Understanding Welsh Places

USP Infographic

Since the development of Understanding Scottish Places (USP) there has been a lot of interest in both the development itself and its potential to be replicated in other countries.  At events in Scotland and when STP and others have presented outside Scotland, attention has turned to potential extensions and expansions.  Could an ‘Understanding xxxxxx Places’ be developed, and if so, would it be the same as, or different from, Understanding Scottish Places?

(If you are unaware of USP then check out my previous posts on it – 2015, 2017 – and then visit the site)

For some time this (my) interest has been focused on Wales.  There are a number of reasons for this, ranging from the engagement of the Welsh Government in our towns based actions in Scotland, the scale of Wales and its potential similarity with Scotland at some levels, and of course my own origins in Wales.  Carnegie UK Trust themselves (one of the partners in USP along with University of Stirling, CLES, Scottish Government and Scotland’s Towns Partnership) – and the clue is in the UK bit of their name – were also interested in scoping out a Welsh version of USP.

So it was no surprise that finally, two weeks ago we were able to have an invited workshop on Understanding Welsh Places, in the really interesting surroundings of the Design Commission for Wales in Mount Stuart Square, Cardiff near the Senedd and the Bay.

Now I stopped living in Wales some 34 years and though I go back perhaps 6 times a year, I can hardly be called an expert on Welsh Towns and the ‘political’ landscape for towns in Wales.  But I do know how we got USP off the ground and what the benefits and uses are.  So, with Matt Jackson of CLES, we outlined the ‘Road to USP’.  The slides for this are available here and the intention is that an accompanying article (currently in production by the wider consortium) will be available in due course.

The Welsh situation is different, but there are lessons to be learned and things to be borrowed.  The slide below outlines the principles behind USP and these have guided development, sometimes to the detriment perhaps of an easy life, as for example in the strict condition about data coverage.  But what these principles have given is a strong sense of identity for USP and something that is immediately useable and understandable.  These principles are perhaps generic for all possible expansions of USP, though the exact definitions of size of town or data to be used may have to be altered depending on availability and intention.  The heart of USP – typology, interaction model, data visualisation – is common (probably).

USP Principles

Others can say what they thought of the workshop as a whole and the interactions (and Gina Wilson from Carnegie UK Trust has already done that here).  For me, time flew and the engagement in ideas and discussion was palpable.  There were however some jarring notes from my Scottish perspective:

  • Some (not all thankfully) felt our insistence in Scotland on avoiding league tables and pejorative labelling reduced the need for places to strive to improve;
  • Some were wedded absolutely to the idea of the local authority being the unit of analysis above all else;
  • The desire for any tool to provide solutions (as opposed to kicking off conversations) also featured in some quarters.

Overall though there did seem to be a sense of interest in an Understanding Welsh Places (UWP)  which would open up conversation, stopped blaming people and which was easy to use and explore, and which critically focused on the town (place, community) as the unit of debate.

How UWP would differ from USP is a question for Wales, if it goes ahead.  The choices we made in developing USP (size and number of towns, range of data, boundaries, more visual than verbal tool etc.) may not be exactly the right ones for Wales.  But, and even if nothing happens now, which we sincerely hope is not the case, at least we triggered a series of conversations and discussions, which will be taken forward to the betterment of Welsh places.

To quote from the two reports which set the scene for USP:

cspp 2011

“There is a real absence of good, reliable, consistent data on Scotland’s town centres.  All towns and town centres need firstly to understand themselves through a systematic, replicative, efficient and affordable data collection and benchmarking exercise.  How else are we meant to know what is going on and what works and what does not?  In an era of “evidence based policymaking” this is unacceptable.  Indeed, it begs the question what local authorities and central government are basing their decisions on?  Good data that is routinely and systemically analysed is a critical first step for local government that should be centrally funded by the Scottish Government.” (p3)

 

 

Fraser Review

“We accept that there is a need for action to be based on a clear understanding of the health of our town centres.  The evidence here is patchy and inconsistent and the different types of data need brought together to present a useful overall picture.  We recommend a model is developed, through a demonstration project, showing how data can be collected, presented and shared.” (p5)

The way we use data and think about towns, places or communities has to change or we are doomed to repeat the mistakes of the past.  Understanding Scottish Places has challenged conventional perceptions; we hope Understanding Welsh Places can join us.

