Some good news today; Tesco, that great Satan of the retail world, ended the last financial year more than 6.4 billion pounds gross in the red. Despite paying its workforce as little as possible and even creating three thousand "work experience" placements for the unemployed (see: http://hpanwo-voice.blogspot.co.uk/2015/02/cameron-pushes-workfare.html) the supermarket giant has entered a terrible financial crisis. These losses are its worst ever and one of the biggest in the corporate history of
The BBC's business correspondent Kamal Ahmed puts this down to a combination of
factors all being exposed at the same time, a practice known as "kitchen
sinking", see: http://www.bbc.co.uk/news/business-32411217.
Apparently in sales revenue terms alone the chain is still operating at a 1.4
billion pound profit, which is still a reduction by 60% on 2013, but the value
of its infrastructure has plummeted. The property value of its three thousand
stores nationwide isn't worth a fraction of what it used to and Tesco already
have plans to close forty-three of them.
I may be getting my hopes too high, but I can't help wondering if this is the effect of a lack of consumer confidence in a particular kind of way. The key words are in Mr Ahmed's blog where he writes: "...and shoppers turning away from larger out-of-town stores...". Does this means that shoppers have become aware of the greater economic consequences of their shopping habits and are starting to spend their money more ethically? Perhaps. In April last year, the beginning of the same financial year that crushed Tesco, I reported that the Nisa franchise had recorded a record-breaking ten percent rise in sales profits, see: http://hpanwo-voice.blogspot.co.uk/2014/04/nisa-to-see-you.html. Nisa are a chain of grocers run by independent cooperative small companies. They were specifically established to cater for the caring consumer. In its own words: "In 1977 we launched the National Independent Supermarket Association to protect the interests of independents against the insurgence of the national supermarket chains... The group grew dramatically over the next twenty years, attracting thousands of independent retailers to its membership... it expanded and pioneered central distribution to independent stores to provide them the same benefits as multiples. Today Nisa is a £1.43 billion turnover company which exists to provide benefits to its members, operating almost 2,500 retail stores, and provides every service that an independent needs to survive and grow in the grocery marketplace. Over the years, Nisa has ensured the prosperity of thousands of retailers and with its renewed focus on the consumer now seeks to provide greater means to achieve success..." Reading those words gives me a warm feeling inside. A while ago I made a film called New Tesco which was about how Tesco are trying to break into the urban cornershop market now that customers are turning away from the out-of-town superstores. A "Tesco Express" has opened up
Road in Oxford,
they demolished a two-hundred year old pub, to make room for it, and I was very
worried that it might put the neighbouring Nisa shop out of business, see: http://hpanwo-tv.blogspot.co.uk/2013/12/new-tesco.html.
The Tesco Express did open shortly after I made that film, yet now, more than
eighteen months later, I'm happy to convey that the Abingdon Road Nisa branch
remains open for business, see: http://www.nisalocally.co.uk/store/nisa-local-328-330-abingdon-rd-oxford.
Tesco are striking back by cutting their prices and Mr Ahmed tells us ..."there
is some evidence that customers are returning..." but for how long? Tesco
will have to raise their prices to accommodate their current shortfall; they're
just staving off the inevitable. If this story has emerged as the direct effect
of customer choice then it will hopefully encourage other shoppers to join in.
At the end of the day, it's up to us. Nobody is holding a gun to your head and
forcing you to do your shopping in Tesco. I know there is enormous pressure for
some people because of Tesco's low prices, but I myself have noticed little
difference at the moment between Tesco and Nisa, and that difference will
shrink even more as Tesco struggles to rebalance its books. And you'll be proactively
helping because by using small local businesses you increase their profit
margin and allow them to lower their own prices in response, so it's a role
utilitarian situation that can form a positive feedback loop. This is what I
mean when I say that nobody is helpless and that people do have political power
even if they did not vote in the election... in fact especially if they did not
vote in the election, see: http://hpanwo-voice.blogspot.co.uk/2015/05/general-election-result.html.