TESCO IN PETERSFIELD
Tesco is the largest retailer in the UK – perhaps in Europe – with a 30% UK market share of groceries. It is seeking to expand, substantially, its existing large store in Petersfield, and on historical form will seek further expansion and open hours in the future.

The last 10 years has seen the town under renewed attack from development, following a 30 year pause after the quite appalling ravages by Raglan Developments, and the disappearance of Herne Farm under brick. The last 10 years has seen a number of undifferentiated estates culminating in the curious, albeit different, Toy-Town of Barentin Way.

From a remarkably pleasant market town Petersfield has been and continues to be expanded & transformed into ‘any town’ and the economic and cultural impact of the Tesco proposal weighs heavily in adding to this change.

The overwhelming consideration by organisations concerned with the built environment (CPRE, The Petersfield Society, SARA etc.) have criticised the plans submitted by Tesco on the grounds of creeping fringe development, despoiling the tranquillity, views and vistas, proximation to one of the remaining rural sections of the town, poor landscaping etc. There is little in the proposal which can be accepted, nothing that can be commended.

I will not add to the distressing list on planning grounds but lay out some of the social and economic impact that companies such as Tesco have and this development will have and also the type of battle the town will have on its hands.

Modus Operandi of Tesco

It is natural that the bigger a company grows, the more attention it attracts though usually this is from analysts and stockbrokers. Tesco is unusual in that it stimulates comment mainly on the following:

• Its approach to planning consents • Land banking
• Its over-build following consent • Monopoly positioning
• Predatory pricing • Secret dealings

Accusations regarding the environment, treatment of farmers (here and abroad) etc I will not deal with.

Approach to Planning

Two clear Tesco strategies are discernible:

• Ignore planning consents and stipulations if these interfere with undisclosed commercial plans
• Play the rules outside the accepted norms of understanding and behaviour.

Examples of the first include, inter alia:

Portwood, Stockport: Consent was given for a 9000 sq m store; one of 11,000 sq m was built (20% over limit). Tesco then informed the Council. If you or I did this we would find that the entire planning negated and be obliged to demolish.
Morton, Wirral: The Tesco store was found to be in breach of 7 planning conditions decided that it was cheaper to pay the fine rather than remedy, given that the maximum fines available are low in comparison to the capital invested or the commercial value.
Gerrards Cross, Bucks: Construction rubble with consent for 28 days in an AONB took 2 years to remove despite enforcement orders and complaints by residents.
Scunthorpe: Ignored a condition on the amount of space that could be given to selling a category of product – it was using 60% extra floor space. Resulted in a further planning inquiry – paid for by the Council Tax payer of course (circa £250,000).

These are just a few cases – in each instance Tesco deliberately flouted the conditions and the law. Gareth Morgan from the Royal Institution of Chartered Surveyors and a planning expert: “It is a battle which many councils and local authorities feel that they're losing. Tesco’s understand the law specifically in relation to the planning system far better than even many local authorities do. Where the law is uncertain or where it is capable of interpretation then they will interpret that law to the best of the ability of the experts that they can employ. And they will spend the money in order to be able to make the money.” (my italics).

Examples of the second, playing the rules, are, inter alia:

Barnet: In the planning application the Council remarked: “Their (Tesco’s) actions suggest they are not the most scrupulous…there is something rather immoral”.
Sheringham, Norfolk: Budgens spent nearly 10 years securing council land for a store in the town centre and in securing planning permission, only to discover a secret deal between Tesco & the officers of the Council prohibiting any other store development in the town. Budgens: “I think probably the best way to sum it up is a feeling of total disbelief. It is incredibly frustrating and in some respects it's difficult to understand.” “It's undermining local democracy, it's just diabolical really,” Mrs Erica Mayhew, a regular demonstrator in the town against Tesco and how it has secured its privileges. It appears that none of the councillors knew of this secret deal!
Carn, Glos: A small town wishing to rejuvenate itself granted rights & consents to Tesco. Subsequently it asked Tesco to release some of the land it held under covenant which it needed. Tesco refused. The result is that the regeneration scheme has been scaled back..

These are just a few cases, yet the Tesco website states:

“We try to work within the grain of planning law and social change - embracing town-centre stores and bringing life back to declining urban areas where possible.”

Or, if you like it another way:

“We are sensitive to both the opportunities and concerns raised when we invest. We try to work within the grain of planning law and social change.”

The company denies that it acted illegally in the cases in Uckfield (E. Sussex) or ….. but I must stop.

