A Ghost Story Retailed (part three)

January 16, 2012 8:42 am Published by Leave your thoughts

Act III: Big Trouble

In the previous canto of this lamentation for the independent, individual retailer, I limned the way department stores have been subsumed into uniform chains, like Debenhams and House of Fraser. But some of these chains are not all that they seem. For instance, BHS, Burton, Topshop, Dorothy Perkins and others have been herded together under the ownership of that ornament on the British scene Philip Green, knighted for his services to tax avoidance, and his fellow entrepreneur and wife, Tina. This is where liberal capitalism leads: a handful of billionaires who decide everything that the marketplace will trade, just as Marx anticipated.

JK Galbraith expounded the privileged position of captains of industry more than fifty years ago. He was writing of a very different sort of economy, driven by productive rather than service industries. The billionaires with whose reputations he had grown up in North America – Henry Ford, EH Harriman, Andrew Carnegie, John D Rockefeller, JP Morgan, William Randolph Hearst – had generally either made things (automobiles, railroads, steel) or constructed enabling empires (oil, personal banking, publishing).

“Without question,” wrote Galbraith, “the individual with the greatest stake in the present economic goals is the businessman – more precisely, perhaps, the important business executive. If production is of preoccupying importance he, as the man with the traditional and established right to the title of producer, will be the dominant figure in the social constellation. Society will accord him prestige appropriate to the role he plays; what may well be less important, he will be able, without difficulty or criticism, to command an income that is related to his prestige. As production has increasingly monopolized our economic attitudes, the business executive has grown in esteem. So long as inequality was a matter of serious concern the tycoon had, at best, an ambiguous position. He performed a function of obvious urgency. But he was also regularly accused of taking far too much for his services. As concern for inequality has declined, this reaction has disappeared. The businessman is no longer subject to a serious challenge of any sort” [The Affluent Society, 1958].

Prof Galbraith’s description of inequality as being formerly “a matter of serious concern” refers to a now far-distant time. Socialism was effectively dead in the USA by the end of the 1930s, in Britain by the end of the 1950s and in Galbraith’s native Canada by the mid-1960s. And now of course production no longer has any monopoly on the economy either side of the Atlantic. These days, a producer is usually understood to be someone in charge of movies, adverts, software, music, television programmes. Most of us in the west toil in service industries. The making of machines, vehicles, implements, garments, furnishings and toys is almost entirely confined to the Far East. Our billionaires are the asset strippers, speculators, venture capitalists and money manipulators who produce nothing but who feed off the toil of low-paid workers in the teeming nations of the developing economies.

Once these buccaneers have grown rich, they naturally like to own things that bespeak their wealth: property, private jets and yachts, customised cars, fine art, trophy wives and, most important of all, businesses. There are some assets, both the initial acquisition and the continuing upkeep of which may only be afforded by multi-millionaires, because they are apt to bleed money and require constant feeding: newspapers, football clubs, hotels, theatres, and movie and television production houses. A safer bet, provided the owner is a shrewd re-investor, is the retail chain. But the biggest chains have been built over generations, mostly within a family: Sainsbury’s, Walton, Morrison. So my argument comes finally to the biggest kind of chain store.

Of all the perfectly horrible developments in the retail trade since the Second World War the relentless swamping of the world by superstores has been both in itself the worst and the one chiefly responsible for all the other most horrible developments. The boards of superstores (and their shareholders) seek only to maximize their profits. Look at the regular lists of the richest people in Britain and you will note how many of the names near the top of the list are those of directors of superstores or of companies engaged not in the production of items but in the packaging of items sold in superstores.

The big stores oversee the permanent buyer-for-retail’s market they have stimulated. They are so powerful that they fix prices, determining the fates of every area of the farming effort, both in this country and throughout the world’s producing nations. They require blemish-free, regular-shaped produce all year round and in predictable quantity. Any wholesaler unable to guarantee this unnatural supply is simply squeezed out of the business. The big stores settle for nothing less than exactly what they want on their own brutal terms.

I once met a former supplier to the supermarkets who told me horrendous tales of the profound ignorance of the buyers – even the chief buyers – who represent the big stores. Characteristically, these tribunes of the shopping people know nothing of seasonality, growing conditions, available varieties or any other practicality of agriculture, by this man’s account. They form categorical, non-negotiable conclusions based on whim, even about items the taste of which they personally do not care for. This at any rate was what he found and he quoted chapter and verse that had the smack of lived experience, gnawing at him in his enforced, premature retirement.

So what these stores, in their ignorance, don’t want falls out of production and customers are obliged to settle for what the superstores have determined that they will have. You can whistle if you want an item that doesn’t confirm to the supermarket’s crass standards. It isn’t profitable so it is ruthlessly culled or made palatable to the taste of the lowest common denominator and so of no interest to you.

