Tesco boss Sir Terry Leahy has stood up to the UK grocery market inquiry by the Competition Commission by claiming the retail giant’s 15 million customers each week are the best regulators there are.
He claimed that the competition watchdog might attempt to punish the success of the UK number-one retailer.
“Imagine a Britain where Premiership footballers are told they can only shoot with their left foot because they are scoring to many goals,” he wrote in the Sun. “A crazy idea, but not to dissimilar to what might happen to one of Britain’s most successful home-grown businesses if the Competition Commission decides that Tesco is just too good at what it does.”
Leahy claimed that the size of Tesco does not protect it from competition. “In our industry you fight for customers every day, knowing that down the road one of your competitors trying to tempt them away with a different offer. Being big doesn’t protect you from this,” he insisted.
Customers switching from Tesco took £250 million-worth of their business to other retailers, Leahy said, but those switching to Tesco in the same period brought almost £300m of new custom. “This shows that customers are canny and will try new things and shop around for the best deal. They are also quick to punish if you disappoint them,” he said.
Leahy claimed that Tesco has a strong relationship with its suppliers and that they “need each other to succeed and grow” in a competitive market. “At least 1,500 of our suppliers have been with us for five years or more, which shows we work well together in a partnership which is demanding but open, honest and fair,” he said.
The latest investigation by the Competition Commission is the third inquiry into the UK grocery market in seven years, and Leahy questioned whether it is necessary. “I believe it will tell us the same as the previous two. That consumers benefit from competitive rivalry between supermarkets, choice has improved, service has got better and prices have fallen,” he wrote.
“There is no doubt that as supermarkets have become more popular, our high streets have changed,” he added. “But this change has been driven by consumers, not supermarkets. People are busier and have less time to shop. They also care more about fresh, nutritious food and the price they pay for it. Supermarkets like Tesco have acted to meet these demands.”
Increased regulation would have a negative impact on the UK grocery market, Leahy warned. “Too much regulation in any market can stifle innovation, limit new jobs, push up prices and restrict choice that I believe consumers deserve and demand,” he wrote. “So when I hear calls for more regulation, a code of practice here or an ombudman there, I say supermarkets already have the most effective regulator there is: You, the consumer.”
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