Pob lwc!

Posted in Academics, Carnegie UK Trust, CLES, Data, Local Authorities, Places, Planning, Relationships, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Small Towns, Town Centre Action Plan, Town Centre Review, Town Centres, Towns, Towns Typology, Understanding Scottish Places, Understanding Welsh Places, University of Stirling, Wales | Tagged , , , , , , , , , | Leave a comment

The Scottish Diet and Retail Shops

FSS Cover

The Scottish diet has become a short-hand for unhealthy living.  All the evidence points to its stubborn lack of change despite information, exhortation and even small measures of legislation.  Whilst retailers and manufacturers have taken some actions on reformulation of products and promotional activities, this has proved insufficient to address the issue. Many Scots remain addicted to a diet high in sugar, salt and saturated fats, to the detriment of individuals, communities and the economy.

Food Standards Scotland (FSS) is tasked by the Scottish Government to address this issue. The organisation agreed five new recommendations in March 2017 to help improve the Scottish diet.  These include calls for greater regulation of the food environment, regulation around the promotion of unhealthy food and drinks and the recognition of the need to support and assist small- to medium-sized food businesses in making these changes

FSS commissioned a report from the Institute for Retail Studies at the University of Stirling to look into “identifying and understanding the factors that can transform the retail environment to enable healthier purchasing by consumers”.  This report is published today.

This is a controversial issue.  The reactions by retailers and manufacturers to restrictions on tobacco and alcohol sales, the concepts of the “Sugar Tax” and Minimum Unit Pricing for alcohol as well limiting junk food advertising to children, point to a fierce protection of the rights of people and businesses to sell and buy whatever they want, whenever, at whatever price.  This is often enshrined as the rights of individual freedom; people should be free to choose, even when the choices are damaging.

For any consumer, walking into a supermarket or a small food store means being confronted by a plethora of choice.  Finding a way through that choice is not easy.  Retailers and manufacturers try to assist in this by their presentation, placement, pricing and promotion of varying product lines and products.  The consumer is bombarded with information of various types, some overt and some more subtle.

The in-store food retail environment is not a neutral one where consumers can exercise full information and true freedom of choice, but a powerful selling environment with conflicting and confusing messages.  Overwhelmingly, the placement and promotion of products, as well as pricing, tends to favour what are regarded as unhealthy as opposed to healthy products.  Consumers are attracted to, and purchase, these products above others, often on promotion, and often in bulk sizes far beyond immediate consumption needs.  The environment is obesogenic in that it encourages over-indulgence and a focus on unhealthy purchasing.

The slide deck shows aspects of the in-store situation, promotions and products that are used.

 

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So what can or should be done?  The report considers the academic literature to date on the topic, focusing on nudging, behavioural and choice architecture adjustments and regulation.  Most practical experiments have been limited or short-term, often occurring in the USA, and evidence for impact is patchy, though with some positive indicators.

The report thus considers the current practices of food retailing from the ground up, before setting out what might be done under each of these areas (e.g. product, place, price, promotion).  The report considers what might be possible (e.g. balancing promotions, limiting package sizes, product reformulation, information provision) and likely reactions and effects.  This is presented via a large matrix which can be downloaded here, supported by discussion.  This matrix outlines the retail landscape that confronts consumers and which, it is argued needs rebalancing to support the concept of ‘free choice’.

