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Who benefits in the retail game?

October 18, 2016

 

There’s a Latin phrase used now and then in investigative work. The expression "Cui bono?" literally translates into "for whose benefit?" and is asked when assessing for underlying motive.

 

Being something of a cynic, I tend to apply the same kind of test whenever I read certain stories in the press.

 

So when news broke of how supermarket colossus Tesco was apparently in danger of running short of some brand products because Unilever, a key supplier, wanted to hike up prices, two questions occurred to me:

 

Firstly, how have we punters come to learn about what would normally be quite a commercially sensitive issue – and secondly, who benefits from this ‘exposure’?

 

It turns out that no leak was involved, which sort of implies that Tesco felt the need to share their pain.

 

After all the retail giant has been having a mixed time of things what with selling off assets and mothballing newly completed stores.

 

Pre-tax profits for the six months to the end of August were down 28% at £71m. On the other hand, underlying earnings jumped by 60% to £596m.

 

Admittedly there’s also the problem of a reported £5.9bn hole in the staff pension fund, so this is probably not the time to be paying more for provisions, even though competitors seem capable of absorbing the additional cost.

 

Tesco has a rocky relationship with its suppliers. Earlier this year, the company was ordered by the Groceries Code Adjudicator (GCA) to make “significant changes” after incidents of payments involving millions of pounds being delayed to boost profits were highlighted.

 

All this comes on top of ongoing angst about how an independent investigation was launched two years ago after it was disclosed how the firm’s profits had been over-stated by £250m or thereabouts.

 

In fact, Tesco is now facing a legal action by a group of investors who claim to have lost £150m due to the 2014 ‘irregularities’. There are presently 60 names involved although the number is expected to increase when things kick off later this month.

 

Of course, as regards the argument over prices, every story needs a baddie and Unilever managed to fit nicely into the part.

 

Named on social media as among the ten big names who pretty much control the supply chain (see below), the British-Dutch multinational has recently been in acquisition mode, mopping up high-end businesses across the US and Asia.

 

 

Retail analysts surmise that the global outfit was looking to offset its outgoings with a series of price jumps elsewhere and Brexit was as good an excuse as any, it seems.

 

Anyway, the impasse between corporate behemoths which might have resulted in a UK-wide Marmite shortage ended within 24 hours of it all becoming public.

 

Strangely though the same candour was lacking when it came to revelations as to how much prices will actually rise. It would appear that the media, having been relived from the role of willing accomplice in a piece of blatant gamesmanship somehow forgot to ask.

 

I think we can safely deduce however that whoever benefits from the outcome, it won’t be the consumer.

 

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Too scary for fiction

 

There was a great fictional US television series a while back called the Newsroom. As its title suggests, the show lampooned the media as well as providing a commentary on what lies beneath the democratic process. 

 

Much of this was condensed for me in a scene right at the outset where the lead character answers a question about the US leading the world.

 

He concludes: “We lead the world in only three categories: number of incarcerated citizens per capita, number of adults who believe angels are real and defence spending - where we spend more than the next 26 countries combined, 25 of whom are allies.”

 

The series owed much to brilliant creative writing and some very brave producers.

 

But I doubt that even they would have sanctioned a plot where a hackneyed political veteran with substantial baggage locks horns with a billionaire borderline sociopath to become the next president of the United States.

 

Scary thought, isn’t it?

 

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Making a difference locally

 

You often hear the phrase “people power” thrown about as a punchline. More often than not it amounts to a petition or folks standing outside official buildings with placards. Occasionally though it transpires into something practical on the ground.

 

One such example is the achievement by Birchgrove Community Association who have been the driving force behind improvements at Heol Las park in my part of the world.

 

Clearly the self-help thing is catching on with news that Mumbles Community Association has obtained outline planning permission to build a two-storey clubhouse at Underhill Park in Mumbles.


There’s a tangible ‘can-do’ attitude about Mumbles lately. The conversion of the old Tivoli into Oyster Wharf is making impressive progress. There’s even the prospect of good news regarding the Mumbles pier project in coming months.

 

I wish all these projects well. The action may be local but the beneficial effect goes a lot wider.

 

 

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