The converted store’s catchment overlaps with the Extra, which is located in the new store’s primary catchment, although the new store’s catchment is pushed towards the M25 to the east of Slough, where competition is lower.
CACI’s analysis reveals that Tesco can expect considerable cannibalisation from this new opening. It predicts a weekly net impact of £281,000 on the Extra store and £32,000 on Tesco’s Windsor store.
These impacts could drop the Extra out of Tesco’s top 25 ranked stores based on turnover, falling 40 places according to CACI’s estimates.
This may be compensated for by the fact there is sufficient population to enable the new store to possibly be ranked as high as 83rd in the Tesco estate based on potential turnover. Only Tesco knows whether it got a good enough deal on the site for these figures to balance out.
On the positive side, Tesco’s brand has the strongest ‘fit’ to the demographics of the catchment of all of the major multiples (chart below). This may help it to drive a greater share of the catchment than may normally be expected.
However, its decision to buy the site seems all the more curious given it already had dominance in the catchment.
CACI estimates that, before purchasing the new store, Tesco commanded more than 40% of the supermarket spend that comes from its catchment. This reflects the relative weakness of the Co-op superstore brand compared with the strength of Tesco Extra, which was drawing a large number of customers to its store.
With the acquisition of the new store Tesco will have total dominance of the local market.
The chart at the bottom left reveals that Tesco will draw more than 50% of supermarket expenditure found within the shaded area of the map.
Sainsbury remains a considerable distance behind, taking just 17% of local market share, while none of the other multiples takes more than 10% of the catchment.
The Co-operative Group will command just 1% of local supermarket spend. The sale of this site appears to reflect the group’s aim of increasing its focus on the convenience store market within the area.