Monday, August 4, 2008

Tesco in the United Kingdom: Small Grocery-Postal Shop Fires Back Against Tesco's Competitve Pricing on the UK Island of Bressay

Fresh & Easy Buzz Editor's Note: When it comes to competition, Tesco, the United Kingdom's leading food and grocery retailer with about a 31% overall market share, has a "take no prisoners" approach.

UK-based international retailer Tesco, which is the third-largest retailer in the world, is the parent company of Fresh & Easy Neighborhood Market USA.

However, that Tesco focus is normally reserved for its competing chain store retailers, ranging from number two Asda (owned by Wal-Mart), number three Sainsbury's and number four Morrisons, to other significant competitiors like the Co-operative Group (now the UK's fifth-largest grocery retailer), Waitrose, the small-format discounters Aldi, Lidl and Netto, and a few others.

However, it seems Tesco also has had a ressesive "Goliath" gene hidden within its corporate culture, as the story reprinted below (in italics) from yesterday's Sunday seems to suggest.

Tesco recently opened one of its supermarkets on the small UK island of Bressay, which is just a seven minute ferry ride away from the island village's long-established independent combination post office/grocery store. The Isle of Bressay is one of the nation's scenic Shetland Islands.

Such mail/grocery shops are common in small English towns. In fact, we've run a number of posts from the Village Postmaster, who runs a similar shop in the village of West Essex. The Village Postmaster often writes in his blog, Village Counter Talk, about being an independent retailer in what he calls the land of Tesco.

In fact, we wonder what the blogger-postmaster-independent retailer thinks about this latest competitive battle, pitting Tesco against one of the UK's fighting independent small shop retailers and postmasters. Something tells us we will find out in the comments section when he reads this piece.

We know how Brian Law, who runs the independent postal shop on Brassay Island feels, based on the Daily Mail story reproduced below.

Mr. Law, 65, fired back at Tesco when it ran a full-page newspaper advertisement undercutting the prices on a number of food and grocery items sold in his store, by matching the Tesco prices with the exception of being 78-p (Pence) higher, which he says in his media piece--a huge poster on his store window--makes his ~20-p (British Pound) market basket actually cheaper than Tesco's because shoppers save on the cost of taking the ferry to the Tesco store seven minutes across the water.

That's pretty good gorilla marketing on shopkeeper Law's part we think. And, as we recall, David beat Goliath in that particular historic fight. History suggests David did so not because he was mightier than Goliath--far from it. But rather to a large degree because he had the support of the locals who generally love to see an underdog win.

From yesterday's Daily Mail-UK:

Bressay shopkeeper takes on Tesco
Aug 3, 2008 By Billy Paterson

THEY have 270,000 employees, 2300 UK stores and their turnover last year was £46.6billion.

But supermarket giants Tesco have sparked an amazing price war with their smallest rival...the post office on Bressay Island (employees: two).

The David v Goliath battle commenced when Tesco began trading in Lerwick on the Shetland Islands last month.

Brian Law, who has run the village shop for 15 years, saw customers lured by deals that have made Tesco Britain's biggest supermarket.

While they placed full-page colour ads in the local paper, Brian's marketing budget only stretched to a homemade poster in his shop window.

It claims £20 of goods advertised by Tesco - a seven-minute ferry trip from Bressay - can be bought from his Mail Shop for £20.78.

But Brian, 65, says their shopping will cost less as they will save on transport costs.

He said: "My catchment area in Bressay is 160 odd houses and 400 people.

"In the run-up to opening their store, Tesco ran an ad showing a shopping trolley with food, many their own brand, which cost less than £20. I decided not to take this lying down and got the magnifying glass out, listed the goods and went round our wee shop checking the prices we charge for the same items.

"The total cost came to £20.78. That may be more than Tesco but for someone to take their wife and car over to Lerwick on the ferry costs £11.10. By shopping with us, people will save £10."

Brian's poster states: "The same goods in the Mail Shop, Bressay, £20.78.

No travelling. No ferry fares. No queueing. No hassle. The choice is yours.

No Tesco own brands."

Brian, who runs the shop with his wife Ann, 57, said: "It was all a bit tongue in cheek. It is not as if we are in direct competition with Tesco but the locals had a laugh and we had a good positive response."

A Tesco spokesman said: "This shows competition is alive and well in the retail sector and the true winners are the customers in the Shetland Isles."

Shetland Islands Council have hired a consultancy firm to carry out a survey on Tesco's impact on the islands' retailers.


The £20.78 Mail Shop shopping list of equivalent items in the £20 Tesco trolley is:

>Kellogs Corn Flakes £1.89
>Twin-pack kitchen roll £1.09
>Walkers crisps, six-pack .99p
>Hovis loaf £1.48
>Birds Eye garden peas £1.35
>Fabric softener 85p
>Bleach ..79p
>Washing-up liquid 75p
>Del Monte orange juice 89p
>Robinsons fruit juice £1.09
>French stick 92p
>Litre of milk 84p
>2 kilos potatoes £1.45
>500g mushrooms £1.41
>500g Flora margarine 95p
>1 kilo bananas 1.50
>Twin-pack toilet roll 89p
>Six eggs 90p
>Sponge cake 75p

1 comment:

The Village Postmaster said...

Another great post. You have again found a competition story that looks at the little man and how he has thumbed his nose at the giant corperate bulldozer.

There are lessons to be learned from Brian and Ann laws actions that should fire any small retailer to 'have ago'.

I have posted my reflections on their actions on

Many thanks for shining ab light on the story.