© Sun Newspaper 2008
Tesco’s profits have fallen by 1% – the first drop in twenty years, and Philip Clarke, its CEO, has been getting his pretty face in front of the cameras today to publicise his £1bn recovery plan.
He’s also been reassuring us all that Tesco aren’t “struggling” – phew! £4bn in profits can hardly compare to the struggles faced by our independent food stores to stay open and keep fighting their David & Goliath battle with Tesco and the other major supermarkets.
It’s no secret that at hiSbe we’re not the biggest fans of supermarkets, they’ve been sucking the goodness out of our food system for decades, whilst forcing themselves on communities, squeezing producers and farmers, and operating in ways that are so far from our ethos of business “how it Should be” that it makes our blood boil.
But Mr. Clarke tells us he wants to put the “heart and soul back into Tesco”. Which is fantastic news, because at hiSbe we miss the good old days when it was a socially conscious business that cared about its suppliers, producers and farmers, stood for something other than making its major shareholders revoltingly rich, and recognised its responsibility for feeding its customers nutritious, real food produced in nondestructive ways.
Hang on, it’s never been like that; they’ve ALWAYS put their profit before people, animals and the planet, that’s why after almost 40 years of supermarkets our food system is in the state that it is.
So what on earth is this “heart and soul” that they’re putting back? They sold their soul a long time ago, along with their grandmothers – but anything to boost profits, that’s just “business” right?
At the moment Tesco have around 2700 stores in the UK, as Zoe Wood from the Guardian says, it’s these stores that have been the “cash cow” that has made Tesco’s overseas expansion possible – British people’s hard earned cash being used to extend Tesco’s “values” to the rest of the world, wonderful.
But back to the UK – 2700 stores, and more on the way! However, the throwing up of new stores is slowing down – as the Financial Times puts it, Tesco is “reigning in its relentless expansion of physical stores”.
That’s something to be grateful for then, shame it’s in response to falling profits and not as a result of listening to the communities across the UK shouting at them that they’re not wanted.
Yes, they’re only going to open up a third of the new stores that were planned, with most of those being the convenience-sized stores. They’ll also spend some of that £1bn recovery plan money on expanding their “Express” outlets, which is all pretty bleak news for our struggling independent retailers and local economies. As long as Tesco isn’t struggling though, that’s the main thing.
Inititally they will refurbish 430 stores, to “make the UK shopping trip better for customers” – but we just wonder about all the energy, water and resources that will be required to make their stores look “warmer and less-functional”, and how many tonnes of waste will be heading off to landfill afterwards.
High Streets (what’s left of them) can breathe a shallow sigh of relief though; they’ll be no new out-of-town Tesco hypermarkets for now, they’re just going to spruce up the existing ones. Although with Philip Clarke predicting the chain still has “decades of growth” ahead to enjoy, and believing that the demise of the hypermarket is still “a very long way in the future”, our high streets may yet have their last breath squeezed out.
They’re also planning on completely overhauling their own brand food ranges, which represent a staggering 40% of all UK food sales. They’ll use all the clubcard data they collect on customers to tailor their offering to the ethnicity and affluence of people within each store area. Would we be cynical in surmising that this translates to further editing of choice, and providing even lower quality food to poorer neighbourhoods?
Of course the 8000 jobs that are part of the plan are good news, particularly after all that unfortunate PR around the Workfare scheme. Maybe they’ll employ the five hundred Dairy Crest workers out of a job after yesterday’s announcement that Tesco have cancelled it’s contract with the Group because they can squeeze a better price elsewhere. Meanwhile, the other 7500 jobs might just cover the amount of dairy farmers that have been forced out of business as a result of the supermarkets’ price war on milk.
Philip Clarke wants to “build trust in our pricing”, but that could only really happen with a fully transparent price system, which would show just how greedy they are, and how little of each pound spent with them reaches the people who are responsible for investing their lives growing and producing our food.
Mr. Clarke finished his interview with this final sentence “The business continues to grow, and continues to deliver for shareholders”. That’s all it’s about really, they don’t care about the customers, they just care about their cash – but your local grocer / butcher / baker / fishmonger knows his customers and values more than their money.
As a shopper you vote with your feet and your wallet – every pound you spend with a retailer is an endorsement, a big thumbs up to the way they do business and a powerful demand for more of the same. Make sure you’re voting for business how it Should be.
I think overall it’s still bad news – in amongst the “friendlier staff, listen to customers” corporate rubbish they have made it clear that their grocery expansion strategy still lies with more “Tesco Express” stores. Bearing in mind it’s an open secret that many of these store lose money until their competitors are driven out of the market, I am always outraged that Tesco clearly have enough influence in government to keep the Competition Commission shying away from investigating what, to me, is clearly predatory pricing.
Luckily, in my opinion the trend over the coming decade will be towards something the supermarkets – with their centrally distributed products and corporate image – will never be able to match; namely, locally produced food offering a fair deal to consumers and producers. The tide is certainly turning, and, incredibly, it’s the likes of hiSbe, The People’s Supermarket, et al., with no PR budget, that are turning it. Luckily we have the consumers and producers on our side, and even with £4bn of profits to throw at the problem, Tesco will never shake off the image they have acquired. Nor, of course, will their shareholders, only interested in next year’s dividend rather than long-term relationships, let them.
Thanks Chris – we couldn’t agree more. Bring on the 21st Century retailers!
