Court dismisses Tesco's appeal against Lidl

In a significant development, the Court of Appeal (Civil Division) has dismissed Tesco Stores Limited's appeal regarding planning permission for a new Lidl food store in Stockport. This ruling, delivered remotely on 9th May 2025, focused on the interpretation of "availability" within the planning policy, particularly the sequential test required by the National Planning Policy Framework (NPPF). This case exemplifies the inherent complexities of planning permissions and retail development policies within the UK market.

The heart of the case revolved around whether Stockport Metropolitan Borough Council had misapplied the sequential test during Lidl's application process. Tesco argued that alternative sites, specifically Unit 4B at the Peel Centre and a location at Water Street, were sequentially preferable for development and should have been considered by the council. Initially, planning permission for the Lidl store was granted on 9th November 2022, prompting Tesco's opposition and subsequent appeal for judicial review, which was dismissed by the High Court on 10th January 2024. Tesco then escalated the issue to the Court of Appeal, alleging misinterpretation of the sequential test policy.

The sequential test is a critical aspect of UK planning policy that prioritises developments in town centre locations to preserve business vitality. According to paragraph 87 of the NPPF, planning applications for primary town centre uses should be directed to the town centres first; only when no suitable sites are available should out-of-centre locations be considered. Tesco contended that the council had not correctly interpreted this framework, thereby undermining the planning process.

As part of the appeals process, the court examined the validity of the sites Tesco suggested as alternative locations for development. Tesco argued that the mere existence of plans by another developer, in this case, Aldi, for these locations should not exclude them from being considered "available." They believed commercial commitments should not overshadow potential development opportunities.

In a robust upholding of the lower court's findings, the judges ruled that the council's determination that the sites were unavailable for Lidl's intended development was valid. They concluded that availability should be judged on whether a site can be developed for the proposed retail use within a reasonable timeframe, regardless of existing commercial agreements. The court determined that the potential use of the sites should be assessed in the context of the proposed development.

In this case, conflicting assessments provided by both Tesco and Lidl revealed varying interpretations of the availability of the sequentially preferable sites. Given that negotiations were underway for Unit 4B and a binding agreement with Aldi was secured for Water Street, the court concluded that the council's decision was both rational and legally justified.

The dismissal of Tesco's appeal serves as a crucial reminder of the stringent requirements of planning policy in retail development scenarios. The ruling reinforces the prerogative of local planning authorities to define the sequential test and their discretion in assessing site availability through practical, commercial lenses.

The outcome of this case carries substantial implications for both Tesco and Lidl, showcasing the competitive dynamics between well-established retailers and new entrants in the food retail sector. Furthermore, it highlights the imperative of adhering to national planning policies to facilitate balanced urban growth, amidst ongoing challenges in UK planning law and its tangible effects on local and national retail strategies