Tesco has granted the independent c-store sector a buyout reprieve - by appearing to rule out more acquisitions.
Britain’s biggest retailer, which had previously shaken the industry with a series of acquisitions including 45 Adminstore outlets last year and its January 2003 buyout of 1,215-store T&S, made the revelation this week as it delivered a record breaking full-year group profit of more than £2bn.
Buried deep in the report, the retailer said the expansion of its Express empire, currently 546 stores, would now be “mainly through organic growth”.
However, cynics claimed the move was nothing but a smokescreen with which to keep the OFT and competition authorities happy. Tesco, which plans to open 20 new Extra hypermarkets a year, declined to elaborate.
James Lowman, public affairs and communications manager for the Association of Convenience Stores, said: “Tesco’s statement is at odds with its stated ambitions to have 1,000 c-stores.
“But I believe they at least now recognise that, despite the government’s inaction so far, it cannot go on buying up rival stores forever. However, it would be pretty naive to take this statement at face value.”
Ben Pinnington, spokesman for the Forum of Private Business, said: “We don’t believe them and would be highly sceptical about this claim. What we really want to see is the OFT finally step up to the plate. It should be a tiger in dealing with Tesco, not a pussycat, and this is just a cynical move to placate the OFT.”
Alan Toft, director general of the Federation of Wholesale Distributors, claimed Tesco’s announcement showed that it was finally feeling the pinch from the lobby group.
“I do believe Tesco on this,” said Toft. “It is a gesture from Sir Terry Leahy that recognises the power of the lobby. It has had to give a signal to the OFT that it recognises that the backlash from the public and wholesalers is reaching a crescendo that can no longer be ignored.”
However, one analyst claimed: “This just seems to be an attempt to keep everyone sweet for the time being, but I have little doubt that it will go after further acquisition targets if the right ones come along.”
Meanwhile, the Association of Convenience Stores is laying the groundwork to discover the true impact of Tesco Express on local traders and the community.
It is currently concentrating on the May 31 deadline given by the OFT for the convenience sector to provide evidence against the supermarkets code of practice, but said that it should be in a position to commission research by May.
Simon Mowbray