It isn’t any use you preferring fruit with the beautiful taste that can only be produced by the natural ripening process in season. Such fruit is only available if you grow it yourself or travel to where it grows plentifully or have access to one of the small-scale specialist growers grimly hanging on to provide those who are willing to go to some trouble for decent merchandise and to be patient for the appropriate time of year. Those who cannot wait until weeks after Wimbledon and who have never tasted a truly delicious strawberry full of in-season juice (especially a tiny wild one) will buy their oversized, flown-in, force-ripened ones in, say, January and imagine that is what a strawberry is like.

Farmers who cannot get by on a large enough fan-base for organic, local and seasonal produce need to be ruthless themselves in order to maximize their yields to satisfy the stores. Pesticides and other chemicals must be applied in industrial quantities to preserve the eerily perfect appearance of the fruit and vegetables. These treatments have their nuclear effect on the insects that feed on the crop margins. They also prevent birds, small mammals and other creatures from taking their share both of the crops and of the insects. These creatures are poisoned or genetically altered by imbibing the chemicals through the flesh of either the crops or the insects. When they do not take the adulterated flesh, they starve.

Denied a healthy food source, the wild creatures die out. The buyer of the unearthly orange-coloured carrot, perfectly straight and with no blemish on its skin but tasting only of rinsing water and slightly of chemicals is unconcerned that a sub-species of shrew or a variety of field butterfly or a type of shrike disappears from its last habitat. But the world is poorer for it. The world is poorer for the decline of good taste in the carrot too.

The appearance of the countryside has radically altered in my lifetime. Modest fields of mixed, rotating crops that fell to the plough in time for the Harvest Festival have been replaced by vast vistas of fast-growing animal fodder. Thanks to the ubiquitous spread of the brassica appropriately called rape, Blake’s England has become an acid yellow and unpleasant land.

Animal farming has changed too. Pandemics of disease – foot and mouth, bovine spongiform encephalopathy – are spread readily in factory-farming conditions and so have wiped out flocks and herds. Consequently, local bloodlines are disrupted and abandoned. Additionally, the narrow demands of supermarkets have put a premium on the meat, milk and other by-products of specific strains. So, for instance, what the Scots call the “heeland coo” is now common in many parts of Britain and no longer a beautiful beast peculiar to the Highlands. The countryside has become like the high street: physical character may distinguish one part from another but the introduced elements are the same all over the country so that a field in Dorset sustains the same inhabitants as a dale in Yorkshire.

Having ruined the food industry, the supermarkets went after other businesses to undermine. First there was a return to the high street with an explosion of small-scale marts, also located in residential areas and small towns – Tesco Express was the leader of this trend. This initiative was a direct challenge to second-rank chains like 7-Eleven (now extinct in the UK), Spar and Budgens as well as to individual corner shops. Then, in September 2005, Tesco opened in Manchester its first non-food supermarket. This upped the anti even further. Whatever you sell – yes, you sir, the ironmonger who used to be the star of your high street, and you madam, the modest draper whose shop has been adored by its regulars since the 1920s – you are powerless against the big guys.

The conventions established in superstores have spread to other retailers that have sufficiently large branches to adopt them. For instance, many stores have done away with the old-fashioned counter system and replaced it with supermarket-style checkouts. Typically, they have found that the checkouts require fewer staff, because all the transactions are concentrated in one place. Thus, as long as at least one of the tills in a row even of ten or twelve is in operation, customers are only likely to complain about being made to wait to complete their purchase if ungrateful people like me are in the queue.

Superstore policies have done damage far beyond the field of diverse retail. Because these stores buy in bulk and sell at speed and in quantity – “pile ’em high, sell ’em cheap” to quote the founding motto of Sam Walton’s Walmart megaliths n the US – they require produce to be transported, delivered, stored and sold in regular-sized units – what restaurant chains call “portion control”.

The display of loose, unpackaged produce takes a very lowly second-place to regulation quantity packs, inevitably pitched at the conventionally-sized family. As with the locating of venues for the benefit of car-drivers, so this packaging culture discriminates against the single person or the household whose members have divergent needs and tastes. It also discourages those who prefer to pick over the selection and choose what they want. With some fruits and vegetables, this is critical. Only a nincompoop buys an onion that is less than hard as nails because as soon as it softens an onion is past its best. When you may only buy a sealed bag containing eight or ten onions, it is impossible to determine whether all the onions are sufficiently hard (if indeed any of them are) and anyway you are probably being obliged to purchase more than you require.

Packaging is not designed to help the customer, save for those who have been conditioned by the superstores – and in the nature of things, these are an increasing proportion of the total – to settle for what they are given. And packaging as an industry has grown fat on the backs of the superstores’ requirements. Most of this packaging, even that part of it that is recyclable, is added to the mountain of landfill garbage that the world generates in self-defeating quantities. Much of it ends up polluting the oceans as well as the land and much of it is fatally ingested by wild creatures. Once again, Tesco and co are making a decisive contribution to the extinction of the planet’s dwindling wildlife.

What can be done to curb the dominance of the superstores? In the last few days, we have seen that they may already carry the seeds of their own destruction. Tesco suffered a much poorer Christmas season than it had anticipated, was obliged to issue a profits warning and saw as much as £5bn wiped off the value of the company in a single day’s share trading. That it can sustain such a loss without being consigned to the same basket-case basket as HMV, Thorntons and Mothercare says a lot about its expectation of continuing profit and its vast size: it employs almost half a million people worldwide.

