Supermarkets set to expand 20 percent by 2014

There’s a quiet revolution underway.

Britain’s supermarkets are expanding on a scale never seen before.

In the next three years, Channel 4 News has discovered there will be 20 per cent more supermarket space in Britain. That’s equivalent to 350 football pitches worth of new Tescos, Sainsbury’s, Asdas, Morrisons and Marks & Spencers.

The recession has played into their hands too. As other retailers have gone bust – the supermarkets have stayed strong. In fact, many are benefiting from the downturn, snapping up empty shops on rundown high streets and renegotiating big development deals with hard-pressed councils.

With a new battle for space about to begin, Channel 4 News decided to take a closer look at the way in which supermarkets are expanding throughout the country.

Dundee

There’s no better example of the competitive battle that supermarkets are engaged in than in Dundee – known to locals as trolley city. Despite the fact there are already 25 supermarkets here, two years ago Asda was given planning permission to open another 24-hour store on the site of an old NCR factory.

The local community was thrilled, as it meant at least 500 jobs for people in one of Dundee’s most deprived areas. But Tesco objected on the grounds that the store was against the council’s local plan for the area. It took the council to court, and lost. But it appealed, although it lost that too. But Tesco still hasn’t given up. Now it’s taking Dundee Council all the way to the UK Supreme Court in London.

“We look on Tescos as a big bully with no concern for the community.” Stella Carrington, Dundee West Communities Association

But Tesco is not the only one making such aggressive moves. Channel 4 News understands that there are eight other court battles between supermarkets and local authorities up and down the country. Of course the sting in the tale of such acrimonious battles is that it’s the taxpayer that’s having to foot the bill. In Dundee the case has cost the council at least £150,000 already, at a time when budgets are being squeezed and it can least afford it.

Stella Carrington, who is chair of Dundee West Communities Association, says people are angry. “We look on Tescos as a big bully with no concern for the community,” she told Channel 4 News. “All they are concerned about is the money dropping into their tills. They are holding this whole part of Dundee to ransom.”

But Tesco is adamant it is simply following the rules and that it’s not about competition. Katherine Edwards, the company’s Group Regulatory Affairs Director told Channel 4 News: “The planning process is supposed to provide a fair level playing field for everybody, which means there is a proper process which has to be followed and we believe that in the case in Dundee, the process hasn’t been followed, which is why we are challenging.”

Analysts say it’s a win-win situation for Tesco, because its legal bills are small in comparison to the £2 million in profits it will get to retain by keeping Asda off its doorstep. And that could increase as the case in the Supreme Court isn’t due to be heard until next year.

It’s not just an expansion of the big supermarkets. The recession means convenience stores are also popping up everywhere. As weaker retail outlets such as Woolworths, DIY chains or pubs go bust, the supermarkets have used their financial muscle to snap up empty shops in prime locations – often without the need for planning permission.

Bristol riots

But while these stores are largely welcomed by communities – and bring welcome footfall to neighbouring shops and restaurants – some are angry at the lack of consultation. That anger was more than visible in recent riots on the streets of Bristol.

What started as a protest against the opening of a new Tesco Express quickly turned ugly after a mob of protestors – wielding bottles and stones – clashed with nearly 200 riot police. Tesco’s says the battle was more than simple anger at their new store and it argues that most people in the area of Bristol welcomed the opening.

The British Retail Consortium agrees. “Clearly there were people in Bristol who were unhappy about the way they felt the decision had been made. But in general what we see is that these stores are very well supported by customers once they open because they meet a real demand with our busy lifestyles.”

Tesco and the other big superstores are also behind ambitious regeneration schemes in some of Britain’s most deprived areas, where they bring much-needed investment as other forms of development have ceased in the downturn.

Linwood

But the chasm left by a bitter recession has also left supermarkets in a strong position and in some instances big development deals agreed before the downturn are now being unpicked.

This happened in Linwood, just outside Glasgow. The town has been in a miserable state of decline since the local car factory – a big employer – was shuttered in 1981. Then – four years ago – Tesco effectively bought up the town centre and agreed to redevelop it in its entirety, promising a new health centre, police station, library and community centre alongside its new superstore.

The health centre was due to cost £6 million, but last year – three years after it signed the planning agreement with the council – it submitted a new one. Tesco argued it was no longer financial viable to build a new health centre and instead it planned to make a £500,000 donation to upgrade the existing facilities. The tweak meant a £5.5 million saving for Tesco.

The council accepted – Tesco’s was the only offer on the table and it was desperate to get the development started. But some locals said they felt let down.

‘Disappointment’

“They’ve gone through this consultation exercise in the community where people were promised this all-singing, all-dancing health centre…but the health board will not be getting their new new health centre and that is a disappointment because that was one of the promises Tesco made,” said Anne Hall, a local councillor in Linwood.

Tesco said it hadn’t gone back on its promise but that the economic climate meant its original deal was no longer financially viable.

“I think the point is we are still making the investment in their community,” Ms Edwards said. “There are lots of developments in the UK that have stalled that are not going ahead at all. We are making the investment. These people need jobs – it’s going to bring hundreds of jobs for local people. So it actually is going to mobilise their local economy.”

And Linwood may not be an isolated case, because in the recent Budget, the Government said it would urge councils to push through local developments as a way of bolstering economic growth. The default answer to planning applications should always be “yes” it said.

That will no doubt be music to the ears of the supermarkets as they embark on this latest episode of store wars. With the government on their side and with the rest of the high street still reeling from the effects of the recession, supermarket expansion looks set to continue unabated.