the Volunteer Hall last night. He needed that number to mount a convincing protest against the new Tesco superstore, which he is convinced is about to wreck Galashiels. At the last count, he had about 600 lined up, which wasn’t quite enough.
The demonstration he has organised is an eleventh-hour stand and, if it fails, this ancient Borders town will lose its Victorian heritage — the red-sandstoned College of Textiles, with its neo-Classical portico and its fine marbled pillars, the Lochcarron mill, whose old water wheel is the only one still working in the area, the burgh yard, where half a dozen small businesses still operate, the streets that link the town to its industrial past — all to be sacrificed to the onward march of the most powerful retail chain in the land.
For Tesco, Galashiels is little more than a blip on the graph of its soaring profits. The extraordinary expansion of its empire, which yesterday disclosed annual profits of £2.25 billion, will not be deflected by the opposition of one small town. In any event, it has no intention of losing. The land has been bought, the council has given its backing, the planning system is sewn up, and a sophisticated marketing operation has gathered local support among the residents. In the words of Hilaire Belloc: “The stocks were sold, the Press was squared, the Middle Class was quite prepared.” Because Tesco has resources and experience that far outweigh anything its opponents can drum up, it is not often stopped in its tracks.
And yet the Tesco effect, with its all-embracing culture of cheap food and wider choice, poses a greater threat to the economies of local communities than any single commercial development of recent times. Whenever it moves in on small towns, the life-blood is steadily drained from their high streets, small businesses are undermined and the network of local suppliers and traders on which communities depend is broken.
Yet most local authorities lean over backwards to give Tesco the planning approval it needs, believing that the arrival of one of its stores enhances the standing of a town and meets the needs of its residents. Tesco smooths the path by offering small “planning gains” — a new road, a refurbished depot, a car park — in return for development approval. Once installed, however, it is omnivorous.
Over the years it has grown from being a simple, if enormous, grocer, into selling over-the-counter medicines, providing finance and banking services, running post offices and garages, selling clothing and hi-tech equipment, always undercutting the opposition. If there is a vacuum to fill, it will fill it. In Inverness, for instance, it already has three superstores, but that, it seems, is not enough. Tesco has plans for a fourth. Locals have nicknamed the town “Tescopolis”.
Not only is Tesco a property owner of formidable dimensions, it has acquired a databank that allows it to map the profile of its shoppers and predict their needs to an extent that few of them even guess at. Known as Crucible, and operated by a Tesco subsidiary, it collates information on every household, either through its own club card or through swapping information with other consumer groups, such as Sky, Orange and Gillette. It tracks the personality, travel habits and shopping preferences of its customers, actual and prospective. It can offer a profile of their lifestyle, which charity they support, whether they are occasional or habitual shoppers and even how ecofriendly they are.
This will position it well for its next big move — into the healthcare world. It sees the White Paper on health services, with its proposals for “surgery in the community”, as offering a new area for expansion. This time, it is the Government rather than local councils that is offering encouragement. Patricia Hewitt, the Health Secretary, believes that retailers such as Tesco and Boots could run GP surgeries, thus taking the pressure off hospitals. Because the stores are open late at night, patients would be able to see a doctor without taking time off work. They have space to house surgeries; they could even employ their own doctors and nurses; and of course they already have in-store pharmacies. What this would do to local GP practices remains to be seen.
All this suggests that Tesco is unstoppable. And yet, like the alien invader in The War of the Worlds, its very size and the speed of its expansion may contain the seeds of its own demise. Consumers do not, in the end, take kindly to an overweening monopoly, especially when it squeezes out competition and dictates its own terms. In towns that face the massive intrusion of new superstores, opposition is mounting. A network of websites offers hostile evidence about Tesco’s tactics, its methods and its ambitions.
Aware of this mounting criticism, giants such as Wal-Mart in America have begun shoring up their defences — they are training rival businesses to offer greater competition; in Britain, Asda, Wal-Mart’s subsidiary, intends to offer loyalty cards that encourage customers to shop at other local stores. This may sound a bit like the mugger who offers his victim a course in self-defence, but it is evidence that these retailers at least are aware of the danger of unfettered expansion.
Tesco is a formidable enterprise. But if it continues to ride roughshod over all opposition, to stifle competition, and to ignore the sensitivities of long-established communities, then, like so many imperial dynasties of the past, it too will crumble and fall.
