So the question is where is the dividing line between stubborn resistance and futile gesture? And at what stage, if ever, does dogged determination cross over into a reckless inability to accept reality?
What prompted this delve into philosophy was a recent visit to a nearby Tesco hyper. Under the canopy, all 16 pumps were fully occupied with three or four more cars queuing behind each of the eight already filled lanes. Were they giving the stuff away? Depends on your viewpoint, I know, but the pole price was 92.9ppl in conjunction with the ubiquitous 5p-off-a-litre-when-you-spend-£50-in-the-store voucher. (Here’s a contest for you readers: come up with an acronym for these vouchers, a la BOGOF, so I can save on the hyphens). My Platt’s price at the time was 87.04p. The next site after Tesco’s was at 92.9 and appeared to be no less busy than the site on Tesco’s milking side that had just gone to 90.9.
So, to paraphrase dear Will Shakespeare, when it comes to marketing against your local hyper is it nobler in the mind to suffer the slings and arrows of outrageous fortune (that they built the bloody site near you) or do you take up arms against a sea of troubles? And in the process make bugger all bottom line and risk the chance that the hyper turns all its guns on you and blows you away courtesy of its much deeper pockets.
I guess your answer kind of depends on (to use Will’s help again) which of the seven stages of petrol retailing you are at. The guy who has just come into the industry or the person who’s seen it all before? Me, personally, I go for the margin every time. How many of those punters queuing at Tesco’s actually knew what the pump price was? For those who did, if Platt’s to pump is less than 5p then, with their voucher in hand, you’re never going to be able to compete on nett price anyway. On the other hand, while my bottom line remains healthy my volume is showing a steady decline. So which course of action is the right one?
By the time you are reading this we will know what latest raft of emergency measures to stimulate the economy have been announced by Alistair. As I write this column the smart money seems to be on a reduction in the rate of VAT from 17.5% to 15%. Pardon me for being sceptical, but when our pole price reduced from £1.17 to £1.15 did you see a huge rise in custom? In the current climate, if you pass a shop with a big poster in the window saying 2.5% off all prices, does this make you rush inside to open your wallet? No, I didn’t think so. In fact, what is beginning to scare me about our future is not the recession as such. I think our biggest threat comes from bungling, meddling politicians.
Threat number one is a government that seems to have thrown old Prudence off the cliff. If your kids are in trouble because they’ve overspent on their credit cards it’s perfectly understandable that you want to pay their debt off. And that’s fine, if you can afford to do it. But if you’ve got to put yourself up to your neck in hock to bail them out then that’s a very different proposition. Sometimes people DO have to suffer the consequences of their folly. Gordon and Alistair are in danger of turning us into a banana republic (or Iceland!), and if the country goes bust the little problems we face now will seem like a pimple on an elephant’s backside.
Then there’s the do-gooder lobby with the twin threats to the retailing of cigarettes and alcohol. What happens in Scotland today doesn’t always find its way down to England tomorrow, but if we’re forced to stop selling beers, wines and spirits the effect on our profitability is going to be catastrophic. And dismantling the cigs gantry is going to lead to huge logistic problems for us all. And that’s coming after yet another rise in the minimum wage and increase in holiday pay entitlement.
Trust me, the recession is the least of our worries.