Tesco: coming soon to a town near you

Tesco's increasing dominance on the Irish retail scene is a cause for concern, writes Paul Walsh.

On Monday, 6 December, Councillor Anthony Connaghan of Sinn Féin put the following motion forward at the Dublin City Council monthly meeting: “That the council calls on An Bord Pleanála to review its decision of the development of a Tesco Express, which will include an off-licence, at Cardiffsbridge Road (Finglas). This development is at odds with the wishes of local people and business alike and will negatively affect local business, traffic, local employment, anti-social behaviour and community spirit as can be seen in similar experiences of many English towns which have dealt with this form of expansion to squash competition spearheaded by Tesco. We also call on the City Manager to strongly consider these kinds of development and advocate for the interests of Dublin City Council in future.” Connaghan’s motion highlights a number of issues and levels numerous charges in Tesco’s direction and was passed by the council unanimously. However, given that Tesco employ over 14,000 people in Ireland, should they not be welcomed with open arms into communities throughout the country?

Growing opposition to Tesco expansion

Connaghan’s motion was proposed in June but due to the slow pace of local politics was only heard last month. The new Tesco Extra store opened in Finglas in July, but Connaghan had a number of representations in advance of this, which prompted his motion.

“Well a couple of businesses around the proposed Tesco were unhappy, because they felt the planning process was unclear and that this development was foisted upon them. In particular the Spar next door, because they had observed that a planning application had been made for an off-licence and storage area. When this was refused they went ahead and made refurbishments to their shop. They had only finished their work a month or two and then work started next door on a Tesco Extra, as An Bord Pleanála had given it the go ahead. I want to know why the original planning application was rejected, but then approved by An Bord Pleanála? What is the difference in their guidelines?”

As the store has been open for a number of months now, Connaghan can already observe the effect it is having on the local area. “There has been clamping around the shops which has never happened in all the years those shops have been there. Also, there has been an increase in gangs hanging around the store as they can get beer in it. Residents have complained to me that young lads are buying beer in the store and sitting out in the field in front of it and drinking. In relation to dealing with their local competitors Tesco has a blank cheque and one of the local shops there has already closed down.”

It is not just in Finglas that Tesco are facing opposition. Planned stores in Smithfield in Dublin and Thurles in Tipperary are also causing controversy.

In June 2011, Tesco were granted planning permission to open an outlet in a NAMA held building on Smithfield Square. The problem was that the building was already occupied by the Complex theatre and arts space and they appealed the planning decision to An Board Pleanála. The units in this dormant building were originally leased for free from one of the stars of the property investment gorge that was the Celtic Tiger, Redquartz. When that company went bust and the building was taken over by NAMA, the latter wasted no time in issuing an eviction notice, despite an offer from the Complex to pay a cultural rate of rent of €2,000 per month. In common with the experience in Finglas, the original planning application for Tesco was secretive and confusing, as Franc Myles of the Complex explains.

“They had an agent who put in a planning application for change of use on the premises. There was no indication who their client was. Then guys came around to measure up the place and one of them slipped up and indicated to us that it was Tesco looking at the unit. When this application went into An Bord Pleanála they still didn’t say it was Tesco, and it took two sets of documentation being submitted before Tesco was revealed as the proposed tenant.”

Myles believes that the Complex is worth the fight to preserve. “I reckon every community in the country should have some sort of arts centre. Whether its theatre, painting, drawing or whatever. Politically, I believe that’s fundamental for the social well-being of any community.”

An Bord Pleanála have now come back with a decision that has left Mr. Myles and others involved with the Complex in limbo and unsure of their future. “They can get change of use, they can open a supermarket but they can’t have an off-licence. We don’t know what the story is now. Tesco might go ahead and open up anyway, they could open an off-licence and keep paying the fine, they might open up with an off-licence and try and get retention planning permission, or they might just walk away from the situation.”

In Thurles, a meeting held by the town’s local Chamber in October heard numerous expressions of opposition to a proposed out of town supermarket and drive through restaurant development. According to many who spoke at the meeting, the proposal contravenes the Thurles and Environs Development Plan 2009 – 2015. The application - by Baycross Developments Ltd, which is owned by Richard and Ann Quirke, promoters of the €460 million Casino Venue in Two-Mile-Borris - seeks to demolish an existing Erin Foods building and construct a supermarket with 397 car parking spaces and a drive through restaurant.

Tesco has a long-standing application in place for the construction of a large supermarket further outside Thurles town centre. However, this proposal has been delayed for many months due to planning issues. There is no indication at this stage as to who the anchor tenant for the proposed new supermarket on the Erin Foods site will be, but there are strong suspicions that Tesco will be its eventual occupier. Given their modus operandi in relation to planning, independent retailers seem to have grounds to be fearful.

banksy tesco generationThe UK experience of the 'Tesco Town' phenomenon.

