20 FEATURE
Continued from page 18 Profits? What profits?
Putting ‘profits warning’ into the Google search box today brought up stories about Mothercare, House of Fraser, Debenhams, Moss Bros, Card Factory and also that New Look were having to do a deal with their creditors. Truly the November to mid January period has been tough on retailers and more widely ending with the spectacular collapse of conglomerate Carrillion – I hope I have spelt that correctly. On that liquidation as
usual it was ‘bloated fat cat’ and ‘profiteers’ from wall to wall in the tabloids, ‘watershed moment’ and ‘Lehman Brothers again’ in the broadsheets and ‘I’m a business correspondent but everything I write shows I have no idea’ elsewhere. Outsourcing of public services quickly became the centre of debate with a) predictable entrenched anti views on show or b) the most avid proponents entering caveats we’ve never heard before. Actual ly our indust ry
has more experience of privatisation than many a local authority service indeed invitations to tender for market operat ion must appear monthly in our pages. As a result I think most traders and operators views would be a little more nuanced. On markets ‘public’ is no more a guarantee of quality than ‘private’ – and you
could replace ‘quality’ here with ‘profitability’ or ‘trader satisfaction’ or ‘customer choice’ and the claim would still be true. Truth be told too I don’t know anybody who’s got really rich on local authority contracting – since the lowest tender is invariably accepted. In October our busiest such local civil engineering contractor went bust with a deficiency of £671,000. Having worked in the public
service, for a county that would be best described in economic management terms as useless, and in the private sector, I just hope this leads to a sensible debate based on who should and not who could provide what services and why. Listening to ‘old labour’
banging on I fear it’s a vain hope.
Wholesale consolidation
I’m more than a little bemused by the Competition and Markets Authority’s (CMA) approval of Tesco’s takeover of del ivered wholesale specialist Booker. Indeed readers of other parts of this publication may well wonder why when such a prima facie case of supplier consolidation seems to raise not a flutter the internal workings of the Showmen’s Guild should have engaged so much CMA’s attention. It’s only a provisional
approval apparently, though it was trumpeted as rather more
MARKET TRADER, FEBRUARY 2 - 15, 2018
...and thought that surely it is time all the taking stopped and something was finally done with the old redundant buildings. They don’t do much for the area.
in the public prints, granted because “The CMA found that Tesco as a retailer and Booker as a wholesaler – supplying to caterers, independent and symbol group retailers including Premier, Londis and Budgens – do not compete head-to-head in most of their activities. In particular, Tesco does not supply the catering sector to which Booker makes over 30% of its sales.” Well of course they don’t
compete directly. That’s not what would worry me if I was an independent retailer depending on Booker for my supplies. No I might be a tad suspicious when suddenly they fall under the control of one of my biggest competitors.
But at least Booker makes
money and has st rong financial reserves. The same can’t sadly be said of good old Palmer and Harvey, who traded as P&H, a venerable Sussex based delivered wholesale firm entering administration in November. No profit in five years
added to administrator’s talk of ‘challenging trading conditions’ and cash flow pressures probably hint at the cause. There was no pre-pack, no attempt to seek a buyer, just closure leaving thousands of employees without work. Mind you it won’t really bother P&H’s largest customer Tesco will it? On that matter did P&H’s
attempts to find additional funding founder on the Tesco/ Booker announcement? I wonder. Around the same time
‘symbol group’ NISA’s shareholders – mainly independent traders – voted to accept an offer for that business from the Co-Op Group. The bid valued the business at £137m, though with NISA servicing a reported £105m debt, Co-Op seem to me to have got the whole bang shoot for £32m. If I was a NISA shareholder
I too might take the £20,000 payment, with other sums promised later, and hope for the best. If I was a Costcutter operator I’d be relieved that
someone had immediately stepped in to fill my supply chain gap. But basically it really means
that the New Year starts with the independent grocery sector having three less truly independent delivered wholesale sources to choose from and two that are left controlled by multiples. I find this all part of a rather
worrying trend for anybody trying to retail on their own on a smal l scale. True independent trading and true competition to benefit the customer depends, it seems to me, on a really variegated wholesale supply chain and a good range of distribution outlets.
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