A mixed reaction has greeted the news that Tesco is on the verge of purchasing the Dobbies garden centre group.
The supermarket leader announced last week that agreement had been reached on a cash offer of £155.6 million for the UK’s second largest garden centre chain. Dobbies currently owns 21 stores across Scotland and England.
Tesco’s chief executive, Sir Terry Leahy, said that Dobbies was an ‘excellent business with a first-class management team and a great brand that we will retain and develop from its Scottish base.’ He added that the increasing popularity of gardening, and in particular the trend towards environmentally friendly products, made this an attractive area for Tesco to invest in.
However the retail giant may not all have it all its own way, with Wyevale owner Sir Tom Hunter reportedly considering a counter offer in conjunction with any of Sainsbury’s, Marks & Spencer or Waitrose.
But with almost 30 percent of Dobbies shares already having been secured, it is thought unlikely that a rival bid would be successful.
The HTA gave a cautious welcome to the news of Tesco’s impending purchase, saying that it represented confirmation of the increasing popularity of gardening and the prospects for long term industry growth, as well as a recognition of the industry’s potential contribution to improving the environment.
It also noted that the high cash price being offered could increase the value of many independent UK garden retailers.
On the down side, it said the presence of more large high street retailers could put even greater pressure on plant suppliers.
HTA director general David Gwyther said: “There is both good news but also points of concern in Tesco’s potential acquisition of Dobbies. We may well be witnessing the beginnings of a substantial step change in the structure of the UK garden retail industry.
“If so, this will have a substantial effect on the supply side as well. HTA has been anticipating these sort of changes for a while, hence emphasising the importance of ensuring that both production and retail businesses are as lean and green as possible, and that the supply chain interface between retailer and supplier is brought up to the most professional standard.
“Taking these steps will stand independent suppliers in good stead for the future.”
Neil Gow, director of GIMA, told Commercial Grower that he expected Tesco’s probable arrival on the garden centre scene to have ‘quite a dramatic impact’. He said that within the industry there would be some concern, but no great surprise at the move, adding that Dobbies was one of the most highly respected firms in the industry in terms of the quality of its offer.
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