Discussion
Tesco has this morning announced profits of over £2 billion. Good for them, it is a very well run business.
It does concern me greatly though that with one pound in every 7 that we spend in shops now going one retailer (the percentage for food is much higher) the choice for the consumer is narrowing and will continue to do so.
With a mature food market Tesco is now pushing hard to grow it's non food business. £600 million of its profit came from non food lines last year. Tesco is actively chasing the electrical, CD and book business, often to the detriment of small retailers.
Many people say "so what, competition is good and it brings down prices". In the short term maybe.
Somebody I know has just closed down their music store after 30 years because they cannot compete. The bulk of sales in this sector is based around the top 100 or so cd's. Tesco takes these, in huge bulk and sells them cheaply. The independent retailer pays more for them and cannot compete. QED the independent goes out of business. Now, go to Tesco and try and buy a copy of Rumours by Fleetwood Mac or Darkness On the Edge Of Town by Bruce Springsteen or even 18 by Moby and you'll have no chance.
The same goes for books. Sure they've got the Da Vinci Code (probably discounted) if you haven't already read it but try and get a copy of The Brave New World, which I purchased from my local bookshop last week. No chance.
I used to be in the Sportswear business. When I started in 1978 there were 2000 sports shops and the biggest chain had around 60 shops. A big retailer had 5 and there were about 1000 one shop businesses. Now theres JJB, Allsports, JD and very little else. And those guys have gross margins of 55%! So who's the winner there? Not the consumer that's for sure.
When will the public wake up and smell the (Tesco's French Intense Strength) coffee. Put all your eggs in one or two baskets and you'll end up with one choice of very expensive egg.
It does concern me greatly though that with one pound in every 7 that we spend in shops now going one retailer (the percentage for food is much higher) the choice for the consumer is narrowing and will continue to do so.
With a mature food market Tesco is now pushing hard to grow it's non food business. £600 million of its profit came from non food lines last year. Tesco is actively chasing the electrical, CD and book business, often to the detriment of small retailers.
Many people say "so what, competition is good and it brings down prices". In the short term maybe.
Somebody I know has just closed down their music store after 30 years because they cannot compete. The bulk of sales in this sector is based around the top 100 or so cd's. Tesco takes these, in huge bulk and sells them cheaply. The independent retailer pays more for them and cannot compete. QED the independent goes out of business. Now, go to Tesco and try and buy a copy of Rumours by Fleetwood Mac or Darkness On the Edge Of Town by Bruce Springsteen or even 18 by Moby and you'll have no chance.
The same goes for books. Sure they've got the Da Vinci Code (probably discounted) if you haven't already read it but try and get a copy of The Brave New World, which I purchased from my local bookshop last week. No chance.
I used to be in the Sportswear business. When I started in 1978 there were 2000 sports shops and the biggest chain had around 60 shops. A big retailer had 5 and there were about 1000 one shop businesses. Now theres JJB, Allsports, JD and very little else. And those guys have gross margins of 55%! So who's the winner there? Not the consumer that's for sure.
When will the public wake up and smell the (Tesco's French Intense Strength) coffee. Put all your eggs in one or two baskets and you'll end up with one choice of very expensive egg.
unrepentant said:
Put all your eggs in one or two baskets and you'll end up with one choice of very expensive egg.
Isn't that the point though? Put all your eggs in one basket and they'll be cheaper.
Unfortunately they operate in a manner that's hard to fault.
Our local 'convenience' store was replaced with a Tesco Metro place last year. The dirty store with no fresh produce and a limited range of products has gone and been replaced with a clean, bright store with lots of choice. Much as I'd like to see the small guys compete, Tescos just do it better.
If the previous store stocked the same items and presented themselves as well as Tescos do then they'd have got our business. It's not all about price.
Do you see the Tonight prgoramme with Trevor McDonut last night? Don't normally watch it but it made interesting viewing.