Predatory Pricing

Withernsea, East Yorks: To dislodge the competing and long standing supermarket, Proudfoot’s, Tesco offered £8 cash back for every £20 spent – an offer exclusive to Withernsea.

This is one of the cases of alleged unfair competition which the Competition Commission is investigating. (Tesco’s profits for 2006 came to £2.2 billion).

Predatory pricing is stamped on following the ruling in the Office of Fair Trading and Boots plc of many years ago, but Tesco feels sufficiently arrogant that such blatant ‘treating’ is something it can get away with.

The obverse of this is interesting to note: when the business sections of the Sunday Telegraph and the Evening Standard, London, published research showing that Tesco was not cheaper than leading rivals, the company threatened to prosecute unless the research analysis was withdrawn. The newspapers declined and 18 months later still await Tesco’s legal salvo.

Competition Blocking

One tactic employed by all the large supermarkets is to purchase possible sites which plays two roles: to use for possible future development and, more unscrupulously, to re-sell to a commercial developer provided it accepts a covenant not to permit grocery selling – thereby starving competitors. The big four supermarkets now hold over 320 such sites, with Tesco the largest by a magnitude.

Examples:

Cheshunt: Teco’s purchased a 3.2 acres site 400 yds from one of its two stores. The site was resold with a covenant preventing a supermarket being built there for 25 years.
Slough: The company purchased and demolished a Co-op food store. It now declines to sell to anyone wanting to open a food store. The Office of Fair Trading has now referred this to the Competition Commission so further comment is redundant.

These are just a couple of many examples yet the company denies it is doing this! Which brings me to the curious cases of the carpet shop in North Finchley and the even more curious case of Curry Motors in Harrow and of….. but I must stop.

The above gives you a flavour of how Tesco operates and what it thinks of the law but I now wish to develop the social and economic impacts that I believe Tesco (et al) make on towns so I will end on Tesco’s modus operandi by remarking that we have had three thousand years of philosophical ethics and morality from pre-Socrates to Epicetetus to David Hume to Mazzini and Popper. Alongside we have two thousand years of Judeo-Christian ethics and morality, from the four great Latin bishops to Martin Luther and John Locke and contemporaneously, Alvin Plantinga.

And what do we end up with – the ethics and morality of Tesco, one of the largest and most influential entities in this country.


Social & Economic Impacts

In every planning application Tesco supports its position by stating that it will not harm existing businesses and it will, instead, attract more customers to an area. These mantras are produced in support irrespective of the location of the store.

The second mantra, drawing in more customers overall, is known as the ‘magnet theory’ - highly branded large shops, particularly when in a cluster, will attract consumers to the benefit of all shops and businesses in the town. I will return to this.

For Petersfield, Tesco is obliged to meet four criteria, in that development(s) will be permitted if it :

• Sustain(s) and enhance(s) the range and quality of provision and the vitality and viability of the centre
• Are in keeping with the scale and character of the centre
• Will not harm the function of the centre, primarily its shopping function.
• Are readily accessible by public transport, bicycle and on foot.

The proposed expansion of the store, by an eye-watering 70%, is dependent on the Planning Authority (EHDC) removing a condition (no. 11) – the restriction on how much space can be allocated to what are known as ‘comparison’ goods. (This quaint term generally incorporates non-food or convenience items; it includes clothing, homewares and entertainment goods. Item value and profit margins are higher on these items than on food. Restrictions on these are normal as an existing business preservation precaution).

Requesting removal of the Comparison goods restrictions follows the classic Tesco Strategy:

1. Open a store
2. Expand store via comparison goods areas
3. Increase opening hours
4. Expand store via shop-in-shop
5. Increase opening hours
6. Increase store size……

Petersfield is on stage 2 – the expansion of the comparison goods sales area from 172 sq m to 544 sq m (+200%) and removing restrictions placed on it as to the type of comparison goods which can be sold.

The arguments put forward by Tesco are:

1. Petersfield is under-served in comparison goods floor space, that Tesco expanded will enhance the whole commercial activity. It argues that only 35% pf comparison goods expenditure of the town and hinterland is served in the town and that surrounding supermarkets have larger comparison goods floor spaces. I presume that it is not comparing itself to Waitrose or M&S but to Tesco Havant (seeking to expand from 3979 sq m to 9300 sq m. which is +230%. To be built on stilts, just to really desecrate the area), Tesco Haslemere, Tesco Bordon etc. as well as Asda in Havant and Morrisons in Cowplain.
2. Petersfield has a robust and healthy retail sector including many multiples and few empty shops.
3. That as the store lies in what is ruled as the centre of the town, it does not need to produce substantial economic argument.

