If getting back to work in the New Year has been tough for you, spare a thought for the bosses of Britain’s major supermarkets. With poor trading over Christmas, their January is proving bleaker than most. And things may get worse before they get better.
Three years ago it was a completely different story. At that stage, the supermarket giants were going from strength to strength and their rise seemed unstoppable. Small shops were closing every week and Britain’s biggest retailer, Tesco, was selling everything from pet insurance to baked beans.
The future seemed clear. In time, every last butcher and baker would close and we would all congregate in huge edge-of-town superstores to stock up on our three-for-two promotions and bread that will last two weeks if you keep it in the fridge.
Then, quite unexpectedly, things changed. The German discount food chains embarked on an expansion that exposed consumers to the phony pricing that has propped up British supermarkets for years. Although they claimed to sell cheap food, the multipacks and complex promotions provided a smokescreen that meant the true cost was often obscured.
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Lidl and Aldi lifted the lid on all that. Add in the horsemeat scandal, where major supermarkets were exposed selling stuff that simply wasn’t what it said on the label, and the result was a real consumer crisis of confidence.
Supermarkets had told us they were our friends. However, no-one likes a friend who rips them off and misleads them. Their response has been to stick their heads in the sand, but last week they could do that no longer.
Faced with its worst-ever trading, Tesco is closing 43 stores and shelving plans for another 49, including seven in Scotland. Its iconic head office is also being closed. Morrisons is also feeling the pain, with Christmas sales down 3 per cent and 400 jobs going, including the CEO, who had been brought in to help turn the around the business.
Even Sainsbury’s, which has out-performed rivals in recent times, saw festive sales decline for the first time in a decade and 500 jobs are now set to go.
The misery for the retail giants is in sharp contrast to the experience of others. Anecdotal evidence suggests small retailers had a bumper Christmas as customers increasingly turn to them for food. The weekly shop is giving way to more frequent visits to local grocers, bakers, fishmongers and delicatessens.
When you learn that half of supermarket bagged salad ends up in the bin, the real cost of buying what you need when you need it makes much more sense.
The supermarkets are here to stay and they are still the most convenient way to buy some of the things we need in life. But our relationship with them has changed fundamentally and the quicker they recognise and accept that, the sooner their pain will end.
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