Tesco discounts non popular lines heavily, promoting a £30 million price cut or whatever, and hikes the pice of popular lines at the same time to make up for the supposed "loss"
They also sell a product for say £4.99, then for a month sell it at the RRP of say £10.50 and then offer it at a 50% discount - £5.25. What a bargain! 50% off. Yeah, but 26p more than it was 3 weeks ago!
>> Edited by diddyman on Tuesday 12th April 09:52
Tesco discounts non popular lines heavily, promoting a £30 million price cut or whatever, and hikes the pice of popular lines at the same time to make up for the supposed "loss"
They also sell a product for say £4.99, then for a month sell it at the RRP of say £10.50 and then offer it at a 50% discount - £5.25. What a bargain! 50% off. Yeah, but 26p more than it was 3 weeks ago!
>> Edited by diddyman on Tuesday 12th April 09:52
Amazon are doing the same thing though...
I wouldnt have any issue with supermarkets if they stopped selling fresh food, if they were just aisles and aisles of tins, frozen, cheap jeans and cheaper electrical products then I wouldnt have a problem.
Supermarkets as a whole though and by no means just Tesco are quite simply the convenience store of the Devil himself.
Homogenisation of availability of poor quality produce, owning the supply chain from production through sale at the cost of 'community' farming and consumer led packaging and production. Go and try to buy a proper leg of lamb in a supermarket. You cant, its dressed and blood red and bloody awful looking.
Its a great business model without doubt and hats off to them for refining their operation but there are somethings you shouldnt squeeze the last pound out of and food production is one of those things.
I wouldnt have any issue with supermarkets if they stopped selling fresh food, if they were just aisles and aisles of tins, frozen, cheap jeans and cheaper electrical products then I wouldnt have a problem.
Supermarkets as a whole though and by no means just Tesco are quite simply the convenience store of the Devil himself.
Homogenisation of availability of poor quality produce, owning the supply chain from production through sale at the cost of 'community' farming and consumer led packaging and production. Go and try to buy a proper leg of lamb in a supermarket. You cant, its dressed and blood red and bloody awful looking.
Its a great business model without doubt and hats off to them for refining their operation but there are somethings you shouldnt squeeze the last pound out of and food production is one of those things.
PetrolTed said:
Put all your eggs in one or two baskets and you'll end up with one choice of very expensive egg.
Isn't that the point though? Put all your eggs in one basket and they'll be cheaper.
Not when it's the only basket left. And Tesco, whilst giving the illusion of being cheap, makes very big margins. The problem is the GBP are taken in with the marketing and don't look at the price they are actually paying.
unrepentant said:
Not when it's the only basket left. And Tesco, whilst giving the illusion of being cheap, makes very big margins. The problem is the GBP are taken in with the marketing and don't look at the price they are actually paying.
Rather than 'price' I would suggest that Joe Public doesnt understand the 'cost' of what they are doing.
It's called "market forces".
If we choose to live in society where people can excercise choice by shopping in the place that they believe offers the best service, then that's fine by me. If there's a market for, say, rare CD's then they will be suppliers of such products to service this market.
Because a company is succeeding in gaining new customers and have (largely) happy staff then good luck to them. One of my clients is a supplier to all the big supermarkets and he says that he finds Tesco the most reasonable company to deal with. As such, rather than critisise success, how about we applaud it!
If we choose to live in society where people can excercise choice by shopping in the place that they believe offers the best service, then that's fine by me. If there's a market for, say, rare CD's then they will be suppliers of such products to service this market.
Because a company is succeeding in gaining new customers and have (largely) happy staff then good luck to them. One of my clients is a supplier to all the big supermarkets and he says that he finds Tesco the most reasonable company to deal with. As such, rather than critisise success, how about we applaud it!
neil.b said:
I berate any of my family or friends who buy CDs, books or films from their local supermarket. The think I'm mental when I start ranting about how it will be the death of quality and choice. Eventually they get it....
