DOZENS of Scottish convenience stores are under threat after Tesco reached an agreement to buy food wholesaler Booker in a £3.7 billion deal, it has been claimed.
The grocery giant said the tie-up will create “the UK’s leading food business” and deliver significant cost savings for the combined group.
Booker is the country’s largest wholesaler and owns the Londis and Budgens convenience store brands.
There are 111 Londis stores in Scotland and two Budgens.
The companies said the deal would bring “benefits for consumers, independent retailers, caterers, small businesses, suppliers and colleagues, as well as delivering significant value to shareholders”.
But there are concerns Tesco’s new-found ability to control both the supply and consumer price will place many of Britain’s historic corner shops at risk.
Tesco chief executive Dave Lewis said: “This merger with Booker will further enhance Tesco’s growth prospects by creating the UK’s leading food business with combined expertise in retail, wholesale, supply chain and digital.
“Wherever food is prepared and eaten – ‘in home’ or ‘out of home’ – we will meet this opportunity with the widest choice and best service available.
Convenience store software provider Epos Now chief executive Jacyn Heavens said supermarkets are already dwarfing local corner shops, with margins down five per cent. He said the latest Tesco acquisition “looks set to put another nail in the convenience store coffin”.
She said: “Tesco already dominates the UK market and controls most of the pricing, which is putting a big squeeze on the independent convenience stores.
The independent convenience store is already being put under lots of pressure from giants such as Tesco Metro and Sainsbury’s Express, which are moving in on the centre of local communities, often forcing many traditional independent shops to shut.
Mr Heavens said: “A large majority of the independent convenience stores rely on Booker to buy their products to resell, so with Tesco acquiring Booker wholesalers it could spell disaster for many stores.
“ Tesco’s acquisition means it is controlling the key supplier and can tighten its squeeze on the conven- ience store market commanding the consumer price in its stores and the wholesale price.” Experts also believe the deal will face regulatory scrutiny from the Competition and Markets Authority (CMA).
Independent retail analyst Nick Bubb said: “The CMA will have a field day with this because, although Tesco is mainly a retailer in the UK and Booker a wholesaler, Tesco does own the One Stop convenience store chain that competes with Booker’s interest in symbol groups and convenience store retailing.
“So it is by no means clear the CMA will allow things to proceed very far without having a good look at the overlap.”
But Mr Lewis and Booker chief executive Charlie Wilson batted away suggestions of competition concerns. Mr Wilson said: “We think it is pro-competition; the CMA will go through what it does, but we’ve had good advice on this.”
Shareholders have been asked to approve the deal in a vote.
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