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Tuesday, 8 June 2010

Good Riddance, Terry Tesco

So, after fourteen years at the top, Terry Leahy is to retire from Tesco. This has prompted the impressionists’ favourite Beeb business correspondent, Robert Peston, to tell how Tel did it, expanding Tesco into the largest supermarket chain in the UK, leaving behind Sainsbury’s and the rest, in a kind of eulogy for the Leahy reign.

Meanwhile, those of us who are merely consumers don’t appear to be getting a hearing. Perhaps Peston and his fellow analysts are more concerned with the market share, share price, and things like the price/earnings ratio to be fussed about the folks who have to suffer the dubious product that underpins them.

When I arrived in Crewe almost six years ago, there was no Tesco presence in the town: the nearest stores were in Kidsgrove and Northwich. But neither was there any sign of any difficulty among the population in locating supermarkets and stocking up, and nor was there any visible movement stirring, ready to agitate for Tesco to come to town.

Then Morrisons took over Safeway – and both had a store in Crewe. The Safeway was placed on a list of stores from which Morrisons had to dispose of a certain number. Therefore they did not have to sell if enough disposals could be made from the rest of the list. Tesco, who took over the Safeway, would therefore have paid a premium.

Thus it was no surprise when the store became Crewe’s first 24 hour supermarket, and since then, Tesco have taken over two fuel stations and turned them into “Express” branded convenience shops. Has the town benefited from this supposed increase in competition? Doubtful. But, as Kwik Save lost its way and shut up shop, one of its two Crewe stores was levelled and turned into a residential development, so the actual amount of retail floor space may well have shrunk.

And, as I’ll consider later, the Crewe Tesco is a by-word for abysmal customer service. Moreover, the car park still isn’t filling up at busy times, unlike the council P&D outside Asda, which is packed Thursday to Sunday. Maybe we’re not up to speed in accepting Tescopoly.

Or maybe Terry Tesco is getting out before his over saturation of the market catches up with him.


John B said...

Hang on: how *doesn't* 24-hour shopping benefit the town? No negative impact, and improved access to things that you might want when you might want them. Similarly, most Tesco Express shops carry a better range, fresher food and charge lower prices than oil-branded petrol station shops...

(interesting that the Crewe shop offers worse customer service than Asda or Morrisons, though - my experience of Tesco is that it's usually better, although worse than Waitrose)

Tim Fenton said...

John, the 24 hour point was to underscore Tesco's need to get their return. If there was a groundswell of demand, then Asda would have followed suit - they haven't (the Crewe Asda, as you may have seen from the by-election campaign, is the town's biggest supermarket, and by some distance).

Both Tesco Express outlets have appeared close by a number of similar offerings - they bookend Nantwich Road. So the independents, and the Co-Op, get squeezed, and then Sainsbury's took over the (close by) remaining KwikSave, all in the name of "choice". Is the offering better than before? Doubtful again.

Which leads back to the point I was making, that ultimately this leads to market saturation. YMMV and all that.

John B said...

I do see your concerns - but (having spent 4 years living in a part of Manchester with no mainstream shops, which was therefore both crazy-expensive and poorly supplied) I'd much rather live near a Tesco or Sainsbury than a typical independent shop or Kwiksave. YMMV.

Given that belief, I'd rather deal with competition concerns via regulation (ie "this is a four-player market, we will ensure they don't collude or predatory-price, etc") than by restricting their ability to take over worse stores and improve them. If you don't think they are any better, I can completely understand your view.