Tesco's £2bn profit raises concern over supermarket's high street dominance

It began as Jack Cohen's market stall in the East End of London less than 100 years ago. Now, Tesco is a retail behemoth, with more than 1,000 stores dominating the physical and consumer landscape of Britain, their tills accounting for almost one-third of the nation's spending on groceries.

But, as Tesco announces record profits of more than £2.2bn today, its corporate achievements are being overshadowed by growing accusations from a loose alliance of consumer and environmental groups, small shopkeepers, farmers, residents' groups and local authorities, who are increasingly challenging its control of the marketplace.

They claim Tesco's trading practices - particularly its aggressive attitude towards obtaining planning permission for supermarkets - have serious consequences for suppliers, farmers, overseas workers, local shops and the environment. They have reworked Tesco's "Every Little Helps'' slogan into "Every Little Hurts". Sandra Bell, Friends of the Earth's supermarkets campaigner, said: "It's time to put the brakes on the Tesco juggernaut. Tesco's booming profits come at a cost, with consumers, farmers and our environment paying the price. The Government and competition authorities must recognise the value of small shops to local communities."

FoE and other groups in the "Tescopoly" campaign claim the planning system is insufficiently robust to withstand "bullying" by Tesco, which is embroiled in dozens of planning applications around the country for new stores, mainly corner shop-style Tesco Express outlets (600 planned over 10 years) and Tesco Extra hypermarkets (20 planned a year, most through extending existing stores).

FoE argued earlier this year that Tesco consistently pursued appeals which threatened some authorities with crippling costs and offered to build local amenities to persuade other councils to give permission.

FoE said yesterday in the past few years the group had taken over other convenience store chains without intervention from competition authorities, tripled the amount of floorspace in Tesco Extras and inserted mezzanine floors in some stores to extend space. Some councils have fought back, rejecting plans for large developments.

But it is not just the planning process. Many farmers are concerned about the stranglehold Tesco exerts on the agricultural economy. Derek Mead, a Somerset farmer and member of the National Farmers' Union board, said beef cattle producers in the South-west were forced to accept low prices offered by local abattoirs, which were exclusive suppliers to Tesco; one is said to find it more economic to take cattle from Cornwall to a Northumberland market to get better prices. Mr Mead said: "We need a statutory code of conduct for the industry.''

The figures support the view that Tesco, once it abandoned Cohen's famous policy of "pile it high and sell it cheap" and under the control of the retail wizard Sir Terry Leahy, has achieved its aim of total dominance. Between the mid-1980s - when it began to seek out the middle-class consumer - and the mid-1990s, its share of grocery sales grew from 13 per cent to 20 per cent; it now stands at more than 30 per cent, with Sainsbury's the nearest rival on 17 per cent. If Tesco built on all the land it owns, that share would be 45 per cent.

CACI, the retail analyst, said places such as Inverness, Milton Keynes, Twickenham, Hemel Hempstead and Salisbury were, in effect, "Tesco towns", with up to 50 per cent of all grocery spending in its stores. Tesco has led the way as supermarkets expanded their ranges and branched out into other services. One pound in eight in the retail sector is spent at Tesco.

While it is likely Tesco will announce environmentally friendly measures today to answer critics, campaigners want fundamental changes. FoE is calling for a review of the grocery market by the Competition Competition and more action to protect suppliers.

Tesco's response to its critics is simple. A spokesman said: "We work within the planning system like everybody else and sometimes lose out. If we appeal and it costs a council a lot of money, that is not our doing. And so far as the convenience stores go, we only have six per cent of the entire market.''

Edward Garner, of the market research group TNS World Panel, said the protests would not throw Tesco off course. "The decline of the high street and the independent sector is not something that can be blamed entirely on Tesco.''

'We will continue our shoestring fight against the billionaire company'

By Emily Dugan

Nowhere has fought longer against Tesco than the small Norfolk town of Sheringham, which has been embroiled in a 10-year battle to keep the shopping giant at bay.

In 1996, when Tesco proposed a supermarket development on the site of a former community centre, a recently refurbished block of council flats, a fire station and a car park, a mass opposition movement emerged. Some 900 residents signed an anti-Tesco petition. Aware of the protests, the supermarket giant kept the land, but refrained from putting in a formal application for several years.

Erica Mildmay, founding member of the Sheringham Campaign Against Major Retail Over-Development (Scamrod), said the opposition was largely based on the fact that there were already several other large supermarkets in the area: "I don't think a 20-minute drive to a supermarket is unacceptable in a country region. They don't need to be here and we don't want them.''

In September 2005, after several years of negotiations over the details, North Norfolk Council eventually refused the application, saying a store of this size was not needed for Sheringham. The council cited the adverse impact on the viability of the local shopping area and issues of highway safety and traffic management. Tesco fought on, and earlier this year appealed to planning inspectors against the council's decision. And the campaigners fear that Tesco will ultimately triumph. According to Mrs Mildmay: "We have fought our guts out, and we are still going to get nuked. We are really weary. Tesco have us in their sights, but we will continue to fight on a shoestring against the billionaire company.''