Economic Argument 1: Shoppers go Elsewhere

The Petersfield hinterland is calculated at around 28,500 people. Using somewhat dated and global figures and multiplying these up brings a 2006 expenditure per inhabitant on comparison goods of £3664 (through shops, with internet & mail order being excluded). This gives a total within the Petersfield catchments area of £104 million being spent on comparison goods (the 28500 inhabitants x £3664).

The comparison goods floor space in Petersfield is calculated at a fraction under 12,000 sq m. of which approximately 70% or 8390 sq m is selling floor.

Other sources indicate a average spend per sq m of comparison goods floor space as being £3897; multiply up by the 8390 sq m selling floor and you come to around £33 million or 31% of the £104 million referenced above as being the total comparison goods expenditure in the area.

This leads Tesco to state that its expansion will draw in some of the “missing” 69% of people or expenditure to Petersfield.

The counter is that given Petersfield location and hinterland, a range of 30 to 35% capture of the comparison goods market is about average (this is a difficult figure to arrive at but broadly correct). In City centres it rises above this, as it also does in very rural or isolated areas.

But we are not either isolated or a City centre. Consequently the additional traffic drawn to Petersfield will be relatively small – say a 10% increase to 34.1%. This equals approximately £3.2 million. As Tesco intends to expand its sales area by 372 sq m it appears that it intends to swallow a goodly portion of this: 372 x £3897 = £1.42 million.

This assumes any increase and of course ignores developments in surrounding key towns, especially to the south of Butser.

Economic Argument 2 – No Effect on Other Shops

The second supposition is that Tesco’s expansion will have little effect on existing businesses, despite the company increasing its comparison goods allocated floor space by near 300%.

With predatory pricing and other practices, if local businesses are not effected it will mean that the magnet drag theory has surpassed all historical trends.

In Liss, about two years ago a Tesco convenience store opened; last month the one other convenience grocer closed and a butcher has also closed.

I revert to the Scunthorpe comparison goods expansion mentioned near the beginning & in relation to flouting planning conditions. Asked to comment on the effect on local traders, John Hayes who is chair of Scunthorpe's local chamber of trade said “Well, it's turned out disastrous really for the local retailers.”

Similar arguments are current in Liphook where Sainsbury’s has considerably expanded its comparison goods offering and this has already led to the partial closure of an independent. Other traders are rallying to seek a way to ensure their survival – something which Sainsbury does not intend to see happen.

Social Cost 1 Clone Towns and Concentration of Local Power

The phrase Clone Town has passed into our lexicon & describes towns which have become undifferentiated; they have spurned their architectural, cultural and commercial heritage for a mondo but always bland identikit urban environment.
Retail spaces once filled with a thriving mix of independent butchers, newsagents, tobacconists, pubs, bookshops, greengrocers and family owned general stores are fast being filled with faceless supermarket retailers, fast-food chains, mobile phone shops and global fashion outlets.
Petersfield has marched down this road, considerably assisted by the expansion of the clone estates mostly populated by people who have not yet built an affinity to the town. And the more clone Petersfield becomes the more difficult it is to find a reason for any affinity.

Tesco’s submission to the EHDC speaks in glowing terms of the number of multiples now in Petersfield thereby fundamentally not understanding the character of the town nor the meaning of diversity - but it does speak for Tesco’s social outlook. Large retailers are fond of other large, chain retailers (if they are complementary rather than competitive). This is because they share an identity of purpose – the town here exists to boost the revenues of the multiple – all the multiples in the town. Thus a few large retailers can combine and dominate commercial, planning and environmental issues (such as transport & roads, night time deliveries, size of lorries etc); they have identikit objectives, and those objectives have nothing to do with the people of the town, its provenance or its desire to choose its own future.

