Is Tesco just a retailer?

During the Competition Commission’s lengthy inquiry into the grocery market in 2006 to 2008, the media was b u z z i n g with questions about the supermarkets’ alleged practice of landbanking (holding or controlling land for future development or to impede the entry of competitors to the local market).

It all went rather quiet with the publication of the commission’s final report in April 2008, by when they’d concluded that:

We did not find that grocery retailers were engaging in holding undeveloped land (landbanking) as a strategy to impede the entry by rival grocery retailers into local markets

although 90 controlled land sites were identified where there was an “adverse effect on competition”.

There’s a related question about the supermarkets’ interest in land: to what extent are they interested as property developers rather than simple retailers?

Reading Carolyn Steel’s superb survey of the relationship between food and cities,
Hungry City: How Food Shapes Our Lives, I was struck by this quote:

We’re now thinking a lot more like a developer and not just like a retailer
(Tesco’s corporate affairs manager, 2005)

Yet when Terry Leahy, Chief Executive of Tesco, was asked by the Guardian about the existence of landbanks he was quick to assert that Tesco was simply a retailer:

Yesterday Sir Terry denied that Tesco had any sort of landbank. “Why would we do that?” he said. “We are a retailer.” He insisted he did not know how many sites Tesco owned.
(Guardian report on Competition Commission enquiry into grocery market, 26/4/2006)

So just how much is Tesco thinking and acting as a retailer and how much as a developer? The company’s 2008 accounts give little away on where Tesco is spending its money, but the increase in group capital expenditure to £3.9 billion is attributed in part to:

investment in new mixed-use development schemes

while the report states elsewhere:

The complexity of many of our property developments is increasing, especially the growing number of mixed-use schemes.

Mixed-use means not just retail, so Tesco’s interest in development beyond that required for simple retailing appears to be growing.

Is Tesco still just a retailer?