Why did Tesco have such a bad Christmas? Part of it is down to governmental manipulation of the economy. The Tories prefer to squeeze hardest those social groups least likely to support the party, so the C2 and D groups – for whom shopping for daily food and household basics comprise their big-ticket spending – are the ones having to cut that kind of spending. (Argos, the down-market catalogue chain, has seen a comparable decline in its profits). By contrast, Sainsbury’s and Waitrose, whose customer base is more middle class, have been less affected by the recession.

But there is also a technological ingredient in the changing fortunes of the supermarket giants. John Lewis, along with its subsidiary Waitrose, has prospered not only from the relative resilience of better-heeled customers but also from anticipating the nature of the growth of on-line shopping. Andy Street, the John Lewis managing director, told The World at One the other day that the secret was to manage a combination of on-line ordering and in-store collection: “bricks and clicks” he calls it. Tesco may not yet have devoted enough planning to what is called a “multi-channel strategy”.

Nevertheless, Tesco is still comfortably the market-share leader, the 30 per cent that it takes of the market remaining nearly double that of its nearest rival, Asda (which is the British identity of Walmart). Despite a healthy Christmas, Sainsbury’s remains about 0.5 percent behind Asda. The superstore sector as a whole grew by nearly five per cent last year.

Monopoly legislation defines a “classic monopoly” as 25 per cent of market share in a given sector. But when the Competition Commission considered the case of Tesco in 2007, it did nothing to threaten the company’s position. This despite that, when Morrisons bought Safeway in 2004, the Commission obliged Morrisons to part with 52 of the acquired stores, ten of which were bought by Tesco. It seems that there is one rule for Tesco and one for everyone else.

What can be done to curb the over-mighty superstores? A widespread determination among shoppers to support independent retailers, local traders and small, specialist chains would be the most effective weapon, but contemporary society has learnt to believe that it values convenience above all else – and remember that an early name for the multi-purpose chain was “the convenience store”. One might think that the surprising popularity of food programmes on television would encourage viewers to favour locally-grown and seasonal produce. But the telly chefs themselves do not follow the implications of their trade. The most depressing aspect of Antony Worrall Thompson’s recent shameful shoplifting escapade was that it took place at his local branch of Tesco.

The government could support the independent and small-scale retailer against the huge conglomerates by adjusting the business rate. Why not abolish the taxation altogether for enterprises whose premises and workforce are below a certain size? Another route to restricting the power of the superstores would play its part in a piece of social engineering that I have long advocated. My argument goes like this:

Whenever governments attempt to intervene in private activities that have a deleterious effect on those who pursue them (and, though this is routinely ignored in the argument, on others too), people complain about “the nanny state”. Oddly enough, the same people scamper to nanny NHS when they begin to suffer the diseases caused by smoking, drinking, obesity and so on. This point might usefully be made more often.

Recurrent proposals for price controls and consumption restrictions, advertising and sponsorship bans and other such measures (ones that also punish responsible consumption and adversely affect enterprises that are innocent third parties) are always fiercely fended off by vested interests. Rather than fixing a minimum price for alcohol, a simpler measure would be to revoke the licences of all supermarkets and non-specialist chains to sell alcohol and indeed smoking materials. This would also be a useful counter-balance to the all-purpose chains that have driven so many off-licences, pubs and newsagent/tobacconists out of business. Many young people find an off-licence a rather more daunting outlet than a corner Costcutter with its discounted plonk and strong beers.

Then, an enlightened Chancellor might impose new, swingeing duties on smoking materials and alcohol that are strictly and accountably ring-fenced for payment direct to the NHS, so that smokers and drinkers may know that they are contributing towards the treatment that they will themselves require. A similar imposition might be made on processed foods, using a sliding scale dictated by objective nutritional assessments, with more stringent tests and surcharges imposed on catering supplies, the contents of which are not (but could be and should be) vouchsafed to consumers. If that works well, all foodstuffs that cannot demonstrate that they are organic might subsequently be surcharged in the same way. Food producers will have an incentive to put themselves in a position where they can demonstrate the healthy nature of their ingredients and processes. This is taxation as organic carrot rather than as resented stick.

A further useful intervention by government would be the imposition of a surcharge on non-recyclable packaging, payable both by the supplier and by the retailer. This would favour, for instance, the greengrocer who sells loose vegetables in paper bags and the delicatessen dispensing cheese in greaseproof wrapping and other items in card tubs. The charge for a plastic bag should be increased vertiginously so that everyone painfully understands the virtue of the re-use of bags issued by the stores and the acquisition by the shopper of old-fashioned shopping bags and baskets constructed of natural materials.

It is not beyond the powers of ministers to restore a balanced cohesion to the state of British retail. Being realistic, though, it may be beyond their powers of imagination.


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This post was written by W Stephen Gilbert

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