Supermarkets: The opening of Tesco's new hypermarket at Clare Hall shows how the company was forced to compromise on its plans for the site, reports Gretchen Friemann

Last Monday Tesco unveiled its first hypermarket at Clare Hall in north Dublin. The company is trumpeting the store as a one-stop shop for consumers, with Tesco's own-brand, cheap petrol flagged as one of the biggest draw factors.

But for independent retailers and the sector's representative body, RG Data, last week's launch of the €25 million centre stands as testimony to their ability to prevent multi-nationals like Tesco introducing out-of-town superstores. Although Clare Hall, located at the end of the M50 in Dublin 13, is now Tesco's largest outlet in the state at 8,361 sq m (90,000 sq ft), selling a mixture of food, household goods and clothes, the store is a far cry from the original hypermarket that was submitted for planning permission back in 1998.

Then, Tesco deployed lobbyist Frank Dunlop to persuade the Government of the economic benefits of the superstore format while the company attempted to counter protests from groups such as RG Data about the consequent demise of local traders and suppliers if the application was granted.

Clare Hall's hypermarket scale coincided with a review of the retail planning guidelines and in 2001 a decision was made to cap grocery outlets in the Dublin metropolitan area at 3,500 sq m (37,673 sq ft) and at 3,000 sq m (32,292 sq ft) across the rest of the state.

It was a bruising experience for the supermarket giant. The battle between Tesco and the independent retailers attracted a weight of negative publicity which still rankles with the company's management today.

Ask Dermot Breen, director of corporate affairs at Tesco Ireland, if Clare Hall will be the first in a network of hypermarkets, and he is quick to deny that Clare Hall even qualifies as a hypermarket.

"Clare Hall is a district centre built by Tesco. The supermarket we have there is fully compliant with the retail planning guidelines and is actually smaller than a number of our competitors' major outlets, such as Dunnes in Cornelscourt. But it has been designed with the customers' needs in mind," he says.

In fact, Clare Hall is dubbed a hypermarket in Tesco's own press releases, which are stored on the company's website. However, in publicity material about the new store forwarded to The Irish Times for the purposes of this article, the company referred to Clare Hall only as a "district centre".

Later Mr Breen clarified the discrepancy by pointing out that the store is "technically a hypermarket" but stressed it is housed in a "district centre".

Much of this contradictory attitude is rooted in the consumer backlash the company's initial attempts to launch a superstore attracted.

When quizzed as to why he was reluctant to name Clare Hall as a hypermarket, Mr Breen conceded the term was laden with "negative connotations".

He also stressed Tesco was not embarking on a roll-out of outlets similar to Clare Hall with its 24-hour opening time and wider range of food and non-food items.

He says: "Every new store we open is based on whether there is, firstly, a local consumer need for the store and, secondly, whether it is consistent with planning regulations and the local council's development plans. These same criteria will apply if we are planning for a small local convenience store, a supermarket or large retail development such as Clare Hall."

In the UK, much of Tesco's phenomenal success - the retailing giant accounts for at least £1 out of £8 spent on the high street and more than £1 out of every £4 spent in British supermarkets - is attributed to its network of superstores that have allowed the company to conquer supply chains and eat up the local competition.

A spokesman for RG Data claims a similar scenario would have occurred in the Republic if Tesco had been granted its original application for a superstore.

He points to a recent report, titled Ghost Town Britain by the New Economics Foundation in Britain, which shows that "roughly one-fifth of local shops and services have been wiped out" in the UK between 1995 and 2000 because of the stranglehold established by the major supermarket chains.

While Mr Breen argues superstores offer valuable economies of scale to both the consumer and the retailer, he stressed Tesco in no way seeks to challenge the current retail planning guidelines.

On the contrary, he said the company is anxious to expand its convenience format and said the supermarket has lodged four new planning applications for smaller stores in the last few weeks.

Part of this strategy is as much to do with the higher rate of planning permission for such outlets as the recent consolidation of the sector amongst key players like Spar, Londis and Musgraves.

According to RG Data, the failure to win permission for the original Clare Hall scheme forced Tesco to rethink its launch into the Irish market.

"Rather than following a prescription from the UK management, Clare Hall showed that Tesco had to adapt to Irish retailing conditions," a spokesman explained.

Mr Breen has always rebuffed claims that Tesco Ireland's strategy is determined by the head honchos at the company's headquarters in Hertfordshire, stating that the supermarket chain here operates as a "separate company".

And while Tesco might have originally envisaged it would establish market share in the Republic through a different format, its current 24.8 per cent lead is an achievement the company is keen to both protect and extend.

One of the most important factors in that mission is a positive customer relations track record.

As Mr Breen points out: "Customers' experience of shopping in our stores will always be the determinant of our success or failure. If we meet their expectations on all fronts - prices, product choice, personal service, community participation, etc - we'll do well. If we disappoint them, then we'll know all about it."