To re-quote Mrs Mayhew from Sheringham (see above): “It's undermining local democracy, it's just diabolical really,”

An excellent study of Clone Towns by the New Economics Foundation (free from www.neweconomics.org in pdf, £10 for hard copy, publ 1995) which is an extension of its study Ghost Town Britain, gives some chilling information of the state of UK’s towns and an even bleaker future prospect unless people take control of their lives again.
I can do no better than quote Andrew Simms, NEF policy director: “Clone stores have a triple whammy on communities. They bleed the local economy of money, destroy the social glue provided by real local shops that hold communities together, and they steal the identities of our towns & cities.”
In the furore over the quite appalling plans for the expansion of the Tesco in Havant (frankly, it is difficult to think that Havant could look much worse but the Tesco designers have come up with it) Mr Felix Gummer, the Regional Corporate Affairs Manager (a title to make you pause) commented : 'I think this is rather an emotive campaign, not based on fact.’ Quite, Mr Gummer; it is emotion that largely distinguishes us from other creatures, to which most of the world’s culture can be attributed and for which we are prepared to make sacrifices. Facts tell us we should save street sweeping expenditure by chopping down all trees. It is emotion that tells us that the Petersfield Tesco store looks like a half squashed shoe box; facts tell us it is constructed of cheap cement and steel.

Social Cost 2 Divorce of Management from Ownership

Owner-managers of local shops & businesses have a stake in Petersfield; it is their own capital and, often, their own homes are in the town, with their children attending the schools.

The transfer of retail ownership and capital to non-residents and the explicit bonding stakeholder ethos again lessens the tenure people have in the town. This is already seen in the impoverished attendance at local Petersfield societies and clubs and neighbourhood help associations. Newer inhabitants have little identity with a town which has increasingly become a consumerist financial conduit for non-residents.

Tesco is typical of the multiples. No local employee has a substantial stake in the company or even in the local store. The manager’s focus is on the next promotion or move – his tenure will be three years on average. Mr Gummer, Tesco’s Regional Corporate Affairs Manager, has no stake in the store or even the town. His future lies in attaining Tesco targets irrespective of the social costs and, having no affinity to the town, implementing these presents no problems. This applies to all the regional & branch managers of the multiples who crowd out the town.

It is interesting that the few remaining independent businesses are the ones which support local events and efforts such as Petersfield in Bloom. The multiples ignore, the locals participate. Indeed, someone once remarked that you could tell a shop by looking at the pavement – if it was littered and with weeds then it was not owner-managed. It is not surprising that the amount of litter around Tesco has drawn comment in the press recently.

Social Cost 3 – Employment

It could be argued that if/when Tesco does destroy local shops it would be, in economic terms, just be a migration from one form of retail outlet to another. This is true but comes with four possible attributes:

• The work will be lower paid than before.
• More part-time rather than full time employment.
• Minimal employment protection as some of the labour could be contract
• Fewer jobs in aggregate.

Good opportunities could exist, though, as a staff member at the Job Centre.

--------------------------------------------

A consumer spokesman on the radio the other day (I could not catch whether it was the Consumers Association) commented:

Tesco will suck out the oxygen of trade and suck out the oxygen of social capital.


Making the System Work for the People

Make Democracy Work

• In France and now Poland local authorities can veto any new shopping centre or supermarket over a given size
• The town of Carmel, California passed a by-law banning “formula” restaurants; this spread rapidly across America and now many towns and villages can stop multiples developing in their towns and villages on a plebiscite. The plebiscite can determine what is a multiple or permit some multiples and not others. This is direct people action and cuts out layers of local government and costly public inquiries.
• In the UK the “Local Works” coalition launched a Parliamentary Bill that would give local communities and authorities in Britain much more power over local decisions enabling more control over the types of shops and services that move into their areas. It may take years to come to the statue book but when it does it will strengthen the hands of communities – that is you and me.

Set a Frame Work

• 20 years ago France prohibited all out of town supermarkets; we are thinking of relaxing our guidelines, produced years after the French, on out of town development under pressure from……….we won’t mention names.
• Malaysia has stopped the construction of all hypermarkets for 5 years in certain areas.
• Nearly every country in Western, and increasingly Eastern, Europe has taken steps to safeguard the character and diversity of towns & villages. Even in Thailand, where Tesco is causing immense job losses among street traders, there are stirrings of seeking control.

Reduce the Power of Money

However much it costs a supermarket in planning and management for a new store it is a small sum when amortised over 20 years. And the substantial one-off cost is the Public Inquiry, should it get to that stage, which is most usually borne by the hapless Council Tax payer. The average cost of a Public Inquiry is £250,000.

Additionally, those that oppose need to raise very substantial funds to obtain expert representation – the supermarket has most of these people already in house, and as remarked by Gareth Morgan, FRICS, Tesco has more guns & knowledge than most local authorities.

To a supermarket, set up costs are capitalised and fines for contravening conditions and regulations are absorbed as marketing costs.