The fact that Tesco has woken up to the fact that customer service counts, as well as availability and ranging, should be a wake-up call for independent retailers. While many independent retailers do a magnificent job providing what their customers need at competitive prices, too many sit behind their counters in grubby, badly-lit shops, staring vacantly into space. Get up, wise up and do what you are there for -providing a vibrant focal point for the local community.
I’m no fan of Tesco, believe me but local shops need to look back in time and trace WHY these big supermarkets are so popular and put those elements into their own business. Although they won’t compete in price and the ability to purchase in bulk, smaller businesses need to look at their range, customer service and delivery/ distribution capabilities. In the modern way of life, we lead increasingly busy lives, people are working harder for less salary, so you can see why supermarkets present a stress-free solution for keeping the cupboards stocked for some. I have found some excellent small/ local businesses that provide better products & services than a supermarket and only a few pence more on balance. But some have a long way to go I’m afraid and Mary Portas can’t be everywhere to help them.
Hi Claire,
Exactly! We think that supermarkets are outdated but there’s no denying their success is phenomenal because they do these things extremely well. However, there’s a great opportunity for 21st Century alternatives to supermarkets that provide better products and services. We are seeing some great new concepts coming through and we have our own plans http://www.hisbe.co.uk/hisbe-food-stores/.
As you say, it’s over to independent businesses to step up!
Ruth
Agree, Independents have a long way to go. There are many out there who really don’t have a clue when it comes to customer service and interaction. However, the biggest battle, in my opinion, is changing consumer preconceptions. Supermarkets are not necessarily better, or cheaper. Years of brainwashing tells the consumer that it is cheaper and easier to shop at a big box, but all this does is limit choices….for everyone. Its great to see people like Mary Portas flying the flag for all things British, now we just need to convert the British buying public! Let’s get our High Streets back! Let’s get great food and products back in these High Streets! Let’s all be proud of what we do – suppliers and consumers alike. At the end of the day, we are all in this together.
Hi Hisbe,
Re your article (“We’ve got Beef”), I love what you are setting out to do – I am an independent retailer in North London, trying hard to encourage hungry North Londoners to eat seasonal, locally produced food – we have been going 2.5 years, progressing promisingly, but business is tough, no doubt.
You deliver a pretty scathing broadside against Tesco, its executives, its shareholders, its cynical non-creation of jobs – but your message is weakened by one group you appear not to have the courage to attack and that is its customers. Only in your final sentence do I see that you mention this final critical Tesco stakeholder, and it seems to be the only sentence in your article that lacks bite, instead exhorting (pretty weakly if i may say so) us to “vote for business how it should be”.
Consumer demand is the single biggest factor in whether businesses succeed, and I am heartened that Tesco have announced their first profits drop in over 20 years – and hope that this is due to reduced demand from customers who find propositions like our at farm direct more attractive than that of Tesco. But i still suspect that more customers pass through the doors of our local Tesco Express in a single hour than purchase from my business in an entire week!
I am not disheartened by this – I think i have a promising proposition for customers and am hopeful that I can make it succeed, but this is my entire focus – on attracting customers to my service and away from the supermarkets: I have no interest at all in bashing Tesco, simply in trying to take a slice of their sales, and in order to do that I need to make our proposition as attractive as possible.
I think you are jumping on an easy bandwagon by bashing Tesco & its CEO, whilst ignoring the queues of happy customers that everyday vote with their feet & wallets through their checkouts: they are the stakeholder at Tesco that you need to focus on.
Hi Robert,
You make a great point that it’s the millions of SHOPPERS that keep Tesco going. We heartily agree – and most of our work is about giving people information so they can flex their “Shopper Power” when they buy their food, whether they shop at supermarkets or not. Check out our 8 Everyday Choices http://www.hisbe.co.uk/hisbes-8-everyday-choices/.
We still think Tesco deserve this bashing though! Supermarkets, led by Tesco, dominate the market and have become so powerful that for many people there is no other choice. They have a responsibility to the millions of customers that only ever buy their food in supermarkets and trust them. But instead they degrade the quality of our food, force their stores into towns where people don’t want them and bully their suppliers.
Our beef is about the abuse of power and the dishonesty and we think people should know about it.
Thanks for reading and responding to our blog
)
Ruth
It is an interesting debate and I think Tesco are easy to target because so many people I know can’t stand Tesco. And what’s wrong with targeting that? Nothing in my mind.
People may go through Tesco in their hundreds per hour, but this doesn’t mean anything is right about it. It may be because they don’t realise they can get fresher and cheaper fish in their local fishmonger where they can ask directly about where the fish has come from and how it was fished (well I can anyway!).
But my feeling is that consumers don’t believe they have the time to do this, because the adverts tell them so. It is a pleasurable community activity shopping at local independents and when I go to mine, I wonder why they don’t advertise the fact their prices are cheaper than the larger supermarkets, after all, this is often what tempts shoppers in to the large supermarkets.
Well said Anna, agree with all of this.
Unfortunately it’s shoppers own money that’s being used by the supermarkets to market back to them and keep a lot of these inaccurate price perceptions alive.
An estimated 30-40p in every pound spent in a supermarket is used to convince people to keep shopping there through ad campaigns etc. With an average of just 9p going to those that have toiled to grow and produce the food in the first place.
This is nuts! And all so they can try to avoid a measly £4bn in profits!
We believe it’s time for supermarkets to be honest and transparent about pricing, and start considering the true value of food (including all of the knock-on costs of its production), then let customers make up their own minds when they are in possession of the full facts.