Tesco has bucked the retail market’s tough trading conditions, posting half-year profit rises of nearly 19% but at the expense of small firms, a small business organisation has warned.
While tightened consumer spending and rising fuel costs have stung many of the nation’s small retailers, Tesco’s pre-tax profits surged by 18.7% to £908 million in the six months to June.
While the retail giant has defied analysts’ expectations, the Forum of Private Businesses (FPB) has accused it of killing off the nation’s high streets, everywhere from London to small country towns.
Up to 41% of shopping centres are now described as clones, the FPB said, and once-thriving independent shops are now scarce.
London high streets, and many small towns, in particular, are losing their identities as supermarket chains like Tesco move in and bully existing, local shops out of business.
The FPB claims that Tesco is also abusing its market position to frighten small suppliers into servitude.
It gets away with such behaviour, the FPB said, because the small firms with which it does business are too fearful of retribution to provide evidence to the Office of Fair Trading (OFT).
The FPB has called on the OFT to introduce an anonymity clause that would allow small suppliers to speak out without fear of losing their contract. It has also asked government to establish a retail giant regulator.
“Small traders, which frequently offer better choice, quality and value are unable to compete with supermarkets on a level playing field,” said Nick Goulding, FPB chief executive.
“The tax and regulation system materially favours big supermarkets, which is utterly absurd and unfair. Supermarkets pay less per square foot in business rates and are not charged VAT on hot take away food, whereas small traders are.
“Moreover, tax increases, such as higher National Insurance contributions, are hitting small traders far harder.”
