Bad news for superstores with out-of-town aspirations

The publication yesterday of draft guidelines prohibiting large out-of-town superstores is a severe blow to Tesco and multiples considering entering the Irish market.

Tesco Ireland managing director, Maurice Pratt, emphasised this week that clear guidelines were "vital for retailers planning their store development programme". But the clarity he was seeking involved permission to embark on large-scale development.

In the event, Minister for the Environment Noel Dempsey has largely reinforced the temporary cap of 3,000 square metres on superstore development - imposed last June - with the new draft guidelines which will now be the subject of public consultation. In a modest concession he has extended the cap to 3,500 square metres in the Dublin area.

However, a major element of Tesco's store development programme for Dublin was a 80,000 square feet superstore adjoining the Liffey Valley shopping centre. This, and other large superstores planned by the company, cannot go ahead if the guidelines are made permanent. Such a move would also render remote the possibility of Sainsbury and Safeway entering the Irish market.

But the multiples are a resourceful lot. As Mr Pratt has explained in the past, if supermarkets cannot build new and larger stores, extending existing ones is likely to be the order of the day. Expect them to be pushed to their absolute limits.