Tesco have just announced record half year profits of £1.6 billion. I am sure their suppliers will be arguing that this is wrong and Tesco should pay them more.
Certainly beef and milk producers have a strong argument for wanting higher prices for their produce but is £1.6 billion excessive? Not really, is the answer, it equates to a profit of 5% of turnover. Its the huge sales that Tesco have that is questionable as they constantly seek to build their sales squeezing out small retailers that cannot exist on a 5% return on turnover. Business owners reading this may want to check their figures to determine the % they achieve, for many businesses it will be much better than 5%.
Certainly beef and milk producers have a strong argument for wanting higher prices for their produce but is £1.6 billion excessive? Not really, is the answer, it equates to a profit of 5% of turnover. Its the huge sales that Tesco have that is questionable as they constantly seek to build their sales squeezing out small retailers that cannot exist on a 5% return on turnover. Business owners reading this may want to check their figures to determine the % they achieve, for many businesses it will be much better than 5%.
I think there is more to life than bottom line.
ReplyDeleteAs a major supplier I think Tesco should have more conscience about their effects on the UK economy. If this is so difficult for them then I think the Government should encourage them and other UK supermarkets to do so too.
They should source and promote more UK-supplied products and pay a fair price to their suppliers. They should encourage their shoppers to make decisions based on something more than just price comparison.
Surely the overall impact on the UK economy would be beneficial, with more jobs created throughout the country, some paying a higher rate than Tesco choose to?
Thankfully I don't report to shareholders or the city, but I do report to my own conscience. I support local independant food suppliers where possible, and you don't necessarily find that they cost more than the nearest supermarket.
Twitter: nicklocalexpert
I wholeheartedly agree with Nick. Tesco may be driving down the cost of goods to the consumer but that has a high price up the supply chain. There is definitely more to life than financial gain for shareholders and cheap prices to consumers. I do hope as we shift away from the mindless consumer to the mindful one, Tesco's will be required to develop a conscience of some kind....or perhaps I just live in hope!
ReplyDeleteThanks Nick and Ann for your comments. Not sure we can persuade Tesco's to buy more local produce because we think they should. However they might want to consider how stable their supply chain is, the longer it is the more vulnerable it is to unforeseen events, climate change, demand from developing countries, particulary China etc. A shorter supply chain paid a sustainable price may prove more reliable in the future.
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