UK: Tesco defends grocery market competition

Supermarket giant Tesco has insisted the UK grocery market is "fiercely competitive".

The claim underpins Tesco's response to the Competition Commission's (CC) 'emerging thinking' report which highlights the sales growth and land ownership of the major supermarkets as areas of concern.

It brushes aside claims from critics that the nationwide control of supermarkets is limiting consumer choice by driving smaller competitors out of the market.

Instead Tesco's submission insists that it makes economic sense for the grocery market to adopt cost-efficient national strategies.

"Those who are wedded to the idea of local markets may struggle to understand why retailers adopt national strategies, but these are the realities of the UK grocery market," the supermarket said in its submission.

Previous definitions of geographical markets by the CC – "crucial in this inquiry" – are attacked as "overly simplistic". It argues that trends in shopping habits, involving a shift towards smaller-scale shops and more frequent 'shopping missions', are undermining the impact of supermarkets.

"Because of these changes, smaller stores and the fascia that operate them now impose an even greater competitive constraint on larger stores than they did in 2000," Tesco asserts.

Above all else, however, Tesco – which controls nearly one-third of the grocery market by itself - is keen to point out that its own dominance has recently come under threat.

"The grocery market remains highly competitive," it states, arguing that recent improvements to rivals like Morrisons, Sainsbury, Somerfield and Marks & Spencer have made them "now far more competitive".

"Competition in the grocery market therefore looks set to remain intense, and customers will continue to enjoy the huge consumer benefits that the market is producing," the submission concludes.

Source: mform.co.uk