What do you think about Tesco? Do you love the value and convenience the chain offers or do you believe it’s everything wrong with modern Britain?
For years Tesco just grew and grew, generating huge profits that even the power companies would cast an envious eye at.
Tesco, under Sir Terry Leahy, was just a fantastic machine that gave people what they wanted in the right place at the right time and for the right price and seemed to suck the money straight from shoppers’ wallets and purses.
But since he stepped down in 2011 the chain has suffered a number of problems culminating in the recent overstatement of profits.
Those choppy waters have seen the share price cut in half compared to 2010 and 11.
Now it seems that it’s not only Tesco which is feeling the cold.
A new report by Goldman Sachs (yes, the bankers) concludes that Tesco is in the worst position of the major supermarkets when it comes to stores.
Around 56% of the chain’s stores are of the super variety of 40,000 sq ft or more.
The report goes on to say that, in the industry as a whole, there are too many big stores that are now no longer meeting the shopping habits of people today.
In essence the report recommends that one in five stores needs to close to make the sector healthier.
You’d probably say well I see the sense in that.
But for the joy exhibited by some at Tesco’s recent travails, they should understand that Tesco is a bit of a barometer for Britain.
Tesco shares, and indeed the shares of the other big supermarkets, are often to be found in large pensions schemes and if Tesco’s price has halved as I state above, then if you’re coming up to retire then you’re going to make that bit less with your pension.
The other thing is that the big four of Tesco, Sainsbury’s, Asda and Morrisons, employ around a million people between them.
I’m not foolish enough to think that closing 20% of stores would mean a directly proportionate number of jobs cuts, but even if that proportion is 10%, then you are still talking 100,000 people out of work.
So they will not only be taking from the system but also not putting in again until they find work again.
It’s a double whammy.
Now while I’m not saying that supermarkets, like those infamous banks, are too big to fail and should be saved.
But what I am saying is that for all the people against Tesco and big business there are a lot of people who rely on the money that the company pays them and indeed the nation benefits from the income tax on all those jobs.
So what’s to happen? Will we return to a pre-supermarket world? Not really. There are great local shops, delis, bakeries etc that have made a virtue of being everything the big supermarkets aren’t and they will continue to thrive supplying excellent produce. It appears that there will be fewer big stores and more of those Express or Local style stores.
So rather than the killing of the high street, it may be the corner shop that should be looking over its shoulder.
And what of those thousands of stores that could be closed? Who knows what they’ll be – would it be more flats (we know how people feel about flats) another business or simply mothballed and left unoccupied for years?
I’ll be keeping an eye on Southgate in Huddersfield town centre for a while yet it seems.