Fee, fi, fo, fum – smelling blood on the supermarket floor

MANY years ago, when the paper I edited was taken over by the first of a series of (increasingly greedy and unpleasant) corporations, I had an argument – which was ultimately and predictably fruitless – with the regional managing director, about the doctrine of perpetual growth.

I argued that there is no such thing as perpetual growth, that it is a natural and logical impossibility. Most things, whether they are oak trees or newspaper groups, supermarkets or pumpkins, have an optimum size. After that they implode, explode, collapse, fragment or in a myriad other ways become untenable, broken, weak, dissipated or otherwise dead.

The managing director, of course, disagreed, gave me a (metaphorical) pat on the head (patronising would be the word) and very obviously marked me down as a luddite, a hot-head with no grasp of business and no respect for senior management, admittedly a good journalist but someone who could hardly be trusted to run the office biscuit fund.

I would contend that the current state of Tesco is a case in point. This is a small country. Tesco is a ridiculously large supermarket company, with an unfeasible number of stores, often totally dominating small or medium sized towns, to the detriment of independent and locally owned businesses. Classic examples are Bicester, with a population of around 29,000, and six Tesco stores, and Inverness, with a population of 72,000 (2009 figures) with four stores, and a 51 per cent share of the market for groceries. Doubtless whoever is currently running Tesco thinks they could do better (51 per cent is obviously not enough), and will certainly be eyeing the proposed new town at Bicester as an opportunity for even more stores there.

Now, we are told, Tesco is in trouble. Share prices have dropped alarmingly – a genuine cause for concern for the many thousands who may be loyal customers but equally may never set foot in a Tesco store, because so many pension funds have been invested in this apparently unstoppable commercial behemoth.

The company issued a profits warning that the group trading profit for the full financial year would not exceed £1.4 billion, far below the £1.8-2.2 billion range expected by the markets. The statement followed the company’s admission earlier in the year that it had “misstated” its profits by £263 million. So the markets, more hysterical than a chicken house when the fox gets in, went into a tail spin and within hours the shares had plummeted by 16 per cent.

Yet, what is the hysteria about? What is the problem? A very big company, which makes a vast amount of money for its shareholders, is going to make a bit less profit than it first promised. But it will still make a PROFIT. A very large profit.

The markets are greedy in the same way as some mythical monster or pantomime ogre that must constantly be fed on virgin princesses – they must be fed ever-increasing profits. A dip below forecast is greeted with the gloom that might realistically follow a plunge into the red.

We all have to spend more, buy more, borrow more, to satisfy this hunger for profit. One of the nastiest manifestations is Black Friday – well-named, you might think, but actually so-called because it is the day when American retailers expect the real Christmas shopping season to start, and the day on which, if things have been bad, they hope to start the climb back from the red into the black. A perfectly reasonable ambition. But what actually happens is that many retailers put prices up a month or so before, then claim to be offering eye-watering discounts on the day, spawning the kind of unedifying spectacle of brawling and screaming crowds that so shocked people here last month.

I was struck by how much the idea of growth dominates thinking in retail at a recent food fair, where some stall-holders complained that they had not done as well as last year (which had been exceptionally successful). Nobody had done badly and the footfall was very similar – it was just that they had raised their expectations unreasonably on the basis that they must do better than the previous year.

One stall-holder laughed and said she was quite happy – she had almost sold out, had met lots of lovely people, had a few things to take back which she would put in her freezer, and had made plenty of money. She was not interested whether she had done better than last year – she had made enough money.

In the world of free markets and big business, enough is never enough. In the real world in which most of us live, enough is quite enough and we will all be happier if we can accept that.

Fanny Charles