Strengthen the OFT Office of Fair Trading

It seems odd, if not a bit worrying, that Tesco accounts for 30% nationally of groceries (and much more in some areas) without attracting the wrath of anti-monopoly legislation.

In 2004 Tesco took over T&S, a chain of 850 convenience stores trading as One Stop and Day & Nite. The OFT’s response was breathtakingly supine – a bow and arrow against a missile.

Consequently, between 2000 & 2005 the number of convenience stores owned by the Big Four, rose from 54 to 1306., whilst the numbers of independent convenience stores fell by 2760.

Further prompting of the OFT produced the response that there were ‘no competition issues at a national level’. What do they mean?

The other institutional barrier to stopping large supermarkets, is that the OFT and Competition Commission are involved whenever a supermarket chain seeks to merge or takeover another – but not when they seek to open a new store. All a supermarket needs to do is convince a local authority that there is a need for more local space, irrespective of how many stores the company already operates. Hence the absurd situation in Inverness (pop 50,000) where Tesco has three stores and then applied for a fourth. Already accounting for over 50% of Inverness expenditure this 4400 sq m store plus petrol station proved too much for ‘Tesco Town’ (local name) and the proposal was turned down.

The strategy was typical Tesco: planning for a much smaller store & petrol station had been granted; impatient with this foot in the door, plans were upped – and this expansion plan before the first brick was laid got them kicked out.

Clumsy (greedy?) handling no doubt, but the turndown was not a certainty despite the petitions, MPs and others, even the venerable ‘Scotsman’, expressing opposition. As the Community Council leader, Mr Steven Rodger remarked that complaints about the store being a Tesco “….wasn’t our concern”. In other words, we cannot turn down something on a name. Perhaps the good voters will remember his name come election time.

Counter Attack

Boycott?

Highly effective but difficult to keep going. Effective because money is the only language understood by Tesco and their compatriots. You cannot persuade when there is no remote meeting of minds, when different dictionaries are being used

But to show how effective boycott is (well, ask the Irish about Capt Charles Boycott in 1880), consider Greene King. The 800 pub brewer purchased the Lewes Arms, Lewes last year. It replaced the favourite local brew Harveys Bitter with its own brand of mondo-beer.

On 11 December 2006 the locals just boycotted the pub. Revenues plunged by over 90% in this usually crowded pub; within four months the MD Mark Angela, was stating that Greene Kings beers are excellent; another two months on and “We underestimated the strength of feeling which led to many locals boycotting what was once a great British pub. As a result it has lost some of its character and greatness…….we did not fully appreciate its special position in Lewes as the former ‘Brewery Tap’ or take into account its history and traditions.”

In other words, this enormous brewery came into Lewes caring not one jot about the town, its people and their character. It threw out a local favourite & then told the people they were wrong, because they did not fit the clone template.

Another two months on and Mr Mark Angela is no longer Managing Director.

Reject the Tesco Proposition

If you wish to stop or even reverse Petersfield becoming more of a Clone Town; if you believe that huge supermarkets abuse their power, if you are dismayed by Mr Gummer’s condescension & Tesco’s arrogance make sure your councillor is fully aware of your feelings. Write to him/her at EHDC, Penns Place, Petersfield GU31 4EX. Get the name from http://www.easthants.gov.uk

Hit Where it Hurts

The most effective weapon is to demand a reduction in your Rateable Value if this expansion proceeds. In the Adur District in Sussex a district valuer gave a blanket 20% reduction to all those who appealed following a Tesco build.

Given the more central location of Tesco in Petersfield I would imagine a 30% to 40% reduction would be fairer for The Causeway, Hylton Road, Sussex Road, the Spain, Dragon Street, College Street, Ramshill and Station Road.

After all, if you suffer because of the vote of your councillor, take revenge on his budget; Tesco has at least taught us that money is power.

John Milman
Committee Member, The Petersfield Society

The Petersfield Society is your local Civic Trust, an independent environmental watchdog dedicated to enhancing the quality of life in Petersfield and the surrounding area. You are invited to join and participate in the Society and work. Membership is £7.50/single and £10/couple per annum.

www.petersfieldsociety.org.uk 

The Civic Trust (www.civictrust.org.uk) is the leading UK charity dedicated to bringing vitality, sustainability and high quality design to the built environment. The Trust works with people to promote thriving towns and villages, developing dynamic partnerships between communities, government and business to deliver regeneration and local improvement.