This issue (and that of the Scottish diet) is not just a retail problem though.  Any restrictions or interventions addressed to retailing will also need to consider individual vs societal considerations (i.e. the ‘nanny state’), retailing vs non-retail food consumption sites (e.g. restaurants, food and beverage outlets), sector vs company vs store levels (can interventions be applied to all sizes of store?) and the issue of physical vs online retailing (avoiding privileging internet retailers).  In store purchasing is not the only method of obtaining food, nor is it carried out in a single way, with one aim or in a unified setting.  Resolutions to interventions across such different settings and approaches/activities are not simple.  If the Scottish diet is to be tackled however, then the steps outlined in this report need to be considered widely.

The report’s recommendations are that:

  1. Salt, fat and sugar ‘levies’ be introduced along the lines of the ‘sugar tax’ to encourage reformulation and resizing;
  2. Product and display information be enhanced, standardised and regulated;
  3. Trials at store level should be funded and undertaken to investigate combinations of interventions providing the most impact in the Scottish context;
  4. A Food Retail Standard (along the lines of the Scottish Healthcare Retail Standard) be developed to rebalance promotion of healthy and unhealthy products;
  5. The retail sector not be considered in isolation and measures be adopted in all food consumption/purchasing settings.

This is not an easy area on which to reach, and contradictory views are prevalent.  However the environment confronting consumers is not a neutral one allowing ‘free choice’.  The Scottish diet has been difficult to alter.  Retailing is part of the problem, but also could be a major part of the solution.  Voluntary initiatives and ‘simple’ healthy promotion have failed; the time to consider a range of actions to alter the architecture of in-store choice may now be upon us.

The full 80 page report is available for download here.

A summary of the report/findings is available for download here.

The press release issued to launch the report is available for download here.

Posted in Academics, Advertising, Availability, Behavioural Economics, Brands, Consumer Choice, Consumer Lifestyle, Diet and Health, Discounts, Food Retailing, Food Standards, Healthcare Retail Standard, Labelling, Marketing, Merchandising, Policy, Pricing, Research, Retail Policy, Retailers, Scotland, Scotland Food and Drink, Scottish Retailing, Small Shops, Space, Sugar Tax, Supermarket, Suppliers, Tax, Unit Pricing, University of Stirling | Tagged , , , , , , , , , , , , , , , , | Leave a comment

The Lost Broch of Stirling

I am not sure what it says about me, but I have been seduced into some small crowdfunding projects over the last few years.  The subjects have been food, drink, rugby and history, so maybe I do know how and why this reflects on me!

As I have reported here before I put a small amount into Incredible Edible to help the book get published.  Before that a couple of start-up breweries and more latterly some bakery/grocery start-ups attracted my meagre contribution, as have a couple of hydro power schemes.   I was not really seeking any return or recognition, but wanted instead to encourage some small and community projects.  Perhaps it’s my version of betting?

Most recently I contributed to a University of Stirling crowdfunding exercise – the Peter Mackay Archive – mainly because I felt such things are important and it ties in to some places and issues that were important to me as a student.  Rather unexpectedly, I received some negative comment about this when I tweeted about the appeal, on the basis that Universities and their Principals are rich enough to fund such things themselves.  Ah well!

Out of the blue this week I stumbled across the Lost Broch of Stirling (Thanks to a @theBEFS tweet).  I will probably contribute, not least as it is such a remarkable (if rather sexist) story, and the ‘dig’ site is just round the corner from where we live.  If you don’t know the story of Christian Maclagan (and I did not) then check out the blog here.  If you don‘t know what a Broch is then see the end of this post.  Put simply Christian Maclagan discovered an urban broch in Stirling in 1872, but was denied membership of the Society of Antiquaries of Scotland as she was not a man and could only publish her key paper on the site after it was transcribed by a man.  A dig at Maclagan’s site will go a long way to confirming her reputation and righting a Victorian wrong.

