The government appears to have gone cold on the proposed Competition Test, and new figures shown exclusively to The Grocer could explain why.
The latest results from retail market expert CACI's annual study of the grocery sector paints a picture of supermarket development into which a Competition Test would have little or no impact. The results also help explain why major multiples are switching their focus towards smaller formats and c-stores, as the areas of the country with the greatest potential for growth are London and the south east which has the fewest available sites for larger, out-of-town stores.
The CACI study of the UK's 118 postcode areas found that the 10 areas with the highest concentration of supermarket floorspace per person are all in Scotland, while the 10 postcodes with the lowest concentration are all in London and the south east.
CACI consulting partner Paul Langston said that these figures demonstrated that the Competition Test would have little bearing on retailers' plans for further development. He claimed in areas such as the south east, where there is still scope for new development, the Competition Test would not apply because no retailer currently has a stranglehold and new applications would pass with or without the test.
And while the test would help retailers get planning permission in areas with a high concentration of supermarkets, he added they would be unlikely to apply because their competitors already have a dominant local position.
"Can greater diversity be brought to the UK's grocery sector if there's little demand for more supermarkets in the areas that need increased competition?" said Langston.
Dundee has the highest concentration of supermarket floorspace in the UK with 2.86 sq ft per person. The 'Tesco town' of Inverness was third-highest at 2.45, while Edinburgh rounds off the top 10 at 2.20. The area of the UK with the least amount of store space per population is west London at just 1.11 sq ft per person, closely followed by Southhall at 1.21 and Slough with 1.22.
The test was one of the most controversial recommendations to come out of the Competition Commission's groceries market inquiry, which concluded in April 2008. The test, which would prevent retailers opening stores in an area in which they already have at least a 60% market share, was originally successfully appealed by Tesco, but after a review the Commission re-submitted its recommendation in October 2009.
So far the government has yet to indicate whether it will implement the proposal. A spokesman for the Commission said it was still being considered.
The latest results from retail market expert CACI's annual study of the grocery sector paints a picture of supermarket development into which a Competition Test would have little or no impact. The results also help explain why major multiples are switching their focus towards smaller formats and c-stores, as the areas of the country with the greatest potential for growth are London and the south east which has the fewest available sites for larger, out-of-town stores.
The CACI study of the UK's 118 postcode areas found that the 10 areas with the highest concentration of supermarket floorspace per person are all in Scotland, while the 10 postcodes with the lowest concentration are all in London and the south east.
CACI consulting partner Paul Langston said that these figures demonstrated that the Competition Test would have little bearing on retailers' plans for further development. He claimed in areas such as the south east, where there is still scope for new development, the Competition Test would not apply because no retailer currently has a stranglehold and new applications would pass with or without the test.
And while the test would help retailers get planning permission in areas with a high concentration of supermarkets, he added they would be unlikely to apply because their competitors already have a dominant local position.
"Can greater diversity be brought to the UK's grocery sector if there's little demand for more supermarkets in the areas that need increased competition?" said Langston.
Dundee has the highest concentration of supermarket floorspace in the UK with 2.86 sq ft per person. The 'Tesco town' of Inverness was third-highest at 2.45, while Edinburgh rounds off the top 10 at 2.20. The area of the UK with the least amount of store space per population is west London at just 1.11 sq ft per person, closely followed by Southhall at 1.21 and Slough with 1.22.
The test was one of the most controversial recommendations to come out of the Competition Commission's groceries market inquiry, which concluded in April 2008. The test, which would prevent retailers opening stores in an area in which they already have at least a 60% market share, was originally successfully appealed by Tesco, but after a review the Commission re-submitted its recommendation in October 2009.
So far the government has yet to indicate whether it will implement the proposal. A spokesman for the Commission said it was still being considered.
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