One big, happy Tescopoly
Tescopoly by Andrew Simms, Constable 2007
Andrew Simms, from economic think-tank nef, certainly appears to have it in for Tesco. It seems it wasn't enough to write a book about evil multinationals, or the desecration caused by supermarkets. No, Tesco is so offensive that he felt obliged to dedicate a whole book to telling us all about it, and he makes no apology for singling out this particular multinational which, according common lore, has nearly 40% of the UK groceries market share and takes one in every eight pounds that Britons spend on shopping of any kind. The book takes its name from www.tescopoly.com, an alliance concerned with countering the negative impact of supermarkets.
From the outset, Simms' tone makes it clear that he's not interested in objectivity. Even the cover, with the first 'o' in 'Tescopoly' cheekily adorned with the Devil's horns and the 'y' sprouting a pointed tail, is a parody of Tesco's logo and its white, blue and red colour scheme. In fact, this is the sort of book that might make the average corporate executive think the author is a hippy, free-loving allotment owner. But Tescopoly isn't just a rant about why supermarkets are bad for you; it's primarily a book about all the ways in which supermarkets are not good for you. Simms dispels common myths about the supposed benefits of supermarkets, particularly in terms of the creation of local jobs and the boosting of local economies. In a particularly revealing chapter, he compares the relative benefits of London's Queens Market to those of the typical supermarket. Queens Market generates an estimated £11m directly to the local economy, excluding indirect benefits from visitors spending money in the area. Per square metre, the market provides more jobs than a typical supermarket, and a typical basket of goods is about half the price of a comparable shop at a supermarket. By contrast, every pound spent at a supermarket is money that leaks out of the local economy and makes its way towards the big Tescopoly in the sky. For, even though supermarkets provide local jobs, those employees will also shop at Tesco, and other local branches of multinationals, etc., etc.
Simms also details how supermarkets, often argued to provide better value through competition, in fact do the exact opposite. Large, out-of-town, rival supermarkets are rarely in direct competition with each other, because they will not build a new branch near a competitor. Moreover, once you walk through those sliding doors, any chance of competition is gone. At a local market, the economic principle of 'the market' still operates, because you can easily compare produce and prices between competing stalls and decide where to buy from, which generally involves some kind of trade-off between quality and value. Supermarkets, however, by virtue of their product diversity, are not sensitive to such market forces, because they rely on the fact that customers are unlikely to drive between competing branches of Tesco and Sainsbury's to see which sells a kilo of peaches for the lowest price. Product diversity also means that supermarkets can keep the price of certain products artificially low to draw customers, but still make money by grossly overcharging for others. This principle can, of course, be repeated over all sorts of scales. Prices of certain goods can be kept low in certain areas of the country in which local market share is low, but be hiked up in places where a particular chain commands a 50% share of the market. Prices of certain produce can be kept artificially low in one country by importing it from another, financially incentivised to dedicate land to the growth of exotic food for exports rather than staples for the local market. And so it goes on.
An even more astounding, though I guess unsurprising, fact is the manner in which supermarkets are able to post record profits. Because of the volume of their orders, supermarket chains are able to negotiate ('negotiate' in this context often means 'dictate') terms such that they do not pay upon purchase, essentially buying goods from producers and suppliers on credit. Supermarkets, however, instantly turn goods into cash, such that they can make record huge profits out of what are, in fact, interest-free loans that, in the case of Tesco, can run into more than £2 billion in any one year.
So there you go. Supermarkets suck. Here are 7400 places to spend your money other than Tesco.
Andrew Simms, from economic think-tank nef, certainly appears to have it in for Tesco. It seems it wasn't enough to write a book about evil multinationals, or the desecration caused by supermarkets. No, Tesco is so offensive that he felt obliged to dedicate a whole book to telling us all about it, and he makes no apology for singling out this particular multinational which, according common lore, has nearly 40% of the UK groceries market share and takes one in every eight pounds that Britons spend on shopping of any kind. The book takes its name from www.tescopoly.com, an alliance concerned with countering the negative impact of supermarkets.
From the outset, Simms' tone makes it clear that he's not interested in objectivity. Even the cover, with the first 'o' in 'Tescopoly' cheekily adorned with the Devil's horns and the 'y' sprouting a pointed tail, is a parody of Tesco's logo and its white, blue and red colour scheme. In fact, this is the sort of book that might make the average corporate executive think the author is a hippy, free-loving allotment owner. But Tescopoly isn't just a rant about why supermarkets are bad for you; it's primarily a book about all the ways in which supermarkets are not good for you. Simms dispels common myths about the supposed benefits of supermarkets, particularly in terms of the creation of local jobs and the boosting of local economies. In a particularly revealing chapter, he compares the relative benefits of London's Queens Market to those of the typical supermarket. Queens Market generates an estimated £11m directly to the local economy, excluding indirect benefits from visitors spending money in the area. Per square metre, the market provides more jobs than a typical supermarket, and a typical basket of goods is about half the price of a comparable shop at a supermarket. By contrast, every pound spent at a supermarket is money that leaks out of the local economy and makes its way towards the big Tescopoly in the sky. For, even though supermarkets provide local jobs, those employees will also shop at Tesco, and other local branches of multinationals, etc., etc.
Simms also details how supermarkets, often argued to provide better value through competition, in fact do the exact opposite. Large, out-of-town, rival supermarkets are rarely in direct competition with each other, because they will not build a new branch near a competitor. Moreover, once you walk through those sliding doors, any chance of competition is gone. At a local market, the economic principle of 'the market' still operates, because you can easily compare produce and prices between competing stalls and decide where to buy from, which generally involves some kind of trade-off between quality and value. Supermarkets, however, by virtue of their product diversity, are not sensitive to such market forces, because they rely on the fact that customers are unlikely to drive between competing branches of Tesco and Sainsbury's to see which sells a kilo of peaches for the lowest price. Product diversity also means that supermarkets can keep the price of certain products artificially low to draw customers, but still make money by grossly overcharging for others. This principle can, of course, be repeated over all sorts of scales. Prices of certain goods can be kept low in certain areas of the country in which local market share is low, but be hiked up in places where a particular chain commands a 50% share of the market. Prices of certain produce can be kept artificially low in one country by importing it from another, financially incentivised to dedicate land to the growth of exotic food for exports rather than staples for the local market. And so it goes on.
An even more astounding, though I guess unsurprising, fact is the manner in which supermarkets are able to post record profits. Because of the volume of their orders, supermarket chains are able to negotiate ('negotiate' in this context often means 'dictate') terms such that they do not pay upon purchase, essentially buying goods from producers and suppliers on credit. Supermarkets, however, instantly turn goods into cash, such that they can make record huge profits out of what are, in fact, interest-free loans that, in the case of Tesco, can run into more than £2 billion in any one year.
So there you go. Supermarkets suck. Here are 7400 places to spend your money other than Tesco.
posted by CCT at 7:04 pm
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