This did make me reflect a little on what such crowdfunding exercises offer by way of return, though for me that is not the point and most have been anonymous contributions.  The Lost Broch is a reasonable example.  At various crowdfunding price points it offers:

  • Access to field updates as the dig happens
  • Your name appears as an official project supporter in the final site report
  • A copy of Christian Maclagan’s biography (currently out of print)
  • A Lost Broch T-shirt or bag
  • A tour of Maclagan’s Stirling
  • Opportunity to join the dig for 1-4 days

Basically these are experiences or items which can not be bought in any other way.  They provide either a degree of exclusivity and/or uniqueness or an experience that is not available in the normal ‘shop’.  At a time when quite a lot of retailing is being confronted by declining sales or reducing rates of increase of sales and the idea of ‘peak stuff’ is being seen/heard more often, this offer, like so many others focuses on experience/individuality as a point of differentiation or engagement.

This is of course not new and retailers have been trying to add experiences to retail for a long time.  It has perhaps become more stark now as consumers get bored with the ‘same old, same old’, can do much functional shopping electronically (and get immediate (well almost) gratification), can shop the world from a smartphone, and attention spans have decreased considerably.  Instead the search is about a sense of difference and a personal experience (though no doubt shared in the right social media), but this does not come cheap.

Given I can dig my own garden every weekend and my knees are those of knackered 70 year old, I’m not sure I am up for learning archaeology, in a trench, around the corner.  But, Christian Maclagan’s story and the Lost Broch of Stirling grabbed my attention and interest.  I wish them well and hope others can also contribute and gain pleasure from involvement and experience.  Just knowing it is going on, that people care, and being kept informed, is fine for me.

The big question for retailing though is how retailers can compete with such benefits now on offer more widely and how you might structure the ‘rewards’ to give that sense of personalisation and experience.

Brochs

Brochs are tower-like structures unique to Scotland, dating from c2000 years ago.  They are the only extinct prehistoric buildings in north-west Europe to demonstrate multiple floors.

carloway broch 2016.jpg

Carloway Broch, Lewis, Summer 2016 (Photo: Leigh Sparks)

Posted in Architecture, Brochs, Buildings, Crowdfunding, Experiential, Heritage, History, Incredible Edible, Retail Change, Sexism, Social media, Stirling, University of Stirling, Urban, Urban History | Tagged , , , , , , , , | Leave a comment

Business Rates: an election issue (not)

Houston

This blog has covered the issue of rates on a number of occasions (e.g. rates relief, a levy, some rates and the Grimsey report, the poll tax and business rates) never fully satisfactory, and indeed, re-reading the pieces, with a mounting sense of frustration at the situation.  The last time was in April 2014, and it is clear that nothing has changed since.  The situation has indeed been made worse by the revaluation – though it may not be as bad in many places as it is often portrayed as losers get noisy and winners grow quiet.  Successive governments have proved incapable of weaning themselves off the predictable and expanding money supply from rates, and retailers have borne the brunt of this.

Everyone knows it is a rotten, broken system, but there seems to be little will in politics to give a damn about it. Both the Conservative and Labour manifestos have a paragraph on the rates system, both promising a review in due course. This is simply not good enough, especially in the former case where the Conservatives have been in power for 7 years and have presided over the continuation of an unholy mess.

It is of course perhaps not overstating it to note that politicians at this time of the cycle (i.e. they need your vote, now) are wedded to places.  Towns and high streets are magnets for the kissing babies politician and their absurd placard waving cling-ons; real people are far too dangerous.

But it is in these very towns and high streets that the rates damage is being done.  Why can’t politicians look around and see the devastation their policies and inaction are wreaking?  No, they’d rather just continue protecting  internet businesses and out-of-town, but milking the high street and the social hearts of our communities.

Rates are centuries old in conception.  They are analogues in a digital world.  As someone on the radio said the other day in a different context, the model of taxation based on fixed place and people working 40 hours a week for 40 years of their life in one place is long dead, so why are business and personal taxes still stuck in the past?

And so it is for rates.  Sticking plasters and outmoded approaches should have gone a while ago.  When you next see a politician in a high street wanting your vote, nobble them and ask them about their views on, and solutions for, rates and business and personal taxation.  Do they get why this is a real issue? Don’t get fobbed off with ‘it’s a local government issue’.  If they know what rates are and why this is important, and can be half coherent on what could be done, think about voting for them, for most of them don’t have a clue and are quite content to keep taking the money and push the problem into the long grass.

