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PRESS RELEASE 3

COMPETITION COMMISSION REPORT IGNORES

MPC Associates (Marketing, Management and Economic Consultants) with 37 years UK and European research into the trading effects of Out of Town Shopping in town centres have recently completed a report on the City of Hereford following publication of the Competition Commission Grocery Report published 31/10/2007.

Extracts from MPC’s Market Research report on the trading effects of Out of Town Shopping on the City of Hereford

1. Hereford’s Large Food Retailers

Hereford has five retailers classed as hypermarket or superstore. These are listed below:

Data: MPC, IGD

            Copyright MPC Associates 2007

2. There are a further 11 retailers classed as supermarket. These are:

Data: MPC, IGD

            Copyright MPC Associates 2007

The total sales area of Hypermarkets, Superstores and Supermarkets in Hereford is 240,826 square feet.

In total these stores have 2,542 car parking spaces.

The market share of Hypermarkets and Superstores versus Supermarkets can be projected by comparing sales areas. This gives the following striking statistic:

Data: MPC

            Copyright MPC Associates 2007

            Data: MPC, IGD

            Copyright MPC Associates 2007

4. Total Weekly expenditure on Hypermarket, Superstores and Supermarket shopping within Hereford’s Catchment:

                                                           £5,169,066

Data: MPC

            Copyright MPC Associates 2007

5. Hypermarket, Superstore and Supermarket balance of power in Hereford

These are ranked according to total sales area and car parking spaces as below:

            Data: MPC, IGD

            Copyright MPC Associates 2007

            Data: MPC, IGD

            Copyright MPC Associates 2007

It is clear that Tesco is in a strong position due to its larger sales area and superior car parking facilities. In addition they may dominate sales in catchment areas to the south and west of the City as it can be reached without crossing the river bridge and central areas.

Conclusion

The size, number and proximity of hypermarkets and superstores in Hereford are creating significant retail saturation *. Saturation was reached with the opening of Morrisons in 1990, and worsened with the opening of Asda in 2006.

Hereford is currently planning new developments in the Edgar Street grid project. Further retail is planned including the possibility of another large supermarket in the Eign Gate area. Clearly this would further increase saturation levels unless it was replacing an existing store.

Copyright MPC Associates 2007

* SATURATION FOOTNOTE

Saturation level should be a pivotal factor in retail planning. A dictionary definition of Saturate the Market is: to provide too much of a product so that there is more of this product available to the people that want to buy it. Retail market saturation occurs when the retail market in a given area expands and additional competition is introduced to a level which significantly exceeds the catchment spending power. Saturation is taken to exist when the optimum level of each retail sector in any geographical area has been reached or exceeded.

Competition below saturation level is perceived as beneficial to consumers and the area as a whole.   MPC have always had regard for the concept of hypermarkets and superstores, and the efficiencies involved in establishing them for the benefit of the car-borne public.  However, in cases of saturation, the introduction of additional hypermarkets and superstores in out-of-town and edge-of-town sites is no longer feasible, due to the effects of traffic congestion and carbon emissions.   MPC are equally concerned for the survival of town centre retailers who serve the 27% of non-car owners, and those who find town centres more convenient.   Sanity must prevail, in ensuring that in future all towns which have reached hypermarket and superstores saturation levels are protected from further out or edge of town development. 

MPC’s Hereford Report also includes:

1. Driving time analysis between Hypermarkets, Superstores and Supermarkets in Hereford

2. Location Map of Hypermarkets and Superstores in Hereford

3. Hereford catchment analysis relating to each Hypermarket and Superstore

4. Allocation of catchment analysis to each Hypermarket and Superstore

5. Hereford catchment showing spending versus floor space demand for each Hypermarket and Superstore

6. Hereford Hypermarket and Superstore weekly turnovers and floor space ratios £/sq ft for each store

7. The shortfall between demand from store floorspace and catchment expenditure

8. Hereford Catchment expenditure for Hypermarkets, Superstores and Supermarkets Models 1 and 2 

9. Hereford's Hypermarket and Superstore densities in comparison with Toulouse, Nancy and Evreux in France.

10. The trading affects of Hereford's Hypermarkets and Superstores on small city centre Supermarkets and Independent Specialist Food shops