DEMANDING. The Competition Commission, which some wholesalers say could secure their future by removing the flaws in the market structure, is in hot water.
Officials are seeking a mountain of information, say critics, which will take ages to produce and deadlines will be missed – Tesco has already asked for an extension.
So what will happen to the CC investigation into abuse of power?
If Tesco, with its cast of thousands, the deepest pockets in Europe and so computer-wise it has profiled all its customers, can’t come up with the answers, how can cash-strapped cash and carries and local retailers?
Answer – they can’t.
NUTS AND BOLTS. So how can the industry help the CC to come up with the answer to superstore market domination – and the subsequent consumer manipulation – that wholesalers need?
The CC, which has agreed with the wholesale/independent sector’s requests to dig deeper than ever before into the food industry’s issue equivalent of global warming, needs to get an understanding of the nuts and bolts of how the independent retailer operates.
This can only come from the visits that the CC is planning to make to wholesalers’ depots.
The relationship between the supplier, the wholesaler, the retailer and then the consumer will be revealed in all its simplicity. “Keep it simple” should be the CC’s motto.
facts. Some level of bureaucracy is necessary, of course.
It’s very likely that if the CC eventually comes out against the Big Four, all legal hell will be let loose and lawyers will begin to salivate.
So the CC will need to keep its minute book as accurately as is humanly possible and make sure that its arithmetic – boy will that be important – is unchallengeable.
But during these critical meetings “on site” between wholesalers and the CC chaps, the sector’s interests will be served magnificently if officials can be persuaded that there is no need to make a mountain out of a pinhead.
Facts already well established speak for themselves.
TRUTHS. For example, if the CC studied 100 invoices for big volume FMCG lines lying in the Big Four ledgers, and compared them with the same volumes and the same products over the same period with invoices received by wholesalers, they would find discrepancies.
CC people would note that wholesalers, by and large and proportionately, paid more for the same volumes.
Discrimination against wholesalers, not by suppliers but resulting from abuse of superstore power, was proved by previous CC investigations.
Once that one single fundamental – discrimination – is out in the open, the CC could slide the handcuffs on to the Big Four.
WHAT HAPPENS NEXT. What happens next is that the CC will criminalise discrimination once and for all. It’s natural justice and consumers (and suppliers) will gain by it.
Next, Gordon Brown will make it part of his manifesto for his general election. Saving those small sole trader shops which deserve to be saved will be electorally popular.
Prices in the superstores will not increase – the dog-fighting in that sector will ensure that the housewife’s pound in her pocket will buy as much as ever.
Superstore margins will shrink from their current bloated levels leaving no appetite or funds for expansion into the local store arena which the CC will block anyway.
The Big Four will be forced to channel cash into their price war diverting it away from opening more superstores which nobody needs.
And all because the CC finally and forever banned discrimination and introduced a level playing field.
POPULAR. Tesco is vastly popular among consumers – the only people who matter in this issue. They like Tesco and exercise their choice to visit it in droves every week.
There’s no need to demonise any superstore operator who gets big by being smart and getting smarter. It becomes a problem when society says it’s a problem.
If the CC is smart, it will produce a solution which continues to give consumers the low prices and superstore choice they crave and, simultaneously, enables wholesalers to serve retailers and caterers at prices which allows the retailer and caterer to earn a decent living and invest in their businesses.
ACCRINGTON. The lad from this remote Lancashire township done well. Julian Hunt is taking his communication skills to the suppliers’ trade union.
Leaving the editor’s chair of The Grocer, Julian’s appointment as director of communications at the Food and Drink Federation heralds new thinking, some say.
Suppliers have been silent in the run-up to the CC probe into the giant retailers, operating as they do under the fear of being de-listed if they speak out (a fear officially recognised as a reality by the OFT).
But the Blackburn Rovers supporter’s entry into their hierarchy could change all that. Will generic cover be the strategy?
And as Tony Blair proposes legislation to curb our appetite for alcohol and tasty impulse products, manufacturers will need to connect with the public and Government through Julian’s new office just off Aldwych.
PRAG. You may or may not be aware of the FWD PR Action Group, or PRAG as it is affectionately known. It runs the My Shop Is Your Shop campaign.
This body must get the prize for being the most creative in the trade – working on a modest budget it has demonstrated that it can produce that most valuable commodity in the jungle which is the grocery trade – positive noise.
With more than 20 million consumers getting the MSYS message on National Independents’ Day (June lst), and more wholesalers and independents than ever taking part, the volume is being turned up year after year.
Shoppers do not want to hear negatives such as shop closures or struggling retailers. “Use it or lose it” was the worst slogan ever invented for independents.
VALUE. What shoppers want to hear is the value message that is carried in the MSYS signal to the consumer. Local independents are irreplaceable focal points for local communities. There’s a big value in this.
Contrast the positive MSYS value message with the negative “Use it or lose it” principle.
Have you any evidence of a shopper, a friend, a member of the family (not always the same), a drinking companion or anyone else deliberately making the decision to buy more from a local shop under threat of losing that shop?
“Use it or lose it” implies a struggling business where the retailer could be forced to employ a high price policy in order to survive. Not the image the local independent wants, is it?