Adminstore delivers the capital to Tesco. Siân Harrington reports

Tesco’s £53.7m acquisition of Adminstore barely affected its share of the convenience market but in terms of customer catchment it means inner London is now under Tesco’s control.
According to research conducted by CACI for The Grocer, the acquisition enables Tesco to gain a massive increase in its household penetration of the sizeable inner London market. Prior to the purchase just 6.5% of the 1.3 million households in inner London were living within the catchment of a Tesco c-store, including those acquired from T& S Stores. Post acquisition this figure rises to nearly 22%.
“Once the sizeable workforce and tourist populations are accounted for it would seem that this acquisition will massively boost Tesco’s brand presence in the fast moving c-store market,” says CACI managing consultant Paul Langston.
Nationally just under 15% of households live within striking distance of a Tesco local store, according to CACI’s Convenience Catchment Model, which simulates realistic ‘walk-to’ catchments for c-stores based on the level of population and workforce density and competition around each store location.
Tesco is confident that the deal, which gives it 15 Europa Foods stores, 11 Cullens, eight Harts the Grocer, three Crispins and eight other London stores, will not fall foul of the regulators.
It says it only has 6% share of the convenience market, nowhere near the 25% that triggers OFT scrutiny. But the OFT this week announced it was considering whether the deal should be referred to the Competition Commission.
It invited representations to be in by February 6 and said it would report by February 20.
In its announcement it noted that the deal did not meet its usual financial threshold, because the 45 stores being acquired had a turnover of less than £70m.
It added: “Therefore the OFT in particular invites comments on whether the merged entity would give rise to a combined share of supply of 25% or more in relation to the supply of goods or services of a particular description in the UK, or a substantial part of the UK.”
But independent retailers are up in arms. A delegation from the Federation of Wholesale Distributors will meet OFT officials next week to seek a block on the
bid. It will argue for a moratorium to give government time to sort out its food shopping policy and to regard the grocery market as one entity. “We will ask OFT to block the bid for six months, together with any similar activity, to enable it to consult trade and consumer interests,” says FWD director general Alan Toft.
Musgrave UK executive chairman Eoin McGettigan is joining the delegation. “Our line will be that there are not two markets. There is only the one. The distinction between the one stop and convenience market is entirely arbitrary,” he says.
“The 25% threshold is also completely arbitrary. Mathematical tests such as this are not the answer. What will it take to find that Tesco has a dominant position in the market?” However, unless the independent sector succeeds in convincing government that its two-market approach is seriously flawed in light of today’s shopping habits, Tesco will continue its march forward.
“Its search is now, no doubt, focused on finding the operators who can address the remaining gaps in its coverage,” according to CACI’s Langston.
He points out that, with just under 13% of the 1.9 million households in outer London living within the catchment of a Tesco convenience outlet, the retailer looks relatively under-represented in this large market. And he warns: “With virtually no coverage in the densely populated Glasgow and Edinburgh areas, retailers with a strong local presence should be on the lookout.”