Convenient, but trouble in store.

Byline: Bill Gleeson 

MY MOTHER-IN-LAW is visiting and she brings tidings of what's happening in the convenience store market in Watford.

Staff from her local convenience store have spent the last couple of months protesting against a plan by Tesco to open its own local shop in the same arcade, saying it would harm their jobs and the interests of local shoppers.

But when it came to it, Tesco offered the protesters pounds 1 an hour more to work for them and so they quickly switched allegiances.

My mother-in-law is all for Tesco opening up, as she prefers its produce and says its prices are cheaper. On the face of it, Tesco seems to be a good deal for the locals in Watford, both staff and shoppers.

The move by big supermarket chains to take over the local convenience store market, worth pounds 20bn in sales each year, has been under way for nearly a decade, ever since Tesco opened a Metro store in London's Covent Garden.

The latest development came at the start of this week, when J Sainsbury spent pounds 25. 5m acquiring Jacksons, a Yorkshire and Midlands-based convenience store operation with 114 outlets. Another example is the sale of Londis to Budgens two months ago.

Including this week's acquisition, Sainsbury has 230 convenience stores to add to its 580 supermarkets.

But the issue consumers need to be wary of is the willingness of the big supermarkets to stay the course in the convenience store market. Their interest in convenience stores has been forced on them to some extent by planning obstacles that prevent them from continuing to build superstores. Given that restriction, they have had to look around for alternative ways of growing market share.

But the convenience store market represents the antithesis of everything big supermarkets have been trying to do for the past two decades.

Tesco's first store on Allerton Road, in Liverpool, was no more than a convenience store-sized operation. Now, of course, it operates a big supermarket just 200 metres down the road. The obvious reason for the expansion is the economies of scale that have been achieved in a very competitive marketplace.

I suspect the current fad with convenience stores will come full circle and, within a couple of years, the big chains will start shutting them down to improve their return on sale ratios. This year's ``strategic ambition'' will become next year's ``non-core disposal''. And then where will that leave local residents?