Tesco accused of using cash and carry to ‘squeeze’ village stores out of business

Village stores have sounded the alarm over what they claim is a battle for survival, accusing the supermarket group Tesco of using its cash-and-carry arm to “squeeze” them out of business by restricting supplies and deliveries of groceries.

Independent retailers, many of them also running the local post office, have told the Guardian that a series of changes recently introduced by Tesco’s wholesale arm, Booker, were adding to pressures at a time when some villages had been left with just one small shop – or none at all.

They claim Booker has:

• Reduced the range of items available by up to 30% at some sites.

• Withdrawn customer favourites at some sites including Yorkshire Tea, Rowntree’s sweets and Colman’s mustard.

• Reduced the availability and reliability of deliveries.

Andrew Goodacre, the chief executive of the British Independent Retailers Association (Bira), called on the UK competition watchdog to examine the issue and said he would be raising the matter with Kevin Hollinrake, the minister for small business.

“I think it’s shocking,” Goodacre said of the problems reported by small retailers. “This shows the worst of a large company bullying little shops. Communities want these small shops and these are not businesses making millions of pounds.”

Seven years ago, the competition watchdog took a much-criticised decision to wave through the acquisition of Booker, the country’s biggest grocery wholesaler, by Tesco, its biggest supermarket chain.

Via Booker, Tesco also controls the Londis, Budgens and Premier groups, which are made up of thousands of independent stores tied into buying deals with the wholesaler.

In 2017, at the time of the Booker takeover, rival wholesalers wrote to the Competition and Markets Authority warning it would hand Tesco “incontestable power over the procurement of all grocery categories in the UK”.

Jonathan Cobb, who runs the village shop and post office in Miserden, Gloucestershire, said it felt like the fears raised then were now a reality. His local Booker has stopped selling sought-after brands including Colman’s mustard, Tuc and Cheddars biscuits.

The alternatives provided are often branded with the Jack’s label, supplied by Booker, which has packaging displaying the catchline: “part of the Tesco family”. Cobb said he did not wish to sell Jack’s products “as it says Tesco on it”.

As much as 30% of the range he previously bought from Booker could no longer be sourced, said Cobb, and it felt like Tesco was “slowly pushing us aside”.

He cannot order enough for a delivery as there is nowhere to store those goods in his small shop. He also wants to continue supporting local farms by buying fresh meat, fruit and vegetables from them and does not want to be solely reliant on one wholesaler.

The Guardian interviewed five small retailers and was shown comments by others from online forums. Shop owners agreed that as much as 20% to 30% of the lines they usually bought from Booker had been affected.

A wider number of items can be sourced from Booker if a retailer requests a delivery. However, many small stores, which may only make sales of £1,400 a week, cannot reach the £1,200-a-week minimum order.

One village shop owner said she did order enough to get deliveries, spending about £1,500 a week, but she said Booker now charged £40 for delivery and had reduced its range by a “significant amount” so that she was having to try and find alternative sources of supply.

She added that she was no longer able to order just the one or two packs of frozen chips and fish fingers she needed because Booker now demanded a minimum of a whole case and there was not space in her freezer.

She said she had spent hours searching for alternative sources of supply but most were too far away or required additional work such as inputting every item into the till system by hand, whereas Booker provides the information electronically for a quick download.

She said she felt like Booker was “deliberately trying to squeeze us out of the market so everybody has to go to the big Tesco”.

“It’s not going to put me out of business but I am going to lose customers and that will make everything harder. If they carry on the policy it could just be a matter of years before I go out of business,” she added.

Another village shop owner said: “Since Tesco have taken [Booker] over it has got harder and harder to get products for the shop. Only two weeks ago they discontinued 400 retail lines.”

She said her local Booker would not provide a delivery as she was not a catering business, for which the minimum order the wholesaler requires is £150.

“Our local pub has a delivery nearly every week. They only have to spend [about] £100 with no delivery charge. The lorry goes right past the shop,” she added.

One industry insider said the changes were hitting the smallest village stores the hardest, particularly those in rural areas that might have little choice of wholesalers.

The well-placed source said: “Tesco wants to move into the catering trade and that is its main objective. There has been a lot of increase in catering stock and in order to make space for that it has reduced retail stock.”

He added that Booker had recently bought larger delivery lorries that struggled to access small country lanes and this had also meant cutbacks to delivery rounds.

Booker has said it is not aiming to increase its catering market share at the expense of its retail trade and recently invested in a distribution centre to grow retail capacity. It confirmed it did not deliver to some rural areas in the south-west but said that had not been changed recently.

Retailers that could get deliveries said they were no longer seen as a priority and so could find deliveries delayed at the last minute.

“It’s harder and harder to get a delivery,” the well-placed industry source said. “There is an imbalance of power between local shops and a large supplier.”

Booker announced in February it would be tightening up its range for retailers which it said had become “a little bloated”, according to a report in the trade journal Better Retailing. The wholesaler said it would also be introducing more Jack’s own-label and more fresh produce after reviewing 151 different grocery categories last year. It promised to “respect regional and local lines”.

Sheila Gallagher, Booker’s commercial director, said the changes would make the wholesaler’s range “more effective” with “better efficiencies”.

A spokesperson for Booker said: “We remain absolutely committed to serving community shops across the UK either through branch or delivery.

“Last year, we reviewed our range across all branded and own-brand products to ensure we have the right offer and in response to feedback that customers want more consistency across branches. As part of that review, we removed products that customers weren’t choosing, to make more space for products that really matter. Overall feedback has been positive and we’ve already seen improvements in availability.”