Tesco, not content with domination of the supermarket sector, is now being tipped to top the convenience market this year.
According to a report by retail analysts Verdict, Tesco will this year edge ahead of convenience stalwarts Spar, the Co-operative Group and Musgraves.
Gavin Rothwell, senior analyst, said: “Tesco is poised to emulate its grocery market leadership by capturing the neighbourhood market leadership.
“We were not expecting it to become the biggest this year. This time last year, we were envisaging a three-year time frame for that, so Tesco is one year ahead of where we expected it to be,” he said.
The retailer, according to TNS figures, already accounts for around one pound in every eight spent in UK shops and has a market share in the grocery sector of 29.1 per cent.
The news is likely to further fuel the debate surrounding the difference between the convenience and supermarket markets.
Rival c-store operators were left furious after competition bosses ruled the two markets separate, following Tesco’s purchase of the Europa group.
The Verdict report values the c-store sector at £43.4 billion in 2004 and estimated Tesco’s share of the market at five per cent last year. This compared with the Co-op at 5.5 per cent, Spar at 5.4 per cent and Musgrave at 5.3 per cent.
This is compared with the fact that in 1999, Tesco had only 0.9 per cent of the market.
Rothwell said: “Tesco’s growth in this sector was extremely impressive in 2004, with share up a whole percentage point.
“A combination of acquisitions, store conversions and organic development of the Express format, on top of potent like-for-like growth, was behind uplift.
“Tesco now stands at only half a percentage point behind the market leader. Given Tesco’s recent track record of growth, it is hard to envisage Tesco not closing that gap in 2005.”
On the Baugur bid for Somerfield, Rothwell remained doubtful. “Were Baugur to be successful in its bid for Somerfield, the combined operations of the Big Food Group and Somerfield would catapult it into the number one spot.
“Yet in spite of the scale attraction of the bid, both operators are in delicate positions, and as such we are far from convinced the combination of two under-performing retailer will create anything other than a larger struggling retailer.”
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