In August 2003, the retailer made headlines by buying a 50,000 sq ft Co-op shop down the road from this store. The OFT took an interest in the purchase on competition grounds, but Tesco said that as soon as the Brunel Way outlet was refurbished it would close the store on Uxbridge Road.
The two stores will give Tesco more than 160,000 sq ft of sales area in Slough. Many people will ask why Tesco is investing so heavily in the area and how long it will take to shut the second store.
From examining the Slough catchment, CACI can reveal that Secure Families (16%) and Wealthy Executives (25%) make up 41% of the Tesco catchment and their custom is crucial for its success.
Tesco also needs to attract the Asian community, which should not be too difficult as the new store has one of the country’s widest ranges of Asian foods and non-food products. The catchment contains 4% of the ACORN group Asian Communities.
Of all the main grocers, CACI suggests Sainsbury has the best demographic match to the area, although it has no stores in this part of Slough. However, Sainsbury still manages to achieve a market share of 14%.
This leaves Asda in third place, with a market share in the area of around 10%.
In August 2003, CACI reported that Tesco would have increased its market share from 40% to 52% with the opening of the second store. With the extension to the original store, we now expect that once the two stores are trading simultaneously, Tesco will achieve 63% market share.
Examining the impact this new extension will have on nearby grocers, Asda and Sainsbury look set to suffer the biggest losses. Asda could be worst hit, potentially losing £94,000. Sainsbury may be less affected, owing to its higher number of local stores, and could lose £43,000 per week.
Both grocers will be keen to monitor shopping patterns once the smaller Tesco closes.
It will soon be decision time for Tesco, given that it has promised the OFT it will close the Uxbridge Road store.
If, and when, Tesco puts this store up for sale, it will be interesting to see which grocer steps forward to make the purchase. Who will be brave enough to try and open next door to a 101,000 sq ft Tesco?
One possibility is Waitrose. With a stronger fit to the area than either Asda or Morrisons, the upmarket grocer may put in a bid for the site.
However, another possibility is that Tesco will sidestep the OFT’s demands by retaining the store solely for its new non-food format.