Bully for food

Judi Bevan loses her focus as she surveys the rise of the modern supermarket in Trolley Wars, says James Buchan
Trolley Wars by Judi Bevan

Trolley Wars: The Battle of the Supermarkets
by Judi Bevan
258pp, Profile, £17.99

Judi Bevan's The Rise and Fall of Marks & Spencer, which came out in 2001, is the best book on shopkeeping in Britain in modern times. It is the story of Richard Greenbury, a man gifted in all the Marks & Spencer virtues, who yet managed to ruin a proud and long-lived company. Six years after his departure, Marks & Spencer is a basket case.

Her new book, which is a sort of pendant and tells the story of the big British supermarkets that now trade as Tesco, Asda, J Sainsbury and Wm Morrison, is not so good. The close focus of the M&S book is dispersed over four large companies that follow the same, simple business model: whatever the other bloke is doing, copy it.

The fate of M&S, alas, doesn't much matter now except to itself. In contrast, the big multiple grocers sell food and drink worth £90bn and employ 500,000 people. Their triumphs and miseries affect the lives of every person in these islands and many overseas. Happiest in the boardroom and at the check-out, Bevan has small interest in the consequences of her trolley wars in, as it were, the open air.

Sainsbury's, a patrician family company with origins in the 19th century, opened the first self-service supermarket worthy of the name in Croydon in 1950. Tesco, under the brilliant and incendiary Jack Cohen, was already a public company, buying and selling cheap, sometimes distressed, stock. Their rivalry is at the heart of Bevan's story, with Sainsbury pulling ahead under John D Sainsbury, later Lord Sainsbury, in 1986, only to lose its lead to a revitalised Tesco under Ian MacLaurin in 1995.

Away from the main battleground in London and the south, there was custom enough in the north for both Wm Morrison, which began as a market stall in Bradford when Ken Morrison returned from national service in 1950, and Asda, founded from the merger of a dairy and a butcher in south Yorkshire in 1965. Safeway was assembled by the Scottish entrepreneurs James Gulliver, Alistair Grant and David Webster from wholesaling and chain-store oddments in the 1970s and 80s.

In her Marks & Spencer book Bevan showed an acute grasp of the character of chain-store merchants, a pleasant mixture of the mundane and the theatrical. Here we have Jack Cohen and his son-in-law, Leslie Porter, slashing at each other with the Wilkinson dress swords from the Tesco boardroom wall. Here is the aristocratic John D Sainsbury, so outraged by Peter Davis's departure in 1986 that company security men broke up Davis's leaving party.

Her judgment of Davis's dismal second act as Sainsbury's chief executive (2000-04) is quite as damning as her judgment of Greenbury, yet both times she softens the blow. "Davis is a talented, clever man, good-hearted in many ways, but he loved the trappings of wealth too well," she writes. That is one way of describing a chap who took £3m in pay-offs from a business he had run into the ground.

For Bevan, the big four grocers (like M&S) have freed women from domestic servitude. She remembers queuing with her own mother "at three or four drab little shops" in the outer suburbs of London in the 1950s, and has no desire to return to some small-store high street idyll. Against the larger gain of female emancipation, how can we grumble about clogged roads, paved countryside, obliterated competition?

In 1964, the Board of Trade under Edward Heath abolished resale price maintenance: this allowed supermarkets to charge what they liked and thus shifted the balance of power from food manufacturers to retailers. As British standards of living rose and the supermarkets grew, they bullied and terrorised their small suppliers and now dictate terms to the likes of Unilever and Procter & Gamble. (Sainsbury's was always the worst, Waitrose the least bad.)

Bevan reminds us that at any one time Wal-Mart, the US owner of Asda, is sitting on unpaid invoices from its suppliers of $1.5bn. British farmers have simply been cut out of the bonanza, and their entire annual revenue (£14.5bn) is less than five months' sales at Tesco.

Bevan believes that the Competition Commission would not have permitted US Wal-Mart to buy Safeway as well as Asda in 1999 because its share of the UK supermarket grocery market would then have been 23 per cent. Yet six years later, Tesco alone had a share of 29.5 per cent, and growing. Sir Terry Leahy of Tesco tells us that is an "old-fashioned measure" and we really should look at others, such as shares of the convenience store market, where Tesco bumps along with an exiguous 7 per cent. He was speaking, if I may say so, like a true monopolist.

The truth is that Tesco is so big it can buy stock more cheaply than the others, and therefore sell it more cheaply, and therefore attract more customers and therefore buy more cheaply, and so on. "Such a virtuous circle," the Financial Times's Lex column said on April 13, "is hard to create, but hard to disrupt." That is particularly the case since both Sainsbury's and Morrison, which rashly bought Safeway in 2004, are now in difficulties. (Bevan believes that the Sainsbury family will sell the chain if the present chief executive, Justin King, cannot revive it.)

Yet, for Bevan, there is nothing really distinctive about Tesco except its size. Leahy's great achievement, to establish a prosperous business overseas for the first time in British shopkeeping history, is barely mentioned in this book. The key to Tesco's domestic success, Bevan says, is that MacLaurin bought up a whole lot of sites on bypasses when planning restrictions were eased by the Tories in the early 1990s.

If there is a lesson from Bevan's two books, it is to resist the siren call of high profit margins. The British public is indolent, but dislikes being ripped off and can easily go to the other fellow, who is selling the same goods. It was precisely when profit margins were at their fattest at Sainbury's and Marks & Spencer that business fell to bits. Will that also be the fate of Tesco?


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