Leading article: Tesco is a victim of its success – but it deserves some of the flak

Sunday 23 October 2011 06:43

It is not difficult to find reasons to criticise Tesco. The supermarket chain has become a sort of British Wal-Mart, not only in the sense of its dominance of the domestic retail sector, but as shorthand for corporate nastiness. Barely a week passes without it being accused of some crime or other, from bullying farmers, to crushing small traders, to polluting the environment.

The problem is that the standard characterisation of Tesco as an "evil empire" of retail is too easy. In fact, Tesco's behaviour is not particularly unethical when compared with other large retailers. The difference is that it is bigger and more successful. This makes it a whipping boy for popular grievances about the sector. Many of the pressure groups lobbying at Tesco's annual general meeting in Solihull yesterday could just have easily presented their complaints to a host of other companies.

All that said, when a retailer reaches a certain size and achieves a certain level of dominance, greater scrutiny is inevitable. Tesco might as well learn to live with it. Its management should also accept that, however unfair it might seem, with market dominance comes an obligation to behave with a more developed sense of social responsibility than others.

First: the case for the defence. It is seldom noted that consumers benefit from efficient and competitive retailers. And few are more competitive than Tesco. Food prices are rising, it is true. But growing global demand for staple crops, not supermarkets, are to blame for that. Indeed, supermarkets are a brake on such rises. Tesco announced yesterday that, from next week, it will reduce the price of 3,000 items.

Yet some of Tesco's cost-cutting activities have gone too far of late and its aggressive tactics are in danger of compromising its good name. Forcing the activist and chef Hugh Fearnley-Whittingstall to pay the full costs of distributing his proposed resolution on poultry welfare standards for yesterday's AGM was petty. But, more significantly, this reflected an evasive attitude from Tesco on animal welfare. The supermarket claims that its ultimate goal is to introduce the sort of farming standards urged by Mr Fearnley-Whittingstall, but that to do so immediately would force up the price of chicken and hurt poorer customers.

This seems like a feeble attempt to have it both ways. Even in an economic downturn, public concerns over animal welfare, stoked by the likes of Mr Fearnley-Whittingstall, are unlikely to recede. Tesco's management would do itself a favour if it simply adopted the RSPCA's "freedom food" standards. It is still not too late for the supermarket to demonstrate some leadership on this issue.

Yet it is not only on animal welfare that Tesco has shown uncharacteristic poor judgement recently. Its vindictive behaviour towards two Thai journalists who criticised the aggressive expansion of the company's subsidiary in Thailand has been a grotesque overreaction. And the evidence presented to the AGM yesterday by War on Want suggests a disturbing ignorance from the company about its supply chain.

Meanwhile, the contrast between the benefits available to the staff at Tesco's American subsidiary and those enjoyed by its UK employees has been picked up by no less a figure than the US presidential candidate Barack Obama. There is, of course, nothing to stop Tesco from exploiting the various levels of social protection afforded to workers in different countries. But it does the company's reputation no good.

Tesco should not be demonised simply because it is efficient. But there is also no reason why, as the standard bearer of British retailing, it should not be held to high standards of conduct. Such, after all, is the price of success.

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