Thursday 13 March 2014

The Great Shop and Con Swindle

The story which I am about to share with you is particularly relevant to the town where I live. It also has relevance to the town where you live and I don't even know where you live. If you're living in the UK today, this piece really should interest you. If it doesn't, I fear for the future of the town where I live and the town where you live.

Over the past thirty years or so, the UK has become a monopoly state. There is a mountain of evidence to support this assertion but for brevity I will restrict myself to a couple of examples. How happy do you feel when you see the bill for your gas and electric? Opening our utility bill statement has made a visit to the dentist a veritable pleasure in recent times. Put simply, the big six suppliers who dictate our market have had it all their own way for a very long time. Some of the reasons given for the scale of the price rises are on a par with "the dog ate my homework!". As well as being unbelievable, they are all too often insulting to our intelligence.

For my second example of corporate greed, I turn my attention to the beloved supermarkets. Just today, Morrison's has released rather disappointing profit results for it's millions of shareholders. A profit of £879 million last year has translated in to a loss of £176 million this year. By any measure, that is a pretty spectacular fall from grace. But what has caused it? Some would contend that Morrison's has lost market share due to being behind in the online delivery market so cleverly exploited by their main rivals. This argument has limited worth though. The fact remains that their turnover fell by 2%. Coming from the food industry, I can assure you that a 2% drop in turnover is colossal - and particularly when your entire business model is based on continued growth.

But there is more to this story than meets the eye. The key to this story is not the performance of Morrison's per se. The real story here is the extent to which the gargantuan buying power of the big four supermarkets has held prices as high as possible in a desperate attempt to continue the growth upon which their expansion is based. Enough has been written about the credit crunch to reach the moon and back and we are all well aware of how much more difficult it has become to keep our heads above water. Throughout the UK, a succession of local councils have been gullible enough to support a relentless influx of supermarkets in to towns of all sizes.

The town where I live is arguably no different to any other. The planning consent was granted under the pretence that the supermarket (on the outskirts of the town) would somehow bring more people in to the high street in the town centre. As arguments go, it is pretty flimsy. With the benefit of hindsight, we can now all observe the worth of that assertion. In the North West where I live, the number of empty shops stands at a depressing 17%. That means that on average, one out of every six retail premises currently stands empty in the North West. Dare I tentatively suggest a link here?

On announcing their disappointing sales figures, Morrison's have revealed that they will have reduced profits in the next few years because they are having to slash their prices to try and compete with the "discounters" such as Aldi and Lidl. This tickles me. If Aldi and Lidl can both run viable, quality retail stores at their prices, how much over the odds have we all been paying at the big four these last thirty years or so? A recent survey illustrated that identical baskets of commonly used groceries at Tesco and Lidl respectively amounted to £27 and £17 respectively. I appreciate that a great many people have become accustomed to the "reward" of clubcard points, but that is a heck of a price to pay for them!

Morrison's are only going to reduce their prices because their hand has been forced. So goes the old saying, "You pay your money and you take your choice". Well, it seems as though more and more people are doing just that. In the town where I live, the High Street feels a bit more vibrant every time I go there and the local branch of Lidl goes from strength to strength. I'd prefer it if Lidl was a local company but have to seek value. Speaking of value, the High Street where I live offers great value at every given turn for those prepared to go there. This whole debate revolves around consumer choice.

For my part, I'm glad that the big four supermarkets are starting to take a hit because it's high time we fought to save our town centres. There remain several important reasons why we should choose to do so. Your local high street retailer is frequently independent with no share holders to worry about. That retailer will often have an impressive knowledge of the product you are buying. That product will be more likely to have been sourced locally. By supporting your local high street, more of the money you spend will stay local. That will support a local job and the local economy. Shopping in one of the big four supermarkets will support a local job too but it will cost several more and less of the money you spend will find it's way back to the local town where you live.

Maybe the time has come where we have seen through the great supermarket con. Maybe we'll all take a step back to the same high street upon which the communities of our parents and grandparents were built? It's all about choice. I've made mine - what about you?

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