Helping You Spend, Every Day

Tesco StoreHow many Tesco stores is enough? Presumably the ultimate target of the company’s strategists is to capture 100% of the shopping market, which would mean somehow replacing every other kind of outlet. I live in a rural area, a couple of miles from the nearest village with a shop. In fact, it has a combined general store, post office and petrol station; adjacent to which is a pharmacy and a Chinese takeaway. It’s not much, but I’m sure it’s a vital resource for some, and anyway, gives a focus and life to the village.

About five miles further on, in a small town, there’s a fairly large Tesco store, opened a couple of years ago. In the opposite direction, at almost exactly the same distance from me, a new Tesco store opened last year. This year, a very large one came into operation, just a little bit further away. I really do get the impression of The Blob, inexorably expanding and engulfing everything in its path.

Just a few days ago, the company received planning permission, at the third attempt, for another very large store. In the usual pattern, local traders were concerned that they would lose business, but some politicians are in favour because they envisage job creation and benefits to the local economy.

A representative of the town’s shopkeepers made the very reasonable point that the net increase in jobs was very debatable if the store caused local shops to close down. You can imagine the scenario: “Do you have any experience in retail?” – “Yes, until last week I managed the town’s grocery shop.”

I thought about the other point, money for the local economy, and I just don’t get it. Tesco isn’t a charity. Their motivation for building a new store is that it should be profitable. That is, it takes in more money than it costs to run. So pay for staff, rates, utility bills, purchases from any local suppliers lucky enough to do business with them: all of that has to be less than the income from customers.

And the difference, the profit, must ultimately go to shareholders (or reserves, or re-investment) which can’t possibly benefit many locals. Unless I’ve fundamentally misunderstood something about the way retailing works, the function of a new chain store in any town is to suck money out of the local economy. But of course, it’s so convenient for shopping.

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