There are only two core functions in any economic cycle that are guaranteed to be necessary whatever else happens:- payment processing and goods handling.
Innovation and manufacturing are risks to be avoided at all costs, and because we are nation increasingly ruled by unimaginative accountants, "efficient" operations like Tesco have been able to exploit the IT revolution very effectively to get well on top of the logistics of the entire consumer business. Moreover, thanks to the granularity of modern demographic analysis, such warehouse operations are virtually risk-free sidelines for retail property developers.
News that Tesco continues to storm onwards by snapping up more than half of the retail space available last year was greeted by concern and joy in equal measure. Concern from those that recall a commercial monopoly is usually deemed to exist at around 20% of any given market, and delight from those who are claiming that is in fact Tesco that single-handedly controlled UK inflation by sitting on its suppliers' margins.
News that "certain retailers" extend their control of suppliers by forcing them accept retrospective price cuts and provide additional labour to stack shelves suggests that UK retailers are fast becoming little more than property developers with computerised CRM. They clearly have obtained more direct control of the market than is healthy in any competitive economy. No producer can afford not to be on the shelves of the retail cartel , and the cartel knows it.
As the Boy Campbell observed recently, the ability of major retailers to put the arm on their suppliers is a two edged sword, and if retailers continue to throw their weight around cartel-like when dealing with producers, something will have be done about it before the UK agriculture scene gives up and turns itself into yet more golf courses and theme parks.
The only good thing to be said for Tesco and its relentless consolidation of retail mediocrity is that it is now also doing to Johnny foreigner what it has done to its UK competition, with the sort of military precision not seen since the East India Company provided the commercial backup for the Victorian adventuring that turned the globe pink.
The Christmas festive season is now little more than a punctuation mark on the retail campaign calendar. And retailers' shelves are already creaking under the weight of Easter eggs.
Tesco's domination seems likely to continue unhindered, and although Sir Terry Leahy might not actually be as provocative as to declare "Am I bovvered?", increasing numbers of observers (including TMP) are starting to ponder the consequences of allowing the extermination of all other UK retailers.
Tesco is very effectively clearing the way for assimilation by the true Borg or global retailing - WalMart, whose quite holding position with Asda might yet turn out to be a Trojan Horse.
Post a Comment