Tescopoly beckons.
Some scary statistics
£1 of every £7 spent in UK shops goes to Tesco
£1 of every £16 privately earned income in the UK goes to Tesco
30% of all domestic food is bought from Tesco
Tesco turnover last year was £46 billion: that’s over £750 per person in the UK
Where has this success come from
About 2000 independent food, drink and tobacco shops closed last year
Approximately 1,000 independent newsagents closed last year
The biggest countryside employer is now no longer agriculture, it’s retail
Bleak future for Town Centres
The future for town centres looks bleak. Up-market shops for the wealthy will be fine: other shops might not be so lucky. This is what the government think anyway, in their “High Street Britain 2015” report. “Unlikely to survive” or “Very Unlikely to survive” are: Convenience stores, grocers, newsagents and independent petrol stations. Pharmacies, bakers, rural shops and most post offices might be alright.
The problem we see now will accelerate. The report puts it like this:
“Small shops in the grocery sector cannot compete with larger competitors, in terms of buying power, promotional activity, etc. The limitations offered to them by the supply chain in terms of differentiating their stock means there is likely to be an acceleration of shops going out of business, as reduced market share continues to impact on the price advantages enjoyed by the larger retailers“
A huge problem for the smaller, independent, stores will be finding suppliers. I recommend reading the report here:
http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/15_02_06_highstreet.pdf
It lays things out very plainly, the key sections being pages 45 to 59.
Choice will reduce and prices will eventually rise. “Mega brands” will dominate and supplier margins will reduce, which will result in a reduction in the number of suppliers too. Innovation will likely reduce too as homogeneity up and down the supply chain increases.
There is a further, different problem: the internet. You can now buy anything online. Who needs shops any more? Imagine what this will do for your local high street, when compounded with the “supermarket effect”.
Why You Should Care About Local Economy
Again, from the government report:
“Without the widespread existence of local businesses, money will be drained from local economies. This will have a long term adverse affect on local and regional areas in the UK as there will be a discontinuation of local cash flows. Some studies show that 50% of turnover from local retailers is returned to the local economy. However large retailers may return as little as 5% to the local economy”
Clear enough? The money you give to Tesco goes into the pockets of their shareholders. It doesn't come back into your community like it does if you buy from a local shop.
But there is more. If you live in a rural area as more and more people are now doing, your options are going to reduce sharply and your travel will increase. The same applies to impoverished town and city areas too: “food deserts” will increase and those without access to cheap transport will suffer, i.e. the poorest people, the elderly and the disabled.
And there is that other factor we can all see, and it’s called “clone town syndrome”.
Hypocrisy?
In 2006, Tesco opposed the planning permission for an Asda shop in the centre of Bangor North Wales because “it would hurt local retailers” and then 2 months later they opened a hypermarket of their own on the outskirts of Bangor. Why the absence of worry about local retailers in this case?
Reasons for Success
The reason Tesco and the other big supermarkets have done so well is because they give a lot of people what they want. They supply reasonably priced products and they sell pretty much everything that people want. If you have little free time, a supermarket is very useful to you. One trip gives your week’s shopping and you’re done in an hour or so. No trailing round little shops buying a loaf here and a joint of meat there.
But this convenience comes with a massive additional cost: the destruction of local shops and economy, increased transport with related environmental impact, reduced choice, reduction of suppliers, and the creation of food deserts. Factor these additional costs in over the long-term and the picture isn’t so good.
The Poster Child
Tesco aren’t the only culprit, the big 4 supermarkets and their wholesale suppliers are all guilty, as are other massive trans-national companies such as McDonalds and Costa Coffee that we can see sprouting up in towns everywhere.
You could spend all your money at Tesco. You could:
Buy your house with a Tesco mortgage
Furnish it with Tesco flatpack furniture
Get on the internet with Tesco Broadband
Buy your car with a Tesco loan
Put fuel in it at Tesco pumps
Get your mobile phone deal with them
Oh, and you could buy your food there too
Tesco are merely the most visible part of this problem in the UK. That’s why there is a campaign against them, which is focussed here:
Your Other Option
They aren’t always cheaper then the smaller shops. You could buy everything at other shops for about the same amount of money, but it would probably take you a little longer. But the benefit is that you’d be supporting your local shops and looking after the future wellbeing of the area you live in, and helping to prevent long-term decline. In the long run it might even be the most cost effective option. You might also be getting a better quality product and you might have more buying options too. You’d certainly get a more personal service and perhaps some community spirit as well. From the report again:
“Social contact will be reduced if small shops are lost. The importance of this cannot be underestimated for people in less populated regions, such as rural areas, and people who are less mobile, such as the elderly. For example, it is estimated that around 30% of people over 65 do not see any friends at least once a week191. For many, the small shop forms their only form of regular social contact. Its loss, therefore, has a much wider social impact”
“Many communities will be severely disadvantaged by the loss of their small shops. Such local businesses can be a focus for community activity, as well as providing employment and vital products and services. Many communities will no longer be able to cater for the needs of its residents if the retail sector is too heavily disrupted, leaving those affluent enough, both shops and homeowners, to relocate to other areas”
My grandfather wouldn’t let my grandmother shop at the supermarket because it hurt local traders, and this is about 35 years ago. If only more people had followed that same policy, perhaps things wouldn’t be heading down the route they are now.
Conclusion
All you have to do to help prevent the nightmarish future for 2015 and beyond in the report is:
buy some things from other shops.
Buy your cigarettes from an independent tobacconist, your papers and magazines from a newsagent, your alcohol from a local off-licence, your meat from a butcher, your vegetables from a greengrocer, your books from a bookshop, etc. etc. Even if you can only do one of these, it will help prevent the hellish future that is predicted. Even if you only do it occasionally, it will help prevent the Tescopoly that is developing now.
Cheers, Tom.
References:
High Street Britain 2015 report:
http://news.bbc.co.uk/1/shared/bsp/hi/pdfs/15_02_06_highstreet.pdf
Article by Janet Street Porter from 2006:
The Tescopoly website:
28/05/08 @ 00:57