>> Tesco bids for adminstore; rivals warn of dire consequences
As I suggested in this column before Christmas, anything is now possible in grocery retailing. And, as if to prove my point, up pops Tesco with the sort of audacious deal that underlines why it has become Britain’s top retailer.
Tesco has made no secret of the fact that it wants to be a major player in convenience. So in strategic terms, its £54m bid for Adminstore is bang on the money.
But, as you will have read in our news pages, the deal is also hugely controversial. For rival c-store operators, the acquisition of Adminstore is a further step towards the rather bleak future outlined by Big Food Group boss Bill Grimsey at last year’s IGD convention; a future where consumers will only be able to choose between a Tesco Express or an out-of-town Tesco superstore.
Unless, that is, the regulators block any further deals involving Tesco in the convenience sector.
Now, the OFT didn’t make too many friends last year when it decided Tesco could buy T& S on the grounds that the Competition Commission had earlier decreed food retailing should be treated as two distinct markets - one stop and convenience. It wasn’t just independent retailers who were stunned by Tesco’s victory; senior bosses at other top multiples have also told me privately about their disquiet over that decision.
So will the OFT act? Tesco is clearly confident that the watchdog will apply the same criteria to the Adminstore deal as it did to T& S. Tesco argues that it still only has 6% of the fragmented convenience market and so a small deal for 45 stores should be allowed. On that basis, I wouldn’t be surprised if the deal was waved through.
But that’s because the criteria are wrong. When you look at the way people shop today, it’s obvious the regulators were daft to define food retailing in the way they did. And by creating this ridiculous, arbitrary demarcation, they are helping Britain’s biggest retailer get even bigger. Full marks to Tesco for taking advantage of the situation. The Competition Commission has made it difficult for the chain to acquire big stores, while planning makes it just as hard to build them. So Tesco buys c-stores.
But the regulators need to sort out their mess before, as many predict, Bill Grimsey is proved correct. As another supermarketer put it to me this week: “How long are they going to let this elephant of a retailer trample through the jungle without challenge?”
rumble in the jungle
As I suggested in this column before Christmas, anything is now possible in grocery retailing. And, as if to prove my point, up pops Tesco with the sort of audacious deal that underlines why it has become Britain’s top retailer.
Tesco has made no secret of the fact that it wants to be a major player in convenience. So in strategic terms, its £54m bid for Adminstore is bang on the money.
But, as you will have read in our news pages, the deal is also hugely controversial. For rival c-store operators, the acquisition of Adminstore is a further step towards the rather bleak future outlined by Big Food Group boss Bill Grimsey at last year’s IGD convention; a future where consumers will only be able to choose between a Tesco Express or an out-of-town Tesco superstore.
Unless, that is, the regulators block any further deals involving Tesco in the convenience sector.
Now, the OFT didn’t make too many friends last year when it decided Tesco could buy T& S on the grounds that the Competition Commission had earlier decreed food retailing should be treated as two distinct markets - one stop and convenience. It wasn’t just independent retailers who were stunned by Tesco’s victory; senior bosses at other top multiples have also told me privately about their disquiet over that decision.
So will the OFT act? Tesco is clearly confident that the watchdog will apply the same criteria to the Adminstore deal as it did to T& S. Tesco argues that it still only has 6% of the fragmented convenience market and so a small deal for 45 stores should be allowed. On that basis, I wouldn’t be surprised if the deal was waved through.
But that’s because the criteria are wrong. When you look at the way people shop today, it’s obvious the regulators were daft to define food retailing in the way they did. And by creating this ridiculous, arbitrary demarcation, they are helping Britain’s biggest retailer get even bigger. Full marks to Tesco for taking advantage of the situation. The Competition Commission has made it difficult for the chain to acquire big stores, while planning makes it just as hard to build them. So Tesco buys c-stores.
But the regulators need to sort out their mess before, as many predict, Bill Grimsey is proved correct. As another supermarketer put it to me this week: “How long are they going to let this elephant of a retailer trample through the jungle without challenge?”
rumble in the jungle
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