Yes but as long as Virgin/HMV etc charge at least £3 more for a CD people will buy at supermarkets.
srebbe64 said:
As such, rather than critisise success, how about we applaud it!
I'm not criticising Tesco's success. As I say they are a very successful, well run business.
I'm just concerned that we are going down a path where in 20 years time we may not choose to buy at Tesco, we may have no alternative to choose from.
With 2Bn profit, it's clear that Tesco should be buying Rover. 
They're already supplying car loans and insurance, so why not supply the cars as well?
The Supermarket market forces are scary - as has been pointed out, cheap CD's at Tescos mean that the independants find it hard to survive, and so we loose out on choice. The same applies to food - one type of pepper, one type of tomato, little choice of apples, etc. Whilst Tescos make huge profit, local farmers struggle because their cut of the margins is pushed into the mud. It's weird to think it's cheaper to bring milk from Europe than down the road. I've no idea what the 'solution' is - or if there should even be one, but it's interesting to discover the local farm shops, and other small specialists are still fighting.
They're already supplying car loans and insurance, so why not supply the cars as well? The Supermarket market forces are scary - as has been pointed out, cheap CD's at Tescos mean that the independants find it hard to survive, and so we loose out on choice. The same applies to food - one type of pepper, one type of tomato, little choice of apples, etc. Whilst Tescos make huge profit, local farmers struggle because their cut of the margins is pushed into the mud. It's weird to think it's cheaper to bring milk from Europe than down the road. I've no idea what the 'solution' is - or if there should even be one, but it's interesting to discover the local farm shops, and other small specialists are still fighting.
I dont agree will suffer from lack of choice. Specialist "shops" are all over the internet.
Internet shops can fill in the gap (if they have not already) of these more specialist shops that provide more selection.
I dont like seeing high street shops close but it seems to be showing no signs of slowing.
Amazon for instance has a vast range of books/DVD/CD's etc.
A number of times I have got a book from amazon in 3 days delivered to my door which any of the high streety bookstores didnt have in stock.
Internet shops can fill in the gap (if they have not already) of these more specialist shops that provide more selection.
I dont like seeing high street shops close but it seems to be showing no signs of slowing.
Amazon for instance has a vast range of books/DVD/CD's etc.
A number of times I have got a book from amazon in 3 days delivered to my door which any of the high streety bookstores didnt have in stock.
If you value good service support your local bussinesses who offer it
Our local butcher is a good 20% more expensive than tesco, but he will take you to the farms where the meat comes from
Not to mention have every single cut available, and tasty 
worth every penny
But where to buy Britneys lastest CD (if I was that vapid) put it in Tescos with all the other below par produce
Our local butcher is a good 20% more expensive than tesco, but he will take you to the farms where the meat comes from
Not to mention have every single cut available, and tasty worth every penny But where to buy Britneys lastest CD (if I was that vapid) put it in Tescos with all the other below par produce
Rob P said:
I dont agree will suffer from lack of choice. Specialist "shops" are all over the internet.
Internet shops can fill in the gap (if they have not already) of these more specialist shops that provide more selection.
I dont like seeing high street shops close but it seems to be showing no signs of slowing.
Amazon for instance has a vast range of books/DVD/CD's etc.
A number of times I have got a book from amazon in 3 days delivered to my door which any of the high streety bookstores didnt have in stock.
Don't mind so much with Amazon as, with the advent of their Marketplace, independents and shops specialising in hard-to-find books seem to have an outlet (I've certainly had a few things this way). This is not quite the same as the Tesco model.
Rob P said:
Amazon for instance has a vast range of books/DVD/CD's etc.
A number of times I have got a book from amazon in 3 days delivered to my door which any of the high streety bookstores didnt have in stock.
I think Amazon is also great because they offer Readers/viewers reviews.
How can anyone complain that we are in an age of reduced choice with such sites available?.
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