James Lowman: Supermarket regulator would halt the bullying

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The Independent Online

It is not at all surprising to see that Tesco has achieved record-breaking profits yet again. For some time the company has been locked into a virtuous circle of profit, allowing continued large-scale investment, even through the recession, leading to further growth and profit.

There are, of course, a range of exceptional retailing practices that contribute to Tesco's success, and competitors – from supermarket chains through to small independent businesses – can and do learn a lot from the retail giant.

The question that those of us outside Tesco must ask is "how big is too big?" Tesco accounts for more than 30 per cent of the grocery market, and the group, and its supporters, tend to answer that question with a shrugged "so what", followed by the mantra that it is customers who decide and if they didn't like Tesco they would not shop there. But there is a point where this loses credibility. In many "Tesco towns", such as Bristol or Inverness, it's not actually that easy to find an alternative.

Tesco's major announcement yesterday was 9,000 new UK jobs, which will receive applause across the spectrum. However, the relationship between supermarkets and jobs is more complex than it might appear in a headline. How many jobs will be permanent and full-time? If that jobs growth is fuelled by building new stores, will it lead to decline in other retail jobs as other shops close down?

Promising new jobs opens doors in a recession. The experience of the past three recessions has been that supermarkets are one of the few developers left once investment dries up. Councils pass proposals that would otherwise face more resistance, and new stores get built, usually just as the economy has begun to recover. Government nationally and locally should insist on smaller-scale, better-located and better-integrated retail developments.

It is time for an effective supermarket regulator, a fact recognised by the three main political parties. This regulator should not prevent Tesco and the others from driving hard bargains and reducing prices but it should prevent bullying and the worst excesses of buyer behaviour that harm suppliers, other competitors and ultimately the consumer.

James Lowman is the chief executive of the Association of Convenience Stores

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