A longer, but equally irritated piece on the rates mess (‘Houston, we have a problem’) has just been published in our column in Town and Country Planning.  You can download it here, but you should also take a look at T&CP and the other great stuff they produce in there every issue.

Posted in Closure, Governance, Government, High Streets, Internet, Internet shopping, Large Store Levy, Mary Portas, Online Retailing, Places, Politicians, Public Health lev, Rates, Regulation, Retail Policy, Retailers, Store Closures, Tax, Town & Country PLanning, Town Centres | Tagged , , , , , , , , , , , | 2 Comments

The Benefits of Collaboration

Last week I gave two presentations – well to be more exact I did that academic thing and did two versions of the same presentation.  The first was a presentation to a UKCGE workshop on Collaborative Doctorates; the audience was academic and policy colleagues from across the UK who are focused on industry-academia collaboration especially around PhD study.  The second was at the second Local Data Company Retail Leaders Forum (details of the first here) where I was invited to discuss how research leads to be better decision-making as part of a two-handed session with Ben Dimson (British Land).

As is known to readers of this blog, we have had a long-standing retail partnership with the Local Data Company.  This is focused around our ESRC/SGSSS collaborative PhD on new measures and understanding of town centres and their management, and around our Annual Scottish Summit which presents the latest LDC data on Scotland, including vacancy rates.  For me, LDC have been an interesting partner, not least for the data, but more importantly in a wider context of their willingness to engage with academics in selected Universities to drive a research and knowledge creation agenda forward.

My theme in both presentations was about the nature of collaboration and industry-academia relationships and the need to recognise the differing agendas, languages, timescales and expectations.  Why do either universities or industry engage in research collaborations, and are they always successful (whatever the term means in this context)?

At one level this might seem like self-indulgent navel-gazing, but for various reasons it is now much more important than it may have been in the past.  Anyone reading the UK Government’s Industrial Strategy will see the large sums of money being put into (especially STEM subjects) research and the role of industry-academia partnerships and Innovate UK that is expected.  Similarly the UK Research Councils are placing much more emphasis on collaborations with industry and pathways to, and realities of, impact of the research on industry, policy, competitiveness, productivity etc.  Universities are being increasingly measured on such things.

This is both a little odd for me, and yet an opportunity.  As a researcher in retailing, from the outset I was certain that I could not do my job without close interaction with retailers.  This has been fundamental to my career, so to meet academic colleagues who don’t (yet) engage with the outside world, or for whom it is a challenge/imposition is a strange feeling.

The LDC seminar at Oxford brought together various academics who work with LDC and some of the retailers interested in this data and who also get involved with LDC and the ESRC Consumer Data Research Centre.  Sundry professors (Longley, Singleton, Dolega, Reynolds and myself) and various retailers and property specialists (Dimson – British Land, Clarke – Tesco, Purvis – Tristan Capital, Lee – Clarks) together with Mathew Hopkinson of LDC explored aspects of consumers/people, places/towns/high streets, data and analytics and research collaborations.  It was a lively day with a high degree of audience participation; others will in due course provide a more coherent commentary than I can in this space.  At its heart though it reaffirmed the need for data, research and communication, especially given the rapid and extensive pace of retail change, expertly summed up in a keynote by Alan Giles (ex Fat Face, HMV and now non-executive director of Rentokil and the Competition and Markets Authority).

But, in one sense were we all ‘preaching to the choir’? All present live and breathe this stuff.  My worry, based on how long and winding these collaborative roads have been, is that as a key plank of UK government strategy, there remains a belief that such collaborations are easy, quick and always produce positive results.   We can hope for this, but all the evidence points to them being more tortuous than that, but then when they do work, as with the LDC and CDRC efforts, they really are worth it, and a delight to be part of.  The output from these LDC collaborations are impacting businesses and universities, and proving the benefits of collaboration based on mutual understandings and goals.

Posted in Academics, Collaboration, Competition and Markets Authority, Consumer Change, Data, ESRC, Local Data Company, PhD, Places, Retailing, Uncategorized | Tagged , , , , , , | 2 Comments

Taxing Times: Tesco and Poland

The financial results for Tesco last week brought forward a lot of comment and some interesting thoughts, not least the looming pension deficit and the exceptional items booked into the accounts.  Oh, and the underlying performance, which was quite good.

But my eye was taken by a small piece in the results document.  There were a couple of lines about the intensely competitive market in Poland, but then this:

“The introduction of a new retail tax in Poland remains suspended pending the outcome of the European Commission’s investigation.  We continue to be cautious about potential legislative changes in our European Markets”.

Now this had rather passed me by; new retail tax, Poland, European Commission investigation? I’d missed this.

One of the good things about being in a University is that you meet some interesting people and one I have recently been involving as a researcher on a project (more on this in the future) is Dr Maria Rybaczewska, from Poland.  So I asked her what this Tesco tax in Poland was about.  Her response to me is as follows:

“On 6 July 2016 the Polish Parliament adopted an Act on retail sales tax, which was due to enter into force on 1 September 2016.   The Act lays down a progressive rate structure for the retail tax with three different brackets and tax rates:

  • A 0% tax is levied on the part of the undertaking’s monthly turnover from retail sales below PLN 17 million (approximately GBP 3.4 million),
  • A 0.8% tax is levied on the part of the undertaking’s monthly turnover from retail sales between PLN 17 million and PLN 170 million,
  • A 1.4% tax is levied on the part of the undertaking’s monthly turnover from retail sales above PLN 170 million.

The Retail Tax Act includes certain exemptions from taxation, including on-line shops and franchise stores both of which were extensively discussed beforehand.

However the European Commission raised concerns that the progressive rates based on turnover gave companies with a low turnover a selective advantage over their competitors; something they feel is in breach of EU state aid rules. Consequently, on 19 September 2016 the Directorate – General for Competition, following Article 108 (2) of the Treaty, initiated the formal investigation procedure, concerns referring to State Aid mentioned in Article 107(1) of the Treaty and the case of Hungary where no State aid was finally introduced as a result of European Commission intervention. This EC intervention has led to the postponement of the date when the new regulations enter into force unto, at this point, 1 January 2018.

According to the Commission Press release the investigation is not aimed to “question Poland’s right to decide on its taxation levels or the purpose of different taxes and levies. However, the tax system should respect EU law, including state aid rules, and should not unduly favour a particular type of company, for example companies with lower turnover.”

On the other hand the Polish Government emphasises the fact that the tax on the retail sector does not lead to “discrimination between foreign and national companies in light of the Polish market structure, it does not differentiate on the basis of shareholding/capital structure, and it pursues a different objective (the revenue from the Polish tax will go to the general budget and, according to Poland, is needed to cover the expenses of the Family 500+ child benefit programme).” Poland also claims that the progressive nature of the tax is in line with the logic of the overall tax system in the country.”

One can read this situation in a number of ways and it will be interesting to see how this unfolds in the European Commission.  No doubt some will applaud the intervention as showing care, concern and protection over small retailers.  Others will be upset at the thought of the possible costs on ‘modern’ retail operations operating large stores.  That many of those affected are international entrants to Poland is of course significant here,  and in the wider anti-globalization mood many are in. There is of course a long tradition around the globe of seeing such stores as competitively (and possibly socially detrimental) and trying to restrict (France, Japan, Thailand and  Malaysia are obvious examples amongst many) or tax them (the Public Health Supplement in Scotland).

But two other things stood out for me from Maria’s account: the exclusion of online and franchise stores.  One wonders why this exclusion of online stores is there; surely if governments are looking at the changing nature of retailing, let alone the attributes of place and tax revenue streams, they would be looking to include such operating formats?  Likewise the issue about franchise stores.  So if Tesco split all their stores into separate businesses then they could avoid this tax, yet operate as they currently do?  There may be other costs of course of such an action but on the surface it seems an odd approach. I understand the sentiment and reason (e,g, small affiliated stores such as Spar) but surely other ways of framing this to avoid/apportion tax could have worked.  Meanwhile Media Saturn and Media Markt in Poland could be smiling quietly to themselves.

Posted in European Union, International Retailing, Large Store Levy, Poland, Profits, Public Health lev, Regulation, Retail Levy, Retail Policy, Tax, Tesco | Tagged , , , , , , , , , , , | 1 Comment

Tesco, Booker and Poundland

In a recent Retail Week opinion piece the columnist John Richards mused about the cost of all the adventures Sainsbury have had over the years and whether the cost outweighed the benefits and whether the management time and effort could have been more profitability spent focusing on the core of the company.  He described their approach as Sainsbury’s “death wish” and cited SavaCentre, Homebase, Shaw’s, Netto and now Argos as illustrations. That may be a tad strong, but you perhaps get where he is coming from.

Further, as a game of ‘what if’ it is entertaining, if ultimately futile. Unless, that is you are proposing a merger and two (at least) of your institutional shareholders have openly come out against it.  Yes, we are back on the topic of Tesco.

Now the question of wasted management time and effort is not one that is unknown to Tesco.  Recent years have resembled a speeded up version of the ‘hokey-cokey’ (look it up) as countries were hastily entered, only to be withdrawn from.  The USA, Japan, China etc. are recent examples, but Ireland first time round was a standout in the 1980s, and there was also France. And now they want to merge with Booker.

I always assumed the current proposed Booker deal would run into Competition Authority problems – the sheer defensiveness on the day of the announcement made me feel they were shooting first and asking the questions later.  But maybe I was wrong that this was the largest hurdle? There seems to me to be a certain commercial logic to the strategic move – the sectors Booker are in have been growing ahead of the core retail market, but then that is never the sole consideration in these things.

The recent announcement by Schroders and Artisan Partners (Tesco’s third and fourth largest shareholders) that they are agin in the deal on the grounds that it is “foolhardy”, “an unwanted distraction” and “value destructive”, let alone the price being paid, is both public and eye-catching. It may come to nothing, and Tesco are defiant at time of writing, but it is hardly a vote of confidence from c9% of your shareholders at a time when you need friends.  Especially given you’ve just done a costly deal with the Serious Fraud Office in relation to false accounting claims, which may not be the end of the matter either.  Focus, even though this is a new team and progress has been made, should be the order of the day.  Is it?

Well, the figures published this morning, show both faces of Tesco. The headline profit figure is reduced from previous years. But, the underlying operational figures are much stronger than last year and indeed show the first annual UK LFL growth since 2009-10. That is something to be satisfied with, but it is the exceptional items that have caused the disparity between underlying and total performance. The settlement with the Serious Fraud Office and the Financial Conduct Authority is only one of a number of provisions and exceptions. And some analysts are questioning the cost of the pension deficit which has doubled and could be storing up issues for next year and beyond. Past behaviour is meeting current and future performance.

In terms of the core operating business the team does have a lot to be pleased about, though they recognize that the job is nowhere near completed. And that is why the Booker question is not going to go away. Is it part of the solution or likely to be part of the problem?

Last week, Poundland announced that 99p Stores were to be put into administration.  Who knew they still existed?  Operated is the wrong word as it seems this was a vehicle for closed stores, some 60 of them.  This, only two years after taking them over.  Whilst a lot of stores were converted, this rump was left as very unprofitable.  Changes in Poundland have pointed to the pressures this end of the market is coming under.  It is also a pointer to the sometimes difficult process of making mergers work.  Distraction is just one part of it. The grass is not always as green as it looks.

Posted in Accounting, administration, Booker, Consumer Change, Food Retailing, Government, Mergers, Netto, Poundland, Regulation, Retail Change, Sainsbury, Shareholders, Store Closures, Tesco | Tagged , , , , , , , | 1 Comment