>>THE ISSUES THAT MATTER, FROM THE PEOPLE INVOLVED
Our item on page four may well provide some cheer for those in the convenience sector worried about further incursions by Tesco into their territory. As you will have read in our story, tucked away in its report to the City this week was a short sentence that suggested Tesco was ruling out further acquisitions of c-store chains.
This is a smart move. Having stunned the industry with its deals for T&S and Adminstore, and having got both those acquisitions through the OFT without any competition concerns being raised, Britain’s top retailer is right not to push its luck any further.
In all honesty, it doesn’t really need to do a deal. As its report points out, Tesco already has 546 Express stores in its stable; has converted all the Adminstore units in London; plans to open a further 60 new outlets in the coming year; and expects to convert 26 more T&S stores to the format in the coming six months.
What’s also intriguing is that Tesco this week pledged to retain the One Stop chain, bought as part of the T&S deal, and run it as a “successful convenience format in more than 500 smaller stores”. Many in the convenience sector have speculated for some time that One Stop was being groomed for a future sale. Apparently not.
All in all, that gives Tesco more than 1,000 c-stores. Not bad when you think where it was just a few years ago.
So, to repeat, why would it bother with the hassle of another acquisition in the c-store sector. Especially when such a move would run the risk of finally prompting the OFT, or a new government for that matter, to intervene.
But before rival c-store retailers crack open the Champagne, a few words of warning.
Tesco is clearly excited by convenience - which it says allows four million customers to walk to their local outlet - and is committed to growing its presence in the sector. So you can bet that its organic growth plans will involve many more Express outlets opening around the country in coming years - with or without another deal.
With its deep pockets, Tesco will be able to outbid any independent operator for the best sites as the space race hots up. And given the fact that the average price of a c-store has, by our calculations, already shot up to £490,000, that is clearly not good news for the very many entrepeneurial independents still out there who are just as keen to keep growing their convenience businesses too.
winning the space race