Local supermarket war leaves retailers fearing for business

By NEIL RIDDELL

LOCAL retailing organisations have voiced their concern at the possible impact of the expansion plans of both supermarkets operating in Lerwick, with the Co-op set to go ahead with a £2m revamp of its store next week.

When Tesco opens its doors in Shetland for the first time on Monday, it will come as a relief for many shoppers after two months of being served by a single supermarket in Lerwick.

The Co-op has been inundated with customers for the past nine weeks but as the additional strain comes to an end in three days’ time, work will immediately begin on a store refit which will increase its sales area by a fifth, to 15,000 square feet.

Both supermarkets are describing their respective developments as ushering in a “new era” for supermarket shopping in the isles, with Tesco hoping to get planning approval for an expansion which would extend its retail floor space by 38 per cent and which it hopes to be able to complete before the year is out.

But the Lerwick Town Centre Association and the Shetland Retailers’ Association both said this week that the expansion plans were a huge worry for small retailers in both Lerwick and the countryside, where some local shops have been experiencing a boost in trade over the past few weeks.

Co-op store manager Don Wilson has described the Holmsgarth Road shop as looking “tired” and the refit and modernisation, which has been planned for up to two years, was delayed after Somerfield sold its Lerwick store to Tesco in March.

The work on the Co-op store, which the company said would allow them to offer customers a larger range and a “spacious, more shopper-friendly layout”, is expected to be completed by October but the store should remain open throughout the refurbishment period. A spokeswoman said this week that if it had to close at all between now and the autumn, it was only likely to be for a couple of days.

Mr Wilson said: “We are starting on the entrance first so the store may look like it is closed but it will be business as usual.”

As it gets ready to do battle with the dominant player in the UK grocery market, the Co-op this week revealed the changes are to include a new shop front and decor and a “significant” improvement in the range of products being offered, including a 50 per cent increase in the range of fresh foods and the introduction of a bakery.

“This £2m revamp and extension represents a significant investment in Lerwick by the Co-operative, which has been serving Shetland for more than 100 years, and reinforces our commitment to remaining at the heart of the community,” Mr Wilson said.

“The store will be transformed and I am confident our loyal customers will be impressed with the improvements. We look forward to continuing to serve the community with an excellent choice of products, customer service and members’ share of profits scheme for many more years to come.”

Tesco has submitted a planning application to significantly extend its store, which would see the retail space increase from its present 1,980m² to 3,176m², and is proposing to expand the existing 156-berth car park by adding a further 76 spaces. The number of staff employed by the company has already almost doubled from the 79 former Somerfield employees, who store manager Paul Clelland says have all been retained, to more than 140 now.

The council’s planning officer in charge of the application, Richard MacNeill, said the department was still awaiting receipt of a retail impact assessment and that there will be a lot of consultation to undertake, with the process likely to take a number of months. Tesco said this week that, if the application is successful, it hopes to be able to open the extension by Christmas.

Tesco’s corporate affairs manager Doug Wilson said the company was continuing to work closely with the council on their planning application. He said: “We hope that some consideration will be given to our ability to serve our new customers in the store and the pressure this will put on our staff.”

Shetland Retailers’ Association chairwoman Janet Davidge has been an outspoken critic of Tesco since it announced the purchase of the South Road store and said she was particularly worried about the impact if their extension plans get the go-ahead. She said the group would study the plans before deciding whether to submit an objection.

“They’re going ahead with their national pricing policy,” she said. “None of the local retailers or grocers can compete, their buying power is far too great. The only thing local shops can do is look at their service, the more personal service and look at it from that point of view.”

Lerwick Town Centre Association chairman Laurence Smith said the developments were the cause of anxiety for small retailers both in the town and the countryside. Neither of the supermarket groups has had any contact with his organisation and he agreed that the supermarkets’ national pricing schemes and buying power made it very difficult for local businesses to compete.

“It’s a concern for shops in the town and also shops in the country, the expansion, or proposed expansion, of the supermarkets,” Mr Smith said.

Tesco, which accounts for £1 in every £7 spent in shops in the UK, opened its Kirkwall store last week and is also due to open in Stornoway this month, meaning that the Yorkshire spa town of Harrogate is the last remaining postal code district in the country without such a retail presence.

Last year the company made profits of £2.8bn in the UK with a market share double that of its nearest rival, Asda, and its worldwide sales of £52bn mean it is now ranked as the fourth biggest retailer in the world, behind Wal-Mart, Carrefour and Home Depot.

Tesco Factfile

TESCO was founded in London in 1919 by Jack Cohen and has grown to become the biggest grocery retailer in the UK by some distance, employing quarter of a million people in its 1,988 stores across the country.

Two fifths of its profits – the company made £2.5bn last year – come from this country, though it is increasingly branching out into the Asian and US markets and has around a further 1,200 stores across the globe.

The company has been a huge retail success story but has also been the subject of growing criticism in recent years as it has cemented its position as the dominant player in the market, to the extent that it is responsible for over a third of grocery sales in the UK.

Tescopoly, an alliance of organisations concerned with the negative impact of supermarkets, points to evidence which indicates that Tesco’s success is partly based on trading practices that are having serious consequences for suppliers, farmers and workers worldwide, local shops and the environment.

The company has also been accused of trying to silence critics after taking out legal writs for millions of pounds against journalists who described the retailer’s expansion into Thailand, under the name Tesco Lotus, as “aggressive”.