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End of an era: Tesco towns no more

TescoThe supermarket age is over. In a matter of months, the big four have gone from growth to groan, their expansion plans put into reverse and replaced by a new blueprint preparing for a rapid downsizing of their portfolios.

For the thousands of indignant protectors of a more gentle way of life this must be the sweetest of messages. A 40-year battle against the ubiquitous spread of Tesco towns is finally at an end.

The final shots were fired this week with new figures showing that total grocery sales had fallen for the first time in two decades and a report from Goldman Sachs predicting that one in five stores may have to close if the chains are to resume their profits growth. Quite simply, the market has reached saturation point. Kantar Worldpanel figures showed that overall sales fell 0.2% in the 12 weeks to November 10 and Asda was the only one of the big four to maintain its market share in the battle with the discounters.

Together with the inexorable rise of online shopping, the major supermarkets have little choice but to reassess their business models.

No wonder Sir Terry Leahy and Justin King, at Tesco and Sainsbury’s respectively, bailed out. Instead of picking up the baton and running ever faster, their successors are the first to be tasked with how to manage a slowdown driven by some fundamental shifts in shopping habits.

Sainsbury’s new boss Mike Coupe is preparing shareholders for a period of shrinking like-for-like sales, while Tesco has several times hit the headlines for all the wrong reasons, including two profits warnings.

The big four are not the only ones feeling the pinch. Waitrose boss Mark Price reckons some stores will close, pointing out that in the past five years, 12% of non-food space has been taken out of the market.

Sainsbury’s now has more convenience stores than large supermarkets, a significant and somewhat ironic development given that the big chains were largely to blame for putting smaller, independent corner shops out of business.

This must be music to the ears of conservationists and those who simply don’t want to see their local villages and towns ruined by big out of town stores that have blitzed every high street like an invading army.

The growth of the supermarket from the 1950s appeared to be unstoppable. For the first 20 years of the post-war era they were no larger than what we now regard as a convenience store. Inevitably, Britain copied the Americans by allowing for the development of enormous out of town units without any care for the differences in demographics and culture. Where an American shopper would think nothing of driving 20 miles to the hypermarket, there was always something anachronistic about having a big shed plonked at the end of a traditional high street.

Supermarket buildings in the main are cheaply built, unimaginatively designed and a blight on every town they occupy. They represent the worst of urban architecture – ugly, over-sized and surrounded by acres of tarmac car parking that can even dwarf the buildings themselves. They encouraged roadways, traffic and jams. Their growth is only paralleled in enormity by the catastrophic errors of the nation’s planners who allowed them to leave their messy footprints everywhere.

And yet the British shopper fell in love with supermarkets. One in three consumers still shops in Tesco. They have expanded their range out of groceries into so many other products that it is possible to buy almost anything you need apart from the kitchen sink (though they would probably find a way to do that). From banking and electronic goods to tyre-fitting and fashion, they have put pressure on other specialist companies and rivals, some of whom have had little choice but to close.

They also introduced the British to foods they had never heard of, let alone tasted. Prices were kept lower through fierce competition. Availability has improved along with food standards.

But British shopping habits are changing in ways that present particular challenges for the supermarket groups. On the one hand the consumer demands the lowest possible price and has deserted the big four for the discount chains, Aldi and Lidl. On the other, the appetite for better quality, more variable and locally-grown food has risen sharply, even though it costs more and is less convenient to buy.

The shift away from supermarkets is partly a deliberate snub against big company culture, but also a growing resistance among consumers to blandness and ubiquity, together with the hassle factor caused by queuing and parking – and even having to cope with their sheer size.

Consumers have rekindled their fondness for the local butcher, baker and candlestick maker. A trip to the local shops – where they still exist – has become an enjoyable and preferable experience to the trek out of town.

While the supermarket bosses scratch their heads to find solutions to their own problems – and some stores may become warehouses for online goods – an opportunity has arisen for those fighting to save the high street.

If shoppers are deserting the out of town stores, they must be looking for alternatives. Online shopping is one thing, but if a trip to the shops can be combined with a pleasant environment to meet friends for coffee, take in some street entertainment, browse in well-lit and interesting boutique shops, then it should surely give the high street a chance.

 

 



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