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Tesco: richer than Peru

As store makes £5,000 a minute, critics fears that Britain is a 'one supermarket state'
Zoe Wood, retail correspondent
Sunday April 15, 2007
The Observer
The UK's biggest supermarket chain, Tesco, will smash its own national record this week when it unveils annual profits totalling more than £2.5bn, or close to £5,000 profit every minute.

The supermarket powerhouse, which collects £1 in every £7 spent on groceries in the UK, will reveal that offering a cradle-to-grave service - providing everything from food to clothes to furniture to insurance to banking and now even houses - has led to the record amounts.

Over the next three years Tesco plans to oversee construction of 2,000 homes, offering potential buyers a Tesco mortgage. It falls short of providing a funeral service - although its financial arm offers a handy life insurance product. The retailer is even trying to educate the masses, suggesting shoppers use the loyalty points gathered under its Clubcard scheme to pay for an Open University degree.When Tesco updates shareholders in the City on Tuesday, its chief executive, Sir Terry Leahy, will show how its ability to second-guess customer behaviour, largely due to the ocean of data gathered from its Clubcard scheme, has helped the business increase sales from £39.4bn a year ago to an expected £42.7bn - more than the GDP of Peru. Its latest profits figure compares with profits of £2.25bn last year.Although the grocer is coming under increasing fire in Britain from pressure groups concerned that its inexorable march is turning Britain into a 'one supermarket state', Leahy will argue its stores are a beacon for millions of Britons who trust in the provenance of the goods it sells.Leahy, who has led Tesco for the past decade, is credited with transforming the retailer into one of Britain's most successful companies, planting its flag in 12 countries around the globe including emerging markets such as China.Its march across Britain, building a chain of nearly 1,800 stores, has dramatically changed the retail landscape with many local, independent shops closing in the wake of each new supermarket opening.The fact that Tesco's market share is now roughly that of the combined number two and three, Asda and Sainsbury, has set alarm bells ringing. Andrew Simms, author of Tescopoly, a book that attacks Tesco's dominance, and policy director of the New Economics Foundation, warns: 'Unless [the Competition Commission] makes full use of its powers... the endgame could be Britain turning into a one supermarket state.'