Some home truths for British supermarkets abroad
Published in Comment is Free guardian.co.uk on Monday 28 November 2011
The Indian government's decision to allow foreign supermarket chains, such as Tesco, to open stores in the country was hailed in some quarters as a death sentence for traditional retailing in the sub-continent. Marks & Spencer's second coming in France, meanwhile, was accompanied by all the customary wishful thinking about a plucky British retailer taking receptive foreign markets by storm. Because our supermarkets have been so demonstrably successful at spreading retail homogeneity on their home turf, there is a tendency to assume they will automatically flourish abroad.
But the inexorable "roll-out" of UK supermarket monoculture across the globe is not a foregone conclusion. When British chains move into foreign markets they not infrequently return with their tails between their legs. Earlier this year, Tesco bid a teary sayonara to Japan and started selling up after eight troubled years of trading. Maybe it was those lacklustre packs of sushi? Perhaps the wasabi peanuts weren't up to scratch? Who knows, but Japan didn't take Tesco to its beating heart.
For the time being, Tesco perseveres with its loss-making Fresh&Easy chain in the US, but grandiose boardroom talk in its Hertfordshire HQ of "thousands" more store openings has been scaled down to "hundreds". Analysts don't discount the possibility that Tesco may yet pull out of the US.
M&S never learns, although it has twice had its fingers burned with failed overseas ventures. In 1988, it bought 155 stores from fashion retailer Brooks Brothers, selling them for a sobering third of the price in 2001. It also sold its New Jersey Kings chain after making losses. It'll take more than a day one queue on the Champs Elysées to convince the world that M&S's overseas stores are ever going to amount to more than nostalgic rendezvous for homesick expats. It's unlikely that les biscuits "Rich Tea" and les oeufs Ecossais will prove irresistible to the French, once the thrill of the new is over. Let's face it, Battenberg cake poses no long-term threat to gateau opéra.
As for India, corporates look out, for here is a country with an impressive history of mounting sophisticated opposition to transnational corporations. Wal-Mart's 2007 move to India as a wholesaler, in a joint venture with Bharti Enterprises, sparked demonstrations, strikes, and the birth of the new, vocal Movement for Retail Democracy – an alliance of environmental activists, small traders, farmers, trade unions and grassroots organisations to "resist the corporate hijack of the retail trade". If Tesco does tip up in India, it will also have to contend with indomitable campaigners, such as Vandana Shiva, who has vowed to "continue to build this movement until the beauty, diversity and vibrancy of our bazaars is defended".
Indeed, so controversial is the Indian government's decision to allow foreign chains to hold 51% stakes in supermarkets, it may yet be forced to back down. A wave of strikes and demonstrations by small traders is on the cards for this week, the main opposition Bharatiya Janata party is opposing the decision, as is a key government ally, the Trinamool Congress. The highly influential and respected politician Sonia Gandhi has voiced concern about the likely impact on the small traders who currently account for 90% of India's retail business. BJP former state chief minister Uma Bharti has gone further. "If Wal-Mart tries to open its mall anywhere, I will burn it myself," she says.
Whether it's Europe or further afield, any ambitious UK supermarket chain salivating at the prospect of cleaning up in virgin territory abroad could well limp home with a bloody nose.
Tesco's bargain myth has been burst by its own shoppers
Published in Comment is Free guardian.co.uk on Monday 2 May 2011
Tesco has had its bluff called by that very special breed, the savvy shopper. The chain has cut back on its price check offer complaining that a "cottage industry of savvy and determined people" had been making too much money from it. A bit rich, surely, when Tesco, like all the big supermarket chains, is forever claiming that it's in the business of putting cash into our pockets, not taking it out?
Under the scheme, which was part of Tesco's permanent mission to convince us that it is a cheaper place to shop than Asda, Tesco had offered to refund double the difference on products bought from its rival. But some customers were identifying products on promotion at Asda, buying them for more at Tesco, and using the double-the-difference coupons they collected to purchase more of the same. If your head is spinning with the personal finance wizardry of it all, the key thing to understand is that here, for once, was a supermarket price promotion that actually worked out to be a great deal for consumers. When Tesco realised that, it promptly changed it.
