IN a shock move, Britain’s biggest retailer, Tesco, is closing its headquarters in Cheshunt, axing 43 unprofitable stores – half of which will be local convenience shops – and shelving plans for another 49 very large stores.
The chief executive plans to close Tesco’s generous defined benefit pension scheme, sell off the analytics business behind Clubcard, scrap the dividend payout to shareholders, and cut central costs by 30 per cent.
Other supermarket chains are cautiously reassessing their future plans, while all are gearing up for the price war to beat all price wars, following news that Aldi and Lidl are still soaring ahead in market share. Just a decade or so ago it seemed as if Tesco was taking over the world. Now caught in a perfect storm of sometimes poor business practice, a fierce recession, customers no longer daft enough to fall for sales tricks, almost fatal underestimation of the budget stores – much of which it shared with every other big player – drastic action is required to save its neck.
But by taking that action now, Tesco has every chance of surviving. It’s still the biggest operator with more than quarter of the market.
It’s easy to snigger up our sleeves at the misfortunes of a company that was loathed for its ubiquitous presence in every little town or village even before it branched into banking and insurance and joined McDonald’s and Coca-Cola in the global Big Unfriendly Giant club.
Supermarkets probably hold more data on us than banks or MI5. They know what pets we have, what we eat for breakfast, what size of clothes we wear, whether we can cook or not, how loyal we are, which area we live in, how much we drink, whether we smoke or not, how brand concerned we are, whether we have dentures, piles, arthritis or dandruff.
Remarkably, they completely missed their own Achilles heel. While they tried time after time to bring quality and prices down on basics to compete with the budget stores, they failed to notice that Aldi and Lidl’s quality was going up and up. Customers who tried them out of financial desperation wound up staying with them out of preference. Hence the only supermarket also enjoying increased market share with the budgets is upmarket Waitrose, which now has similar market share to Aldi.
An arrogant complacency coupled with disbelief that two family-run German companies could topple their supremacy left the Big Four vulnerable.
But the reality is that an enormous number of jobs in the vast grocery industry are now at risk and, if they go, the effect on employment figures and communities could be disastrous. Tesco UK alone employs more than 260,000, making it the biggest private sector employee in the country. The variety and convenience supermarkets offered shoppers in a clogged up, over-subscribed market place was unsustainable.
But so many people here and across the world from shelf-stackers to farmers, from shoppers to food production plants, from charities to advertising agencies, now rely on supermarkets. Like banks, they had almost reached “too big to fail” status. In some areas, especially poorer ones, they are working on becoming not just shops but community hubs supporting and funding local projects.
The supermarket retail sector is reforming before our eyes. How it emerges could affect us all in ways far more profound than getting a tin of beans at the best price.
Careful what you wish for . .
JIM Murphy threw the Scottish wildcat among the Trafalgar Square pigeons when he said he would use part of Labour’s mansion tax to fund more nurses in Scotland’s NHS. Since about 95 per cent of those “mansions” worth £2 million and more are in the south east, fellow Labour MP Diane Abbott said he was “seizing money from Londoners” and “expropriating money from London to Scotland”.
Well, that’s what happens in a United Kingdom focused on a wealth-generating London. That’s what Labour campaigned for. It’s the cost of being “Better Together”.
Roads ‘strategists’ are in wrong game
WELL, good luck with the 20mph zones. We’ve had the twenty’s plenty limit for ages round our way. We also have massive, cobbled, sleeping policemen which are so high they can strip off the underside of a small family car at 10mph and can only be driven over by having one wheel on the highest point and one on the lowest. That means driving on the wrong side of the road for a few minutes, but needs must.
Add that to the potholes, and folks round our way rarely get above 15mph anyway. The ones who speed merrily through our residential street with nary a thought for children, dogs, cats or little old ladies are “visiting” white vans, delivery lorries and buses which are too high off the ground to care. Probably just as well because slower moving vehicles give off higher emissions.
Don’t waste your time trying to make sense of road “strategies”. Only a funfair designer could possibly be proud of the roundabouts twinned with zebra crossings along George Street, for example. Perhaps our road planners are in the wrong business. They should be designing video games.
AWAKE TO HEALTH KICK
We went “healthy” for January. Eat lighter and earlier, eschew wine, and walk the dog after dinner. Good plan. But without the anaesthesia of Pinot Grigio and a full tummy, we now have galloping insomnia.