Supporting local economies

The economic and social impact of supermarkets continues to be a matter of debate, especially in the UK. We believe our stores help businesses and local communities.

Terry Leahy at Orpington Regeneration Partnership store ‘topping out’ ceremony

Professor Neil Wrigley of Southampton University pointed to several research studies in his evidence to the Competition Commission that show a supermarket investment brings benefits for the town and local businesses. People stay in the area to do their shopping and visit other local retailers and services, spending their money locally. The mix of retailing may alter and some grocery shops may lose business but other retailers, such as bakers, do well.

Sometimes a new supermarket brings direct benefits to a run-down area because it is part of a larger scheme including other properties. For example, in 2008 we developed a site in Orpington (south of London) to include apartments, a medical centre and town centre parking. We worked closely with the local planning authority and the Greater London Authority to develop the scheme, which is the most significant investment in Orpington for years and will bring over 400 jobs to the area when the store opens in June 2009.

UK Competition Commission Inquiry

The Competition Commission reported on the UK grocery market in 2008 after a two-year investigation. It found that on the whole, the market delivered a good deal for customers and that competitive rivalry was alive and well. The Commission did propose some changes around the supply chain and land agreements and we are working with the Commission to put these into practice.

We did appeal against one of the Competition Commission’s recommendations to introduce a competition test into the planning system. We believe that such a test would have significant negative consequences for the industry and for consumers, including blocking viable and competitive investments. In March 2009 the Competition Appeal Tribunal upheld our appeal, although this is not the end of the process. In light of the Tribunal’s decision the Commission will now be required to review its work on the competition test and reconsider what, if any, recommendations it should make to Government.