The Tesco Effect

It may not be fashionable to say so, but maybe Tesco has a point when it says it can work to help develop local trading and communities. The evidence is not conclusive, but neither have all the arguments as yet been fully explored.
The debate about Tesco is all around us in Liverpool just now. There are strongly vocal groups, some of them just local people and traders, and some of them I suspect part of larger national campaigns, who are implacably opposed to any further development of Tesco anywhere near our patch.
Others, far more quietly, would actually rather like a bigger, brighter Tesco (or any other large supermarket) not far from home, where they can pop in, parking assured, 24 / 7.
It seems however that whilst one of Tesco’s applications, to the north of the city, has now been approved, there will be a big fight over the south city bid. Officers have recommended agreement, politicians mostly oppose it; so who knows what will happen when it all goes to appeal?
Reasons for unease
As far as I can gather, opposition to Tesco and other supermarkest falls into some four categories:
1. we live nearby, and shoppers will block our street parking, and maybe make a noise;
2. green space is at risk;
3. local traders will suffer;
4. we are opposed to any big business which may be getting the upper hand.
Reasons for quietly hoping plans will go ahead, however, tend simply to be that it’s convenient, open long hours and the range of merchandise is good.
Mixed messages
Maybe I’ve missed something, but it feels to me as if a number of mesages are coming over here, not very coherently.
Firstly, concerns about street parking are persuasive for local councillors dependent on electoral support – let the people park – but they are not otherwise very convincing. Mechanisms exist and are easily put in plaxce to prevent parking altogether, or allocate resients’ priority, etc; and in any case most Tesco stores have quite adequate parking facilities of their own, if they are permitted to establish these.
The concern about green space of course follows from this – more Tesco space, less green space; but Section 106 arrangements (which basically require developers to ‘give’ something to the local community in return for ‘taking’ a local footprint) can be brought to bear by Council Officers, so that alternative facilities will be part of the package. Perhaps not everyone from the Council for the Protection of Rural England will be happy with the end result; but, to be frank, cities are not rural.
The argument that local traders will suffer is more difficult; the jury is still out on this, because the evidence is generally unconclusive. Organisations such as the New Economics Foundation suggest that the effect on local traders may be damaging; this is therefore an issue to be taken seriously. It is probably however less clear that at least some of these local traders would have done well even if the lcaol supermarket had not been built.
And finally, the question of market share needs to be considered. Tesco, for instance, has about 30% of this in Britain, almost twice as much as its nearest competitor. But whether Tesco should be constrained is a matter in the hands of the Office of Fair Trading, not something which can be resolved at local level in a narrow context.
The counter-argument
The issues so far discussed are perhaps only part of the story.
Let us put aside matters of investment, when building large supermarkets, in local infrastructure and construction and so forth. These are usually acknowledged at least in part at some level.
But only rarely is it also noted that Tesco, like its main competitors, offers well-defined and nationally led staff training and development; the pay to start with is not especially good, but the opportunity to move up the ladder (or across to another one) is certainly there. In some communities, there are few other opportunities of this sort; but where these opportunities are on offer, specially in otherwise less advantaged areas, they are surely of value.
And, finally, we have to ask ourselves why local traders, if they really do want to keep going, are not forming liaisons at the professional as well as the protectionist level. Are they sharing responsibilities such as staff training, local environmental improvements and the like? What, if anything, is the collective deal, with or without the supermarket in their midst?
Maybe Tesco is right to carry on growing, or just maybe it should be restrained; but the basis of the debate so far does not explore all the issues at stake. If the simple demand to ‘stop!’ were replaced by a dialogue on how to develop, with or without large supermarkets, local people and politicians might discover that there are more ways forward than they think.

Posted on November 13, 2005, in Education, Health And Welfare, Equality, Diversity And Inclusion, Liverpool And Merseyside, Politics, Policies And Process, Regeneration, Renewal And Resilience. Bookmark the permalink. 2 Comments.

  1. The problems associated with mega-stores are well known, but two important points seem to continually get overlooked…and I think that they are probably the most important.
    Looking at supermarkets vs local trade (particularly our high streets) supermarkets are so much more efficient at churning money through the tills, so for every x£ that is drawn in they only have to provide one, usually low paid, job, where as the ‘inefficient’ local traders’ have to employ many more staff to generate the same turnover. So, when the local press say ‘such and such’ have generated 300+ jobs they should remind all that it will result in the loss of maybe 600 from elsewhere in the city’s economy…and not only low paid positions, but also the owners salary and profits…these all disappear from the ‘local economy’.
    The second consideration is the amount of ‘value’ created. For each business that goes bust as a result of a supermarket being allowed into an area the council loses the huge rates income that they screw out of small high street business, but that they can’t demand from the ‘big boys’, they lose the extra rates when the entrepreneur has to trade down from the bigger house they owned when they had a successful business etc. The city also loses the profits from the local store, the extra staff needed by banks to service a multitude of accounts etc too, creating a downward spiral….and also changing from an entrepreneurial ‘generating’ community into a passive ‘consumer’ group.
    Cities and their high streets behave as an eco system. If you just look at the decline of the high street you can see that it is not only the companies whom the supermarket is competing with directly (but inceased range means nowadays that they compete with almost everyone) but also the companies, like solicitors, copy shops and estate agencies that depend on the passing trade generated by a vibrant ‘shopping’ street. This then extrapolates down so that other amenity and social services cannot retain a foothold in the area.. from bus routes and ‘one stop shops’ to funeral parlours and insurance offices.
    We will not be able to counter these problems and start building a real city underpinned by entrepreneurial activity until planners start to appreciate the value of the high street to mainstream economic wealth creation and social service…right now they see those tatty rows of small business units ‘cluttering up the urban clearways’ as ‘obsolete modes of development’…so bloody 50s’ in their thinking.

  2. I think you might have missed a couple of objections:
    1. the impact on consumer choice of a monopolistic shop
    2. the wider impact on producers (and their communities) both in terms of viable supplier size and the variety of produce.
    Obviously these are linked. In a capitalistic model, we’re not supposed to get excited about the commercial victims of successful businesses. But, where the effective monopolies start to drive both the dietary and the community agendas, I start to get somewhat concerned.
    The supoermarkets have changed the shopping experience into a warehousing exercise. If they now want to become part of the community again, they need to take into account the impact they have on both ends of their supply chain.
    Q. What’s the difference between a centrally planned economy and a monopolistic one?
    A: At least we can vote the politicians out!

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