Frequently asked questions: clearing up misconceptions

A few facts about Tesco and the No Mill Road Tesco Campaign

November 2007

There is a huge level of local support for the campaign to keep Tesco off Mill Road but, of course, not everyone agrees with us that a Tesco on Mill Road would be disastrous for the area and a bad deal for local consumers. Obviously we respect their views, but we also think it is important to clear up some of the misconceptions about the proposed store.

1. “Having a Tesco on Mill Road will increase consumer choice”

No, it will reduce it. Mill Road currently has 13 grocery stores, as well as a greengrocer’s, a butcher’s, a baker’s, and two independent off-licences. The evidence strongly suggests that many of these will go out of business if a Tesco opens on Mill Road because of the tactics used by supermarket giants like Tesco.

Some people in Cambridge want to shop at Tesco, or at least to have the option of shopping in Tesco. They are already very well provided for: there are currently 13 Tesco-owned stores in Cambridge (from superstores to Express stores, to One Stops, which are Tesco-owned). Even without the new store, Tesco already has a majority of the grocery business (at least 51%) in the city, making Cambridge one of the most Tesco-dominated towns in the UK. As the Competition Commission noted in its recent report on supermarkets, this kind of local dominance is bad for competition and bad for the consumer.

2. “Tesco will be cheaper than the existing shops on Mill Road”

No, our research suggests that it will be more expensive. We did a shopping basket comparison and found that Tesco Express was more expensive than the existing shops on Mill Road. See our shopping basket comparison and an article in The Grocer.

3. “If people don’t like Tesco, they can shop elsewhere”

Unfortunately, they are unlikely to have that choice. The evidence from all over the country is that the opening of a Tesco Express puts existing, independent shops out of business. The House of Commons All-Party Small Shops Group Report says that the closure of independent stores where the big supermarket chains open convenience stores is “inevitable” (, p.27).

Nearly a third of independent convenience stores in the UK have closed since 2000, while the growth of convenience stores owned by the big supermarkets has been huge (Tesco plan to open more than 100 new Express stores in this financial year alone). A new Tesco store will probably remove the possibility of shopping elsewhere on Mill Road.

4. “If people chose to shop at a Tesco and other shops eventually close wouldn’t that just be fair competition?”

No. Small, local independent retailers in an area like Mill Road inevitably struggle to compete with a company as powerful and aggressive as Tesco, and not because they aren’t good shops. Supermarket giants like Tesco use a variety of means to draw customers away from other shops – some legal, some not. For example, Tesco and the other big supermarkets have enough economic power to enable them to sell staple goods at a loss as a way of drawing in new customers (‘loss leaders’). Their wealth also enables them to run short-term voucher schemes in new stores, heavily discounting selected goods (see points 11 and 12, below). Obviously, local independent shops don’t have the resources to run similar schemes.

Less legally, Tesco was also one of four supermarkets involved in a cartel with dairy companies to fix the prices of milk, butter and cheese, according to the Office of Fair Trading earlier this year. This isn’t the only ruling relating to Tesco’s anti-competitive practices this year: in September, the Competition Commission provisionally found that Tesco had acted to block the possibility of competition in Slough.

Fair competition requires something like a level playing field, not a situation where one player has the wealth and the determination to force everyone else off the pitch.

5. “Tesco say they will bring 20 jobs to the area”

No they won’t – not net jobs. The evidence from other towns tells us that the opening of a Tesco on Mill Road will force the closure of some of the existing shops, putting people out of work. Even if Tesco did employ 20 people, these wouldn’t be 20 full-time jobs, and it’s likely that Tesco will put at least as many people out of work as they would be employing. So, we think that Tesco will actually take jobs away from the area.

It’s not clear where Tesco have got the figure of 20 from anyway. In the plans for the shop that they submitted to the council, they said that they didn’t know how many people they would need to employ. So, they didn’t know how many people they needed to run the store when they were actually putting together their plans for the shop but they know now – when they are trying to fight a PR battle against local opposition.

6. “Tesco say that this will be a small convenience store”

That’s incorrect. It will be large for a convenience store – only 10 square metres below the Competition Commission’s medium-sized store category. So, it would be a convenience store, but a big one.

7. “Tesco say that they are only proposing a small extension to the shop”

Not true, the extension will increase the size of the building by just under 40%. That’s not a small extension!

8. “Tesco say that they want to work with the local community and to consult with them to address their concerns”

Tesco have been interested in the site for at least a year and a half. If Tesco were actually interested in consultation, they would have tried to speak to local people sometime in the period of at least a year between starting to take active steps to acquire the site and submitting their plans. They made no attempt to do this. That tells us very clearly that they don’t care what local people think.

Tesco representatives told us in November that it would be “impossible” to have a discussion with local residents about even the possibility of not opening the store. Since not having the store open is precisely what thousands of local residents want, they obviously don’t want to address the concerns of local people.

9. “It’s pointless making all this fuss about some minor planning applications because the site is already approved as a shop site, so Tesco could open up tomorrow, without the changes they are asking planning approval for”

Not according to Tesco themselves! When we met with them, Tesco representatives told us that they needed to build the extension before they could open the store. So, no extension, no Tesco on Mill Road.

10. “All the arguments about the impact of a Tesco store on the local area are irrelevant to the planning decision”

Not true, the impact on the local area is a key consideration, according to local and national planning guidance. The Cambridge Local Plan says that planning decisions regarding shops must enhance the ‘vitality and viability’ of shopping centres such as Mill Road; as we all know, a Tesco store on Mill Road will threaten that vitality and viability. A Tesco planning application almost identical to the Mill Road one was rejected by Barnet Council earlier this year on precisely these grounds. The councillors that make the decisions about these planning applications will have to take this issue into consideration, if they don’t want to be in breach of national and city council guidance.

11. “You say that Tesco will artificially lower their prices but they say that they don’t do that, that all prices are set nationally”

As we discussed with Tesco when we met them, it is ridiculous to suggest that this is the only way of engaging in predatory tactics around price. One alternative tactic is to introduce vouchers for particular Tesco stores offering huge discounts until the viability of rival shops is threatened. This is what Tesco did in Withernsea in Yorkshire, for example.

12. “But Tesco say “The [Competition Commission] report said that there was no ‘predatory strategy’ aimed at convenience stores or specialist shops””

This is incorrect, the Commission do not say this. Their discussion of this widespread complaint (a complaint most often directed against Tesco) is extremely carefully worded, saying that they do not think that below cost selling is part of a broad-based anti-competitive strategy. However, they do not rule out the possibility of local predatory pricing strategies, which is what we have always said was the concern in relation to a Mill Road Tesco.

On the question of vouchers being used as part of a predatory pricing strategy, the report says that:

in relation to the specific examples of vouchering that have been brought to our
attention, we do not have sufficient evidence to conclude that any of
these vouchering campaigns were conducted with any intention beyond that of
normal local competitive behaviour. (5.106, p.164)

Obviously, this is not the same thing as saying that such policies do not exist, particularly when the Commission also complains about the unwillingness of some parties to give evidence.

13. “You are just opposing this new shop because you hate Tesco”

No, that’s not true. We would oppose an attempt to open a new store on Mill Road by any of the big national supermarket chains. All of them would pose a threat to the area’s local shops.

14. “Tesco are too big; it’s pointless fighting them because there’s no way you can win”

Tell that to the residents of Saffron Walden! They managed to stop a Tesco store in their town; we can do the same here. All over the country people are standing up to Tesco and the other big supermarkets, and winning. Don’t forget: this is our home, we care more about it than Tesco ever could, and that gives us a huge advantage over them.

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