This episode underlines how supermarket price offers are rarely the bargains they're cracked up to be. The catch with deals such as buy one, get one free, three-for-two, two-for-one and other "multibuys", is that they coax you into buying more than ever intended or need. Apart from wreaking havoc with your budget, much of the food on promotion ends up in the bin. Earlier this month, the Local Government Association urged the big chains to ditch such deals on perishable lines because they are causing sky-high levels of food waste – a cool £13.7bn last year alone.
Leaving aside the landfill mountain supermarket "bargains" create, as diligent shoppers who keep their pocket calculator in hand when supermarket shopping will tell you, such offers are all smoke and mirrors. Quite commonly, supermarkets set prices absurdly high at the start of the season – summer berries, for instance, are ripe for this treatment – so that they can then "reduce" them later and present that as a discount. Hence those "50% more than last week" and similar claims that bombard us.
The industry term for this first-jack-it-up-then-bring-it-down technique is price establishment. If you were wondering how 125g of blueberries for £2.99 can ever be presented as "great value", look to the price establishment principle for justification.
Such supposed bargains help maintain the fiction that UK supermarkets are cheap places in which to shop, when in fact Britain's rate of food inflation is three times greater than the average 2.1% for the G7 group of nations. A report this spring from investment bank UBS concluded that food prices in the UK were "rising in excess of justifiable cost increases" significantly outstripping food retailers' cost inflation. UBS calculations suggest that the higher cost of ingredients would only justify a 3 to 3.5% rise in prices, but UK supermarkets have upped food prices by on average twice that.
British supermarket chains have worked hard to convince us that their food is cheap, using in-your-face promotions on seemingly unbeatably low-priced items to place an aura of good value around all that they sell. But buyer beware: if you're shopping for fresh food – fruit, vegetables, meat, fish – rather than bumper packs of crisps, then the local greengrocer, butcher, fishmonger and market stall will very likely be significantly cheaper.
Saviours or killers of community?
Published in The Grocer on 13th November 2010
Windsor and Maidenhead council is in the vanguard of the PM’s “Big Society”. It plans to run a rewards scheme, rather like Nectar, where points awarded for carrying out community-spirited good works can can be redeemed in outlets such as Sainsbury's, Homebase and Argos. The scheme works on the depressing assumption that there is no such thing as altruism- kindness must be monetized.
Without any trace of irony, council chiefs cite activities like wading into canals to drag out shopping trolleys, litter-picking and holding tea parties for isolated, elderly, neighbours, seemingly oblivious to the fact that supermarkets and similar outlets have played a major role in creating such problems.
Where did that floating, rusting trolley in the local duck pond come from in the first place ? Who can’t have noticed all those buntings of torn, windswept carrier bags stuck in the branches of trees and clinging on to railings, littering the areas around supermarkets?
If many older citizens feel lonely and isolated in their homes, the supermarket blight that has closed down the nearby local shops where they used to know people and pass the time of day, is largely responsible. When there was a butcher, a greengrocer and a hardware shop within walking distance, there were people who knew you by name and with whom you could pass the time of day. A newsagent who might notice that an elderly person had not come in to pick up their newspaper. Small shops provide a natural community focus. Supermarkets kill it off.
If councils want to incentivize community-minded activity, they shouldn’t allow it to be hijacked by that companies which feed off the community without investing in it. Some cynicism is legitimate. Remember all those loyalty schemes where supermarkets and food manufacturers were going to fund the public good? The thousands of crisp packets needed to collect a “free” school book ? The orgy of chocolate that earned you a “free” football ? The mountain of supermarket reward points that produced a “free” printer ?
Let councils operate their own “loyalty schemes, repaying community efforts with vouchers for public services- reduced tariffs for bus fares, entry to pools, night classes and so. As it stands, council-led “Big Society” schemes are shaping up to be just another opportunity for Big Companies to indulge in more hypocritical posturing and brazen self-promotion, while masquerading as saviours of the community.
