When Tesco rules the world

Thu, 01 Nov 2007 12:39:54 GMT

Cityblogger fears Tesco is taking over his life. He does his grocery shopping there (usually accompanied by a surprisingly left-wing trolley for such a capitalist’s dream), Tiddles is now insured for battle scars courtesy of the supermarket giant, and Cityblogger once suffered the indignity of being turned down for a Tesco’s bank card. It’s only a matter of time before Cityblogger’s modest home is swathed in wallpaper decorated with thousands of tiny Tesco logos.

Can nothing stop the march of this monster, which began life as a East End market stall? Not the Competition Commission, it seems. In its wisdom the Commission found no evidence of foul play in the supermarket space, although Tesco and its peers could have to flog off land after claims the supermarkets are buying it up to keep out competitors. And Tesco’s shares have this week reached a year high.

“I’ve been covering this sector for nearly 20 years and this was the umpteenth review into competition,” Freddie George, analyst at Evolution Securities, told Cityblogger. “I think the findings were as expected – that’s it’s a very competitive market.”

PharmaTimes’ Great Oxford Debate this year was entitled ‘this House believes Tesco should take over the running of the NHS’. Cityblogger scratches his head. It’s not such a bad idea really. Could we eventually see a Tesco cabinet? This was partly explored in that charming TV drama featuring Jane Horrocks as the naïve supermarket manager propelled to the position of Prime Minister. Gordon Brown has something of the bank manager about him, so why not a supermarket manager? Mrs Thatcher was a grocer's daughter, so Tesco running the country is only one step further.

And yet Sainsbury is on the verge of being taken over by an obscure Qatari outfit. Taste the difference, indeed.

Titan Tesco could have further growth in it yet. Analysts at Citigroup are excited about its US expansion and reckon the shares are relatively cheap. Freddie George agrees. “The shares could go up further in the long term as Tesco has an analyst trip arranged to the US for us to see the Californian operation,” he says. “I don’t think they’re perfect but they do things better than other retailers, although they’re probably getting a bit too big. But there’s lots of opportunities for them in UK non-food retail too.”

George believes the Sainsbury bid will probably go through. “I’ve been up and down emotionally with this one,” he admits. “It’s by no means a done deal but it’s more likely to go through than not.”

Cityblogger is a patriot and sad to see any UK company fall to foreign predators, but it may be worth it to see Jamie Oliver reduced to cooking on a camel’s hump.

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The inside word from the City: Supermarkets

When Tesco rules the world