Tuesday, April 17, 2007

Congratulations Tesco

How sad it is to see and hear the evil envy dripping rhetoric from the BBC (which every TV owner is forced to pay for), about Tesco (which nobody is forced to pay for).
^
Tesco has made a record profit of £2.6 billion. I would like to say simply – well done! This is a 20.3% increase in profit on last year, with a 10.9% increase in sales. Why has this happened? Two reasons:
^
1. Tesco is selling what people want to buy at a price they are willing to pay;
2. Tesco runs an efficient tightly managed operation that keeps costs down low (and as a result avoids waste).
^
Tesco has not got a statutory monopoly, or a de facto monopoly (there are plenty of shops selling the different merchandise Tesco sells), nor is it subsidised (unlike many of its suppliers, such as European farmers who whinge and moan about their buyers wanting a good price – which effectively means they want consumers to pay more).
^
Britain is the only country I know of that considers a market with four major retailers, all competing vigorously on quality and price, and umpteen smaller retailers, a “monopoly problem”. What is DOES have is an envy problem, arising from middle class Guardian reading, Radio 4 listening wankers who decry that Britain doesn’t always have the smattering of small, high priced, low variety shops that add so much quaintness to the shopping experience – while at the same time they sneak off to Waitrose to get their organic mungbean surprise (or whatever).
^
Tesco succeeds for the most democratic of reasons – people choose to shop there. Despite all of the media bashing by the envy classes (who look down their nose at the average family who simply want cheap good quality groceries, instead of locally grown or fair-trade organic, hand made, in season chelseaberries), shoppers have voted with their pounds and pence. It is a more honest expression that any vote at any election.
^
You don’t see people traipsing into Tesco begrudgingly wishing that everything wasn’t so expensive, or the selection were better or that the queues were shorter, like they do with the state owned Post Office here in the UK. They go out of choice. Within 15 minutes walk of my place I can choose Tesco, Waitrose, M&S, Sainsbury’s or Budgens, and a smattering of smaller retailers each of whom sells some of the things those shops sell, usually at a higher price, and sometimes at better quality. I go to Tesco when it offers the best deal for what I want.
^
According to the BBC Fiends of the Earth claim that "The supermarket giant's market dominance is bad news as it allows it to dictate conditions to suppliers and to drive High Street stores out of existence". Well tough shit frankly. Suppliers are in business, they don't exist as charities, and British farmers in particular are already protected and mollycoddled by Brussels, unlike Tesco. Perhaps when they face the full force of competition from efficient and more environmentally friendly suppliers they can talk, and then maybe they might start embarking on more efficient production techniques and respond like businesses, rather than like spoilt children. After all, Tesco's suppliers would love to be monopolies screwing Tesco and consumers for all they can. The High Street stores go out of business because people don't want to shop there, because they can't buy what they want at a better price. What do Fiends of the Earth expect?
^
Tesco is a highly successful British company embarking on a worldwide expansion. The sort of expansion that should make it and its shareholders proud. The global presence usually seen in large firms from the USA, Japan, continental Europe and the like – you know the flipside of those who bemoan how the British car sector has largely disappeared. They forget that Britain’s recent economic success has been on the back of the service sector. Long may it grow.

No comments: