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December 11, 2007

Richard D. North counts the reasons to love Tesco: Tescopoly: How One Shop Came Out on Top and Why It Matters - Andrew Simms

Posted by Richard D. North

Tescopoly: How One Shop Came Out on Top and Why It Matters
by Andrew Simms
London: Constable, 2007
Paperback, £7.99

Let me count the reasons to love Tesco. Some of them are perverse. With enemies like Andrew Simms and his many fans, the store can rely on my support. Tesco has come to represent everything the modern alternativist hates. So it really can't be all bad. Besides, Tesco stores are ugly-magnets. If I want to avoid the sight of over-weight middle-aged men with pot-bellies and bare tattooed arms in vests, I can shop at Waitrose. (I don't say that the shoppers in Waitrose are prettier, but I do insist more of them make an effort.)

But then, more soberly, I reflect that if there was a monopoly in retailing and one had to choose just one of the supermarkets to have it, one would probably opt for Tesco, uglies and all. Tesco's genius is to have enough elements of every other brand of store to be sufficient unto itself. In short, whether you are in posh or peasant mode, it'll more or less do, and often triumphantly do, and none of the others quite pull that off.

So let's get down to Mr Simms's core case. The title more or less says it: presumably he believes that Tesco is a monopoly.

A problem quickly emerges. Mr Simms's real belief seems to be that the supermarket chains, taken together, are monopolistic and to a degree which is killing the smaller players:

Under pressure from the anti-competitive practices of the supermarkets, small, independent retailers are passing through a "mass extinction event"…
He does his best to make a case that it is bad that Tesco is the "dominant grocer" in large swathes of the country. But that really unpicks as Tesco being the most successful, Number One, grocer in those areas. It is as silly to imply that being Number Equal necessarily equals a dangerous domination as it is silly to use the common expression that a Number One necessarily "controls" its share of the market.

I don't think that Mr Simms could demonstrate that the supermarkets, taken together, are a monopoly and he is even further from convincing us that Tesco is.

He is certainly within his rights to worry about the power of the supermarkets. He is right that over-mighty market players are the very animal that Adam Smith warned us against, and that Adam Smith was very interested in social benefit.

Mr Simms has to do a manoeuvre even here. He says any supermarket is a sort of monopoly. He says a street market allows a shopper to compare goods item by item, stall by stall. But once you're in a supermarket, he says, you have to take their offer, lock stock and barrel. But if we think about this, it comes unglued. After all, the same sort of worry was once more true of the street markets he admires. Most people were stuck with the quite limited offer from the stall-holders they could reach. That's to say: they were offered a very limited range but could bicker like crazy within it.

In any case, let's suppose that comparison-shopping is a bit more difficult in some details than it once was. Granted our car-borne mobility, don't we find inter-supermarket promiscuity to be quite a powerful freedom, even if the competitors aren't often in the same business park? Anyway, most stores, and especially Tesco, offer such a huge and genuine variety that even intra-supermarket variety most of the time makes for a vast range of real choice within each.

Adam Smith thought that firms naturally conspire to diminish competition. But Tesco got big by mostly being good at what customers want of it. As Mr Simms says, supermarkets do sometimes collude. Much more often they compete, and quite fiercely.

Nor has the "dominant position" of a particular supermarket (its being Number One in an area) crushed competition. In and around many towns there are a handful of supermarkets and a farmer's market and a tractor-load of farm shops and a goodly scatter of specialist dellies and bakers and butchers, all within the radius which includes a store with a "dominant position". Still, one can easily celebrate Mr Simms's preferred solution to the Tesco hell: even greater variety of supplier and outlet.

The famed Tesco Towns (where Tesco is really very dominant) doubtless exist, and there doesn't seem to be much evidence that in such places the Tesco managers exploit their situation by fleecing their customers. Still, it's not ideal and I wouldn't mind a monopolies regulation that held the ring better, region by region, if that was thought necessary.

It is a small difficulty but not a negligible one that Mr Simms really, really thinks Tesco is much worse than any other shop. Right there, there's an answer to his problem. People of conscience should, on this view, shop in any competing supermarket. The more he monsterises Tesco, the more obviously that solution hoves into view. Of course, it's a solution he'd hate. He always has the hovering default view that they're all awful and powerful. Anyway, we can agree with Mr Simms (and the whole world) that competition is king, and we'd better watch out to keep it so.

You may say it is unfortunate that supermarkets compete mostly on price, and sometimes to the detriment of their suppliers. Lord knows this book parades the depredations of supermarket buyers, and they are familiar to all of us. But the buyers are obeying the signals their customers send them, and their customers are socially-careless tight-wads. That's human nature at work. What can you do?

You can do what we have done. One recalls that market diversity tends to cure most ills. One energises customers to be fussier about provenance. And in cases of considerable market failure, one passes laws on minimum wages and working conditions, and land use, and animal abuse and we can go further and make tougher rules anytime we like.

In the case of the Third World, things get trickier. In time, of course, local regulators will emerge. For now we're obliged to require our firms to be a bit bossy and colonialist. People like Mr Simms and the likes of Oxfam are good at being both, and they are a powerful and even useful part of the mix. They'd be more attractive if they did their work with a livelier appreciation that most sweated labour in the Third World would rather be exploited by Tesco than by a local or by no-one. Not being exploited at all is the primitive experience of peasants in mud huts and one guesses that most of them do not believe that it is the Original Affluence beloved of 1960s anthropologists.

To return to Tesco's local abuses. Andrew Simms suggests Tesco is uniquely slimy and vicious in wriggling round the existing rules. And, he says, the competition regulators in particular are extraordinarily supine in their dealings with the Tescopoly. If this is true (and Mr Simms doesn't take into account the latest round of the regulatory fray around supermarkets), we can simply muscle-up and do this job better.

Besides, as Mr Simms points out, local politics has sometimes seen off the supermarket "threat". So why say these firms have awesome power?

Surely the point here is that Tesco is greedy, manipulative, clever, and aggressive as it plots and schemes to increase its market share. Lions eat antelopes. What's to hate? Even if Mr Simms is right that Tesco's behaviour is sometimes actually illegal and even blatantly so, the case remains simple. Whether Tesco is merely a bully or is actually a crook, there is no point whingeing about its proclivities. Most of them are in plain view and Mr Simms lists them with awful thoroughness. If even a quarter of what he says is true, we should try to take an interest in Tescopoly, and we could have done with a much shorter, neater and clearer book - a less bumptious and tedious one than this - to guide us to the priorities.

But the point would be not to wind ourselves up into an ecstasy of hatred and fear about Tesco. The funny thing is that Andrew Simms recognises this, very briefly, very early on in the book. He makes "an important caveat" that his target should really be the legislators and regulators. And then he goes on in page after monotonous page to excoriate the over-mighty beast he hates. At no point does he recognise that Tesco's customers are the most to "blame" of everyone. Most of us go to Tesco in the face of dozens of other options which Mr Simms thinks we ought to prefer.

Those of us who only reluctantly care about the brutalities of the market can't escape the fact that its worst excesses have to be dealt with. If Andrew Simms was a more interesting analyst he would be bolder in accepting that good regulation is optimum regulation. Sensible people seek the silver bullet not the blunderbuss. It is not necessarily brutal or wicked to hope against hope that other, non-regulatory, redress can be found.

Andrew Simms is director of the New Economics Foundation (which he writes in an e e cummings manner). He presumably claims that he and his ilk are on to some insight that an Old Economics Foundation couldn't quite manage. He thinks old economics is "reductive". I wouldn't be surprised if he prefers something more "holistic". If I get his mission right, it is to argue for an economics which cares about and even produces some rounder social and human well-being than is captured by standard economics.

Actually, economics has always been about the complexity of behaviour of real humans, and it is becoming more and more interested in the behaviour of economic actors who are at least a bit virtuous (that is, moral as opposed to merely "rational"). Plenty of old economists of note were of the left and grappled with the same stuff Mr Simms now calls "new".

But to hang on any claim to its name, economics has to be at heart analytic. It aims to look at what humans are and do, and even at how to deliver what they want when they are in nice mode. It can take an interest in helping people get what they ought to want, provided they really do act on these aspirations.

It is just possible to say that there is a new economics, because it is certainly true that economics evolves. But it is worth stressing that Andrew Simms is not producing any such New Economics. He is looking at the modern world with the eyes of a William Morris, or a Kropotkin, or a Marx (not that he cites them as of interest). And, yes, he is looking with the eyes of an Adam Smith too. He does lob in my old inspiration, Ivan Illich, and a roll-call of other hippies and alternativists such as Kirkpatrick Sale and the unreadable Schumacher.

There is nothing very new about his hatred of the modern as epitomised by Thatcher. More to the point, beyond a vague New Age wishy-washiness, and a rather hopeless claim that it is he and his like who love the market, really, he doesn't add much to being a nice old-fashioned leftie.

The quickest and easiest way to lose sympathy with Mr Simms - and to long to ignore even the bits of his thesis which ought to worry us - is to read him. He presents himself as a soul-inhabitant of the real London. A visit to a Tesco store is an awful trial, and

required a tube journey in the dimness and thick air of the Northern Line.
Surviving this horror, he misreads a bus timetable.
Then I noticed that it was Saturday…..
Blimey: even I always know when it's Saturday. Inside the store, everything is so horrid that after five minutes,
suddenly, I got a splitting headache.
Earlier on he had described another visit to the store:
A part of me is dying.
And this in a boy who says he knows "a spiritual wasteland" when he sees one: he was brought up in Chelmsford. As my second mother-in-law would have said: "He doesn't know he's born".

In some world - the world of, say, Alain de Botton (to name one of Mr Simms's admired sources) - this visceral, emotional, cultural flinch from the world around them may seem normal. To me it seems like their fuss-o-meter is turned up far too high. On this evidence, Mr Simms needs a nice new planet of his own.

Richard D. North is the author of Rich is Beautiful: A Very Personal Defence of Mass Affluence and Scrap the BBC!: Ten Years to Set Broadcasters Free.

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Thanks for heads-up.

It sounds as though Simms has produced the usual kind of neo-Gramscian extended whine that educated folk with too much time on their hands, and not enough fashionable causes to be involved in, are capable of.

I would wager that there is more than a hint of sub-Rousseauian wistfulness about him too. We are seeing his type of 'intellect' here in Mexico as the anti-Wal Mart protest movement gathers pace.

As usual, it's a strangely half-blind view they all have, these 'social activists'. Wal Mart de Mexico is being excoriated whilst its bigger rival, Grupo Soriana, has just swallowed the market's number three player, Gigante, with nary a whisper being heard.

Posted by: Eddie Willers at December 16, 2007 12:51 PM
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