Chris Blackhurst: A rule for supermarket positioning: the nearer, the better

Midweek View: Surely it would have been obvious that the hypermarket experience was far from satisfactory

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The Independent Online

Stand back for bad news. This is the time of year when the supermarkets tell us how well, or badly, they’ve done over Christmas.

I will go out on a limb and say that only one of those reporting will have anything to sing about. That’s Waitrose, which yesterday unveiled a 7 per cent rise in sales. According to the employee-owned store chain, part of the John Lewis Partnership, some of that success was attributed to the demand for English sparkling wine and Heston’s Ultimate Chocolate Bar frozen dessert.

Only part, mind you. I can’t recall once being offered a glass of English bubbly during the holiday, and I live in south-west London, which ought to be renamed Waitroseland, such is the prevalence of the chain’s branches. Neither is our freezer bursting with Heston’s latest delight.

No, the reason Waitrose did well is empathy. It knows and understands its customers, giving them exactly what they want, without strings and gimmicks.

It’s fortunate in that it sits at the top of the market. It’s no coincidence that Fortnum & Mason, which aims even higher than Waitrose, also enjoyed a bumper season. M&S food is also likely to have done well, when it reports tomorrow (alas, the same will probably not be said of its clothes, judging by the racks of stock I saw).

For Sainsbury’s, which comes clean today; Tesco, tomorrow; and Morrisons and the Co-op, they’re fighting for share on different fronts simultaneously – at the high end and at the bottom, against the specialist discounters. Witness the latest round of price wars reported today.

But there’s another ingredient behind Waitrose’s success. Its sites are in town and smaller than the out-of-town superstores of Sainsbury’s, Tesco and Morrisons. Waitrose is reaping the benefit of the changed nature of food shopping: that people now want to buy a little and often rather than a lot and all at once.

It must rank as one of the mysteries of our age in business – and one that should provide numerous case studies on MBA courses for years hence – as to why the likes of Sainsbury’s and Tesco, with their batteries of sophisticated forecasting equipment and armies of retailing experts, never saw the shift coming.

To an extent they did – they both went into small express, convenience stores. But they did not predict just how dramatic the change would be, and how they would be left stranded with giant stores (and land banks to match for future large-scale openings).

Surely it would have been obvious that the whole hypermarket experience was far from satisfactory. Think about it: you drive along often crowded roads, find a frequently tight parking space, eventually park your car, search for a pound for a trolley, walk up and down the aisles past items you neither need nor want, unload your shopping again at the till, load it up again, unload the bags back at the car, return the trolley, carry the shopping into the home. How can that be described as an easy, attractive experience?

Compare that with the simplicity of internet shopping for essentials, which are then delivered to your door; followed by a quick foray into the metro branch on the way home from work during the week for a few items for that night’s meal. It’s a no-brainer, and one that should have been staring the corporate giants in the face.

Perhaps, though, that is the point. It was, but they were so large, so set in their ways, so riddled with vested interests, that they simply could not respond and move sharply. If they’re not to become the commercial equivalent of the dinosaurs, they’ve got to come up with a coherent strategy, and soon.

‘Fat Cat Tuesday’ is not the way to earn respect

 By the time you read this, the average FTSE 100 chief executive will have made more money in 2015 than the average UK worker will earn in the entire year.

Yes, by yesterday afternoon, the second working day back after the holiday, the bosses of Britain’s 100 biggest quoted companies will already have passed the national average salary of £27,200. To them, of course, can be added a slew of top bankers (the bonus-awarding season is upon us), and private equity and hedge fund kings.

Yesterday was “Fat Cat Tuesday”, according to the High Pay Centre think-tank. FTSE 100 chief executives are paid on average, £4.72m; even allowing for the fact that they work 12-hour days, including three out of every four weekends, and take less than 10 days holiday a year, this works out at about £1,200 per hour.

Before they raise a glass of fizz in the direction of what many of them will doubtless dismiss as “typical leftie research” (not true, since the High Pay Centre is independent) the bosses might want to reflect that last year, it took them until today, the first working Wednesday, to surpass the earnings of the average worker. They could ask themselves if their average pay increase of £500,000 in the year just gone, as opposed to the average worker’s £200, is deserved.

They might try and justify the yawning chasm between top and bottom in terms of the global marketplace, and how they must receive the going rate. It’s true; there is merit in that argument.

But there is a reality, too, that they cannot and should not ignore. This is that the public’s faith in big business is low; that they are seen, inevitably, as “fat cats” who receive rewards for failure or at least only minor success; and politicians from all parties are queuing up to give them a kicking. This is general election year in the UK, and attacking perceived excessive pay is a populist vote-winner.

These days, chairmen and chief executives agonise long and hard over their personal reputations and how they’re judged – by their peers, the City, and society at large. This self-flagellation is one of the major changes to have occurred during my time covering business. Soon, they will indulge in another bout of deliberation on the need to alleviate poverty and inequality, and the socio-economic pressures facing the world, as they get together for their annual knees-up in the luxurious Swiss ski resort of Davos.

But if they want to be regarded with the respect they crave, it’s very simple: they must stop giving further succour to their enemies; they should avoid fuelling surveys such as this one.

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