By Jon Cronin BBC News business reporter

A common sight in Britain's towns

The people at Tesco think big. The company's hypermarkets are big, its share of the UK market is big, and its profits are big.

So big, in fact, that Tesco has unveiled record annual profits on Tuesday of �2.03bn ($3.83bn).

Under its tough but respected chief executive, Sir Terry Leahy, Tesco is thought to account for one in every eight pounds spent in Britain's shops, while it has been expanding abroad rapidly.

The company sets great store by its commitment to competitive prices, customer service and efficiency.

But while Tesco shareholders may be cheering another set of glittering earnings figures, not everyone will be celebrating.

Local stores

Critics of the company - and there are a growing number of them - argue Tesco is simply too big and too powerful.

Tesco are raising the standards in this country, but they also have a blind spot for fair and square Ian Proudfoot, managing director of Proudfoot stores Check Tesco's share price

They say Tesco's sheer size is pushing smaller shops out of business.

Tesco has been pushing aggressively into the convenience store market, while non-food sales in its bigger stores are gobbling up more of the market once dominated by the likes of Boots and Marks & Spencer.

Tesco has been accused of "bully boy" tactics, while suppliers - especially those in the milk industry - say they are being squeezed by a company that drops prices for customers while maintaining its own margins.

When UK food group Dairy Crest announced last year that Tesco was not renewing a contract for fresh milk, its share price plummeted.

'Tesco everywhere'

Tesco has many admirers.

Daniel Bernard, the former chief executive of French retail giant Carrefour, recently paid tribute to the growing strength of Tesco's global brand.

"If you compare [Carrefour] with Tesco, it is Tesco everywhere," he told the BBC.

Tesco's fortunes have soared under boss Sir Terry Leahy

Many retail analysts, too, say it appears there is little Tesco can do wrong.

However, Professor Ian Clarke of Lancaster University Management School believes Tesco's ubiquitous presence in the UK is beginning to turn off some customers.

"Consumers are getting fed up with the uniformity of provision. They are saying there is more to life besides Tesco," he says.

A study led by Professor Clarke, and supported by the Economic & Social Research Council, found that while consumers generally liked shopping in bigger stores operated by the likes of Tesco and Asda, they were keen to see more local convenience stores run by smaller firms.

The rapid development of the major supermarket groups will inevitably lead to greater centralisation, Professor Clarke argues.

"Tesco does an excellent job, they are market led and they are expanding. However, it is the unfettered nature of expansion that deserves some investigation and some action."

'Bully boy tactics'

Ian Proudfoot, joint managing director of independent grocers Proudfoot, is a critic of Tesco.

Mr Proudfoot brought a complaint to the Office of Fair Trading (OFT) against Tesco, alleging "predatory pricing" by the firm in the small North Yorkshire town of Withernsea.

At the time, Mr Proudfoot said sales at his family-owned store plunged after Tesco sent 6,000 local households a 40% voucher for its own store.

"It was the wrong thing to do, it was bully boy tactics. They weren't going to keep those magic prices for ever," says Mr Proudfoot.

"Tesco are raising the standards in this country, but they also have a blind spot for fair and square."

Responding to Mr Proudfoot's complaint, the OFT said there were no reasonable grounds to suspect Tesco of breaching the 1998 Competition Act, or of engaging in "abusive" trading.

'Responsible company'

Several campaign and pressure groups have accused Tesco, and other leading supermarkets, of damaging the interests of suppliers and local communities.

In December, the pressure group Farm called on Tesco to use its "market power to ensure dairy farmers receive a fair share of the retail price".

Meanwhile, the international development agency ActionAid has described the growth of supermarket power "as very worrying indeed".

It plans to stage a protest outside a Tesco store in London's Bishopsgate, on Monday, highlighting what it says is the plight of low-wage female workers in South Africa who grow fruit for Tesco.

Tesco maintains that it is "a responsible company".

"We are proud of our record of serving communities around the country and the benefits we bring, such as jobs, housing and investment in local economies," the company has said.

Tesco points to the 2001 Supermarket Code of Practice, drawn up to regulate trading relationships between the major supermarkets and their suppliers, of which it is a signatory.

"We remain committed to maintaining strong mutually advantageous relationships with our suppliers," the company says.