The disquiet in communities around Ireland mirrors the UK experience of ‘Tesco Towns’. This is a term used to describe areas in which there is a dominant supermarket such as Tesco which stifles other local competition. In 2006, it was reported that in Inverness, Scotland, Tesco had a 51% share of the market for groceries in the city, the highest rate of penetration for any locality in the UK. The city of 66,000 has three Tesco supermarkets, which has resulted in the closure of 30 small independent shops in the city centre’s Old Town, according to Charles Morgan, founder of City of Iverness Traders Association. Tesco’s conquest of this town has not stopped at three supermarkets, as in December 2008 they were awarded planning permission for a fourth supermarket. The area planning committee granted planning approval for a supermarket, petrol station, four smaller retail units, doctor’s surgery and a community building. This was despite the Highland Council planning committee being asked to reconsider the development after nine councillors signed a motion of amendment, calling for the decision to be re-examined. In their attempts to get the decision overruled, councillors complained that the proposed store of 4,447 sq metres was too big for the area. Concerns were also raised about whether there would be any demand for the smaller retail units in the development. Inverness councillor Norrie Donald expressed his fear that the units may remain vacant and in time attempts may be made to incorporate them into the Tesco store, increasing the total floor space beyond an acceptable level. These concerns fell on deaf ears, as in January 2009, the new Tesco store won approval for a second time. Tesco have never hidden their expansionary and monopolistic ambitions. In 2004, their former chief executive Terry Leahy was quoted as saying “our market share of UK retailing is 12.5% - that leaves 87.5% to go after”. They are well on their way to fulfilling Mr. Leahy’s ambitions, with their market share standing at 30% in November 2011. The Inverness experience has been mirrored in towns and cities the length and breadth of the UK.

Official response

The growing dominance of Tesco has prompted authorities in the UK to investigate how competition can be preserved. A report by the London Assembly, based on the London experience but applicable across urban centres in the UK, suggests that councils should be given more power within the planning system to protect corner shops. The report, Cornered Shops, says that corner shops are in decline in London and should get protected status in local, regional and national planning policies. The report identifies the growth of high street offerings by major supermarket chains such as Tesco and Sainsbury as putting extra pressure on corer shops on high streets in the UK. The report provides compelling statistics to support the protection of independent retailers. According to the report, over 50% of the turnover of independent retailers goes back into the local community, compared to just 5% from supermarkets.

The Irish approach

In Ireland our Government seems to be adopting policies that will harm rather than protect independent retailers, despite the warning signs from our nearest neighbour. In November 2011 Minister for the Environment Phil Hogan published draft guidelines on increasing the upper limits on the size of new superstores and out-of-town shopping centres, thus honouring a commitment made as part of the EU-IMF bailout agreed last year. Why, one wonders, did this requirement make up part of our bailout conditions? Despite its bizarre inclusion in that deal, which allows the current Government wash its hands of its implementation, the proposed guidelines will have real and detrimental effects on independent retailers. The draft guidelines propose an increase in the size of allowable retail floorspace from 3,500 sq m to 4,000 sq m in the Dublin area. An increase in the size of allowable retail floorspace from 3,000 sq m to 3,500 sq m in the cities of Cork, Limerick, Galway and Waterford is also proposed. According to Irish Small and Medium Enterprises Association chief executive Mark Fielding, these changes to the retail planning guidelines will “crucify” retailers.

Apart from questionable competition practices, Tesco has also been accused of fostering unhealthy relationships with their suppliers. In 2010, it was revealed that Tesco had been demanding millions of euros from Irish suppliers in return for the continued stocking of their products on the supermarket’s shelves. Individual suppliers were asked to pay up to €500,000 in order to have a presence in Tesco stores. Irish suppliers have also revealed other less than honourable trading practices engaged in by the supermarket behemoth. According to unnamed sources in an Irish Times article from April of last year, it strikes deal covering 12 months and then demands changes months later; it promises a certain amount of shelf space and does not deliver; it drops product lines without informing suppliers and producers, and it arbitrarily increases prices.

Consumers may be more concerned with the cheap prices that Tesco offer, rather than the survival of independent retailers or the terms and conditions of suppliers. However, if Tesco succeed with their expansionary plans and eliminate competition, how long will it be before we see price increases? Also, while the consumer may see short term gains from Tesco’s pressing of suppliers, these are Irish profits and jobs which are being sacrificed for the benefit of a multinational retail giant. It would seem that legislation is required to protect consumers, independent retailers and suppliers. In the UK, their experience with large retailers such as Tesco led to the Competition Commission passing a proposal for a “competition test” onto the Department for Communities and Local Government in October 2009. This test aimed to stop one supermarket chain dominating a local market, but was immediately challenged by Tesco. Despite intensive lobbying by Tesco the “competition test” remains on the agenda in the UK and is one of the ideas considered in a review of the future of the high street commissioned by the UK government which has just been completed. If there is no acknowledgement of the need for legislative change in Ireland, Anthony Connaghan predicts a bleak future. “If you don’t have some sort of regulation, you will just have Tesco coming in and wiping the floor with everybody.” {jathumbnailoff}


Image top: Cian Ginty. Image middle: smokeghost.