OH LIFE WAS SO MUCH SIMPLER back then. A row of petrol pumps, a couple of old codgers to take the money and all stock control consisted of was counting the oil cans on the trolley and wondering each month why the UCL receipts never matched the amount that had been dispensed. (Silly boy, they may have been old codgers but that didn’t mean they were daft old codgers – some things never change!) Annual budgeting sort of took care of itself. Your wages went up a bit but then the annual increase in duty at the budget took care of part of that and the increased margin on the higher price took care of the rest. For the benefit of my younger readers let me repeat that phrase ‘increased margin’. These were the days of 10% gross profit margin on retail price that everyone in the area adhered to.
HOW MUCH MORE difficult is budgeting today! The certainties in life are there all right. Thanks to that wonderful innovation the National Minimum Wage, the one thing we can guarantee is that wages are going to increase by another bucketful. The latest indication is that this October we will be faced, if we’re lucky, with £5.05 an hour with the prospect of £5.35 the year after. When will the TUC et al begin to realise that the only winner out of this annual, inflation-busting, ratcheting up of wages is Auntie Prudence. When you only have to work 16 hours a week in order to pay tax and national insurance it’s small wonder that people on low incomes don’t feel any better off. The extra in the pay packet is soon eaten away by the taxman and the higher prices that can’t be avoided. Council tax – up, because wages have gone up. Bus and rail fares – up, because wages have gone up. Eating out – up, because wages have gone up. Cost of nipping down to your local shop – up, because wages have gone up. Or because the local shop is now much farther away as the one nearby has closed down.
SO FACED WITH the certainty of increased wages what other solution exists apart from raising prices. The obvious solution is increasing sales, and over the past 10 years or so we haven’t had to be very clever to achieve that. But things have changed. On the one hand we have the reports of the slowdown in retail spending over the past three months and on the other hand we have the seemingly-impossible-to-stop march of Tesco. Now I’m not referring to the fact that the big T now has a 29% share of the grocery market. That increase is only at the expense of the other not-so-clever hypermarkets. No, the race for growth by Tesco, which is truly staggering, is that it now has 5% of the convenience store market. Considering their share was 0.9% in 1999 that is a phenomenal increase.
THEY MAY NOT BE the biggest yet, the Co-op having 5.5%, but I bet this time next year they will be. And that’s even allowing for the possible Somerfield-Iceland tie up and the potential purchase of 140 Texaco sites. (Incidentally, £100m for 140 sites seems to suggest a certain degree of desperation on the Lone Star’s part. Just over £700,000 a site seems rather low considering these 140 will be the absolute pick of the Star network and bearing in mind that some pretty ordinary company owned real estate has gone to dealers for £500,000-plus.) Somerfield and the Co-op might increase their property portfolio but neither can match the colossal sales per square foot that Tesco churns out. Faced with this onslaught, the only answer is increased investment in our own sites. Whether this is through increasing the size of our shops to be able to offer new ranges or through expanding the car valeting offer will depend on our own particular locations, but without significant new investment our turnovers will, at best, stagnate.
AND FINALLY, the recent scare over chilli powder only served to show the scandalous nature of today’s food distribution. I checked my stock of Pot Noodles to see if they were affected. The most forward dated stock I had was July 2005, so how come the affected batches were November 2005? Wait till I speak to my wholesaler!