IT IS ONE of the most unattractive of British traits. We love underdogs so much that successful people, ideas and enterprises cannot live long in the limelight before they are shot down in flames. Tesco, the supermarket chain, is the latest company to fall foul of fickle British public opinion.
This is not to say that the Office of Fair Trading has changed its position regarding grocery market competition because Mr and Mrs Saturday Shopper are getting the hump. The way the tills at the Tesco checkout are ringing ever more loudly is testament to the still-growing popularity of the Cheshunt-based group’s offerings. The testament is all the more compelling because Tesco tills are ringing loudly while many retail rivals — albeit ones without food on at least some of the shelves — are so quiet.
The nub of the argument boils down to shoppers’ behaviour. It is all very well for public opinion to be outraged about the ubiquity of supermarkets. But actions speak louder than words. And shoppers have the power to act on any disdain they hold for Tesco or its ilk, by taking their business elsewhere. If a demand vacuum exists, independent retailers will thrive. As things stand, it is far from certain that a demand vacuum exists.
Nor is it necessarily accurate to assume that the OFT got it wrong the last time it looked at the position. The passage of time brings events that change the landscape. But if it was possible at one time to think that convenience stores operate separately from supermarkets, that time is no more. The consumer popularity of Tesco, to say nothing of the cheapness, the quality and the trust shown in the safety of the products sold, means it has invaded the corner shop space with some ease.
Corner shops, meanwhile, have become increasingly outspoken in their contention that supermarket competition is leaving them up the creek. But you need no expert knowledge to know that corner shops and supermarkets are competing for the same pounds and pennies in your wallet or purse.
At the same time, however, the OFT does not have to penalise Tesco — or Asda, Sainsbury, Waitrose or Morrison — because they are competing with the corner shops.
The authorities need to ensure that supermarkets do not turn into bullies. Regulators need to ensure that there is adequate diversity in food retailing. There are issues about providing access to food for elderly, infirm or otherwise immobile shoppers. It is also important that we do not become reliant on too few food suppliers.
Concentration of grocery retailing might be built through aggressive pricing policies, and aggressive pricing policies are good because they bring more things within the grasp of a wider constituency of people. Low prices also promote the cause of enhanced productivity and efficiency, and since this minimises waste it is a good thing. But pricing policies could reverse very quickly if a small number of players come to dominate the market.
If Tesco’s wings are to be clipped it is because of the anti-competitive threat it poses, not because it is proving to be a powerful competitor. The OFT may find that the negative of anti-competitiveness is much harder to prove than the positive of Tesco’s constructive competitive practices.
It’s just the job oop North
LOOK at the figures today showing that the Government employs more northerners than southerners per head of regional population and you will be forgiven making a wisecrack of some sort, irrespective of your geographical relationship with the Watford Gap.
Andy Capp images may spring to the minds of southerners, beside suspicions that Whitehall is buying electoral favour through recruitment practices. Northerners, brimming with pride, might suggest the Office for National Statistics numbers confirm what they knew all along: that the North is better than the South in all things under the sun.
News that nearly one in four tough Tynesiders, but just under one in six soft southerners, is in the pay of the State should elicit a more sober response. The physical location of the jobs is relevant if there is cost implication. Since the cost of living is, by and large, higher in the South it makes perfect sense to shift as many state jobs as possible up north. And for that the Government may deserve a pat on the back.
The quality of the work done, however, is the crucially relevant factor. It may be that northerners work better than southerners. It may be that southerners’ productivity justifies a wage scale premium. But the key question is whether we are better off if the State employs people directly or if it defers to the private sector.
There will be tasks that the State must exert total control over. Outsourcing to private contractors, meanwhile, is no panacea. But Government would achieve more if it thought itself less as a provider and more as a procurer.
A trade-off
PETER MANDELSON is right, and he is right on three counts. European nations must cut the subsidies they pay farmers because free trade is a principle to be defended and pursued. Mr Mandelson is also right because if the EU cannot take concerted action on this issue, it begs the question of whether it can do any more than rule that feta cheese from Yorkshire cannot be called feta cheese from Yorkshire. The third and most important reason Mr Mandelson is right is because living standards in developing nations will improve, and improve most quickly, if the global trade playing field is level.
Mr Mandelson’s difficulty is not in the identification of the problem or the solution. It is in managing the implementation of reform. Vested interests — many of which are perfectly justifiable — must be negotiated with care, subtlety and determination. There is no place for grandstanding.
Risk control
BOND markets have worked themselves up into an unjustified, if understandable lather, over inflation risks. Part of this is down to edginess over the nomination of Ben Bernanke as the new Federal Reserve Chairman. That should pass, as markets recognise his credentials. More importantly, the hard numbers remain reassuring. Yesterday’s US GDP figures showed that, despite near-record oil prices, Alan Greenspan’s favourite gauge of inflation remained subdued. For now, at least, the inflation danger remains contained.
