Everyone loves a football analogy, apart from grocers....
Posted by Red Robbo on 27th Sep 2014
A number of business columns have wryly noted the similarity between
the fin de ciel handovers of the reigns at Tesco and Manchester by their knighted and benighted leviathans to their inadequate successors (neither of which are still
in place) and with Sainsbury being the most shorted stock in the FTSE, it is
possible that King’s successor might be looking at Alan Pardew’s role enviously.
However my beef (and I’ll come back to this later) with the world of
grocery and football is more fundamental.
As a supporter of one of the less fashionable football clubs
(Sunderland if you are interested), the claims that the English Premier League
(EPL – to marketing toss pots) is the “best in the world” (© SkySports) are
increasingly ringing more and more hollow.
Leaving aside the bad joke that is our national team, it is becoming
increasingly clear that even the cosseted world of the top four teams in the
UK, with their TV millions and foreign owners billions, are at best Championship
quality when compared to the best teams in Europe.
Similar misplaced hubrus is now being exposed within or grocery
The big four within the UK market have, until recently, managed to
convince a docile shopping public and naïve politicians, both local and
national, that their world leading expertise would lead to improved choice and
competition, more jobs and lower inflation.
However, the only thing world class about our grocers has been their
This is now looking as exposed as LVG’s back three.
Choice is a relative benefit.
There is little choice left to consumers who’s town has seen over £35-45m
of consumer spending sucked out of it by a 100,000 sq ft hypermarket on the
ring road. As an aside, how many
consumers (the majority of which earn less than the average wage of £26,500)
really need or want the choice of seven different types of olive oil?
Similar monopolistic tendencies in football have resulted in the
annual four horse race for the title.
This used to be a genuine competition, open to a wide range of clubs,
before Sky invented football in 1992.
And pity the poorer consumers who have to eat the everyday value
ranges. With the honorable exception of
Morrisons, all were contaminated to some degree by the horsemeat scandal and whilst
Sunderland has repeatedly signed a number of donkeys, no football club has
actually tried to pass a horse of as human.
Ok, well apart from Ruud Van Nistelrooy.
The new jobs will have come at the expense of old ones. Consumer spend is diverted, no wealth is
created. In the place of tens of smaller
stores, each with a manager/owner, you get a small full time management cadre
supported by tens of part-time works.
What would their margins look like if the government removed the
implicit subsidy to big retailers by removing working tax credits and they were
forced to pay a living wage?
But at least the massive government subsidies and the supine
planning system, broken to promote investment and jobs, will have delivered low
inflation to the hard-pressed populous during the great recession?
UK’s grocery inflation was the second highest in Europe (runners up
to Hungary) from 2008 to 2013.
Politicians call it “the big lie,” repeat it enough and people will
believe it’s the truth. We’ve repeatedly
been told that we have a world-class grocery industry, we do not.
The Germans do discounting better, the French have a boulangeries
and pattiseries in every town and village, the Italians take pride in their
local produce and traditions.
We’ve got chicken tikka pizzas, booze sold at below cost price and
crippled town centres bravely battling back from the abyss.
Whilst you have to feel for the employees, sympathy should not
extend to allowing these corporate giants to have a second attempt at ruining
our town centres by turning their giant out of town white elephants into open
consent retail parks or mini shopping centres.
This is perhaps my biggest concern of what might happen next.
Finally, to do the football analogy to death, it should come as no
surprise that Tesco’s former finance director Laurie Mcilwee was getting paid
hundreds of thousands of pounds not to come to work, given that Wayne Rooney
hasn’t turned up on a Saturday afternoon for some time now.