Paying for Tesco's Profits

Tesco is expected to announce record profits of over £2.2 billion tomorrow (Tuesday 25 April). But Friends of the Earth warned that Tesco's continuing success is partly based on trading practices that have serious consequences for suppliers, farmers, overseas workers, local shops and the environment [1].

Friends of the Earth Supermarkets Campaigner Sandra Bell said:

"Tesco's booming profits come at a cost with consumers, farmers and our environment paying the price. It is time to put the breaks on the Tesco juggernaut. The Government and competition authorities must recognise the value of small shops to local communities and create an environment that allows retail choice to flourish.

Tesco has grown unchecked by the competition authorities and aided by a planning system which has not been robust enough to stop it building new stores and extensions even where there is strong local opposition. In the last few years Tesco has:

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Taken over convenience stores with no intervention from the competition authorities.
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More than tripled the proportion of floorspace in its huge Tesco Extra hypermarkets (over the last five years).
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Significantly extended existing stores without planning permission by inserting mezzanine floors [1].
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Created `Tesco towns' where it has over 45 per cent of the market share.

Some consumers/communities are beginning to say enough is enough. More and more communities all over the country are fighting Tesco plans to open new stores [2].

Recent surveys suggest that customer loyalty is being shaken as people learn the truth about the companies bully tactics. Tesco's corporate image slipped on YouGov's brand-index, which measures consumer attitudes to brands on a day-by-day basis, after media coverage of anti-Tesco campaigners. And a study of consumer attitudes to the top supermarkets, by brand market research consultancy Millward Brown, found that while Tesco was still the most popular brand its brand loyalty rating had fallen sharply since 2003.


There is speculation that Tesco will announce funding for new environmental measures alongside its profits tomorrow. But Friends of the Earth said that Tesco would have to fundamentally change the way it does business to reduce its negative environmental impacts. This would include sourcing a lot more of its food from the UK instead of flying it across the world.

The environmental campaign group pointed out that local shops tend to be more energy efficient than huge supermarkets - per square foot supermarkets emit three times more carbon dioxide than greengrocers and it would take more than sixty greengrocers to match the carbon dioxide emissions from a single average superstore [3].

Friends of the Earth wants a rapid and thorough review of the grocery market by the Competition Commission, who have the power to break up the supermarket monopolies and a swift rewriting of the supermarket Code of Practice to protect their suppliers.



[1] Friends of the Earth survey 2006

[2] See www.tescopoly.org/index.php?option=com_content&task=view&id=213&Itemid=103

[3] Sheffield Hallam University (2002) Energy use in the United Kingdom non-domestic building stock