Retailing

One Thing Tesco Shares With Wal-Mart: Critics


On the night of Apr. 21, a quiet shopping district in the British city of Bristol erupted in violence. Protesters set fires and hurled bottles and bricks at riot police, sending eight officers to the hospital. What sparked the blowup? The opening of a Tesco store.

Tesco, Britain's answer to Wal-Mart Stores (WMT), is now the No. 3 retailer worldwide after Wal-Mart and France's Carrefour. In the U.K., where it rings up more than two-thirds of its $92.4 billion annual sales, the discounter has become a lightning rod for protests on issues ranging from workers' rights to dairy prices. Wal-Mart has faced its share of protests, including in Britain, where it owns Asda, the second-largest grocery chain. But animosity toward Tesco runs particularly deep as supermarkets have supplanted local shops to take 90 percent of British food spending. Tescopoly, a nationwide anti-Tesco coalition, includes more than 300 local organizations that campaign against Tesco store openings.

The Bristol riot followed a 15-month effort to block the recent opening of a Tesco Express convenience store in the city's bohemian Stokes Croft neighborhood. Last year opponents briefly occupied the site while it was being renovated, encasing their arms in concrete and super-gluing themselves to the building. On Apr. 21 about 160 officers descended after receiving a tip that squatters in a nearby building were preparing to attack the store with Molotov cocktails, a police spokesman says. Richard Brasher, who heads Tesco's British business, said the company was "saddened" by the violence.

Claire Milne, a leader of the Bristol opposition, says her group doesn't condone violence but understands residents' frustration. "We painstakingly navigated through the planning system, but the [town] council failed to follow proper procedures," she says. A council spokesman says correct procedures were followed. Local residents contended the new store would harm local merchants. Elsewhere, foes have accused Tesco, Asda, and other big retailers, of treating workers unfairly and squeezing price concessions from farmers.

Such complaints aren't likely to dent Tesco's global growth, which increasingly relies on expansion outside Britain. On Apr. 19 the company reported that 2010 net income rose 14 percent, to $4.39 billion, on sales up 7 percent. Some say the riot could spur a backlash against anti-Tesco campaigns. "Do people love Tesco? That's open to question," says Graham Hales, chief executive officer of the British unit of branding consultancy Interbrand. "But the level of mayhem and destruction doesn't necessarily create empathy."

The bottom line: To some critics, Tesco has become a symbol of British consumerism. Resentment has sparked protest and a full-scale riot in Bristol.

Matlack is a Paris correspondent for Bloomberg Businessweek.

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