Woman buying saladA very worrying proposal has hit the newspapers today; several local councils are petitioning the government under the Sustainable Communities Act in order to impose a punitive business rates levy on supermarkets to redistribute within the local community, this has been dubbed the “Tesco Tax“.

Aside from the obvious problem that such a levy would just be passed onto consumers in those areas, hitting the poorest hardest (which is the Government’s view), we have to ask ourselves what the true root cause of the problem is, instead of meddling around to try and fix the perceived symptoms.

Councils do their best to prevent people parking in town and city centres, with limited spaces, inability to just stop and “pop in” somewhere and punitive hourly rates, not to mention an army of enforcement officers. I rarely go to the high street, and if I do, I generally go by public transport as it is, ironically, less hassle. This means that the many businesses of Kingston Upon Thames lose out to Amazon before they’ve even had a chance; I don’t see how a Tesco Tax would even remotely help this.

Then you have to ask yourself about the economics; firstly people go to supermarkets because it is convenient, cheap (and ignoring recent scandals) of a consistent standard. I buy everything from Sainsbury’s….. except my meat and wine, but I have it delivered. Whilst that particular supermarket currently picks for delivery from its regular stores for now, some are moving to “dark stores” which are delivery only; it would appear that the council proposals would omit that from their scope which avoids their whole point, surely?

Secondly, there’s an economic assessment everyone does, albeit often subconsciously. I make an effort to visit Stephen’s Fine Foods in Hinchley Wood for my meat because he is an excellent supplier of very good quality meat at reasonable prices (I’ve previously analysed it in detail and found it to be not far off the prices for premium ranges in supermarkets). In this situation, the pay-off for me exceeds the incremental effort in visiting; as it does for many that go out of their way to shop there. Equally, I get my wine mostly from Majestic….. it’s the same cost/benefit mental analysis – better quality, better advice, reasonable prices, pay-off exceeds the notional cost.

People travel for several miles and pass many other hostelries on their way to my local, The Hare and Hounds in Claygate; there’s a reason for this – it is a welcoming, family and dog friendly place with a solid selection of beers, wines and decent food all at reasonable prices. They’ve built that business virtually from the ground up, competing (and dare I say winning) directly with several major brewery chain pubs and restaurants in the vicinity. The natural extension of the “Tesco Tax” would be to place an extra levy on Pizza Express to prop up the local trattoria – yet we see in many places the trattoria can, when run by good people, more than fend for itself.

There’s a fundamental Darwinianism about business; it is by its very nature survival of the fittest – Stephen’s Fine Foods and Majestic are fitter and stronger than Dewhursts (remember them?) and Oddbins that preceded them respectively. The Hare and Hounds stands proud against some big names. Equally, the magnificent Hotel Chocolat is everything the struggling Thornton’s should’ve been.

I have faith in the average UK consumer. Aside from perhaps a fundamental apathy and laziness (or rather a high value placed on our free time) which naturally means we gravitate to the more convenient option, I very much doubt any of them go to a large supermarket to spite small local businesses. I very much would say they do it because it is, in the round, they’ve done their subconscious assessment and concluded that it is the best overall option. Like me and many others, elements can be carved out where there is a more optimal offering. If every high street had a Stephen’s Fine Foods, then I doubt Derby Council et al would be considering taxing supermarkets to prop up high streets that would, otherwise, in the natural order of business, fail. In other words, their business constituents should focus on offering competitive, sustainable and quality offerings and compete than rely on regressive redistribution which will only impact those least able to pay in the first place.

Image courtesy of Ambro at FreeDigitalPhotos.Net
The Tesco Tax
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