The city is disappointed this week with lacklustre like for like sales from Tesco. These apparently compare unfavourably with Asda and Morrison. The numbers are disappointing compared with previous results as they are both trending down and also marginally below expectations. The Tesco announcement has therefore infringed two City laws.
The first law is that steady uphill graphs of lfl or same store sales must always be maintained so that highly trained analysts can use their maths and economics degrees to continue that graph.The second is that analysts’ predictions must always be proved right and if you as management think they might not be right you need to tell them so that they can adjust their predictions and be right.
The City doesn’t have to live by the same rules as the rest of us but then we know that. My own banker sent me a chirpy email last week reporting that my investments were up 9 per cent this year. He conveniently forgot that last year’s performance was minus 20 per cent… When challenged, he explained that loss away by the unprecedented world events that highly trained economists and analysts could not possibly predict despite being in precisely the right place to do so.
In our business life if we require finance of any description we have to operate by City rules and the first advice I would always give to a new business is to look to grow top line sales steadily. Longer smoother growth curves make better banking and investment cases. Avoid giving signals of volatility. In fact, with bankers, investors and boards I think it prudent to live by one of my great boss and mentor’s mantras; ‘Don’t bring me surprises except on my birthday.’
To return to the world of supermarkets, another colleague once shared an insight into the differences between small store and supermarket trading. What joy he said to work in a world where you don’t have to figure out how to get customers through the door because they are coming in droves. What you have to figure out is what else you can sell them while they are there. As we all know, generating any lfl growth in a mature market with little or no price inflation and consumer confidence at an all time low takes some doing. The only sustainable way to do it is take other people’s customers. On the ground in the real world the easy kill for a supermarket is the small independent trader.
So I know how my local Tesco store is looking to improve its lfl. Management has reconfigured the entrance to squeeze in a Timpsons. Now I am a great admirer of Timpsons as a brand and agree that their kiosks in stations both overground and underground provide a fantastic service to a huge market. But where does it befit Tesco to sublet space in a tiny market to undercut Trev the cobbler, John the locksmith and Lyn the dry cleaner? All these aforementioned businesses are within 75 yards of the entrance of Tesco because it occupies prime space in the town centre. Tesco of course has a large and free carpark, Trev et al are in the pedestrian, (no parking, no waiting), wet and blustery main street.
So Tesco is providing a hugely convenient alternative to its customers who will no longer need to use shoe leather to carry that bulky dry cleaning to the quaint little shops of the town. And when they are gone and Tesco moves to a more cost effective location for its enlarged business we won’t even be Tescotown any more, we will be a ghost town. Just like all those dismal little towns you find in the USA.
So here is the dilemma and the topic for my next dinner table discussion which I invite you to join. Should women like us, overloaded professionals, leaders and entrepreneurs enjoy the choice, value and convenience that the supermarkets and internet give in our busy lives or should we use our consumer power and leadership positions as opinion formers to shop in the old fashioned way while we still can?
For the avoidance of doubt, I do not in any way blame the supremos at the helm of our supermarkets. They are talented committed and skillful operators, doing an amazing job. Some possess retail genius and should be admired by future generations for their vision. As a retailer I admire them all and none less than Tesco. But as we all know their job is to maximize shareholder return not work for the public interest and I don’t believe in trying to force business to behave in any other way.
It is we the consumers who have the power, and the choices we make as individuals do have huge collective effect. Because just like those flocks of starlings steered by small individual movements somewhere in the group, collective change of speed and direction is amazingly sensitive. And if we chose not to use the power we have, we must accept that we played a role in the changing landscape and not blame others for it.
What do you think? Vote in our FMWF poll (on the right): ‘Is Tesco destroying our towns?’
Comments from Twitter:
FeministUK @FMWF re Tesco: I don’t know about our towns but they are going to build one in the rural village where I live and it will ruin the place.
This post has been commented 3 times
1
December 15th, 2009 at 6:16 pmJulie says:
They want to bvuild a massive one in oru small town, Belper. We are fighting!Check out Tescopoly website
2
December 15th, 2009 at 10:05 pmTes Go says:
Tesco have admitted they made an “Error” with the figures on the size of their planned store in our village of Ashtead, Surrey (but only after it was pointed out to them). They can’t be trusted! Save Ashtead’s Village Environment!
3
December 21st, 2009 at 10:46 pmPete Holder says:
Tesco are nothing more or less than Bully Boys frd by pure greed at the expense of our local communities. They move in and kill off all the existing retailers. They are destroying our Communities.