All 6 entries tagged Business

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January 15, 2009

Is Labour too scared of business to say 'No'?

Finding a good reason to build a third runway at Heathrow Airport isn’t hard. The trouble is, there’s only one.

It’ll apparently be good for business.

Some airlines argue that it’s good for passenger equality too because more ‘slots’ means more cheap flights for the lower-middle class. The only trouble is that it’s not true. George Monbiot estimates more than half of Ryanair’s adverts are placed in the Daily Telegraph.

Put simply, a bigger Heathrow means more flights for people with second homes in the Med.

The strangest thing about the whole Heathrow argument is who is opposing it.

Heathrow AirportThe Mayor of London, the Conservative Party (their leadership, at least) and the Liberal Democrats. All in unison.

For Labour to be left on the other side with the CBI suggests the government’s reasons are skewed somehow.

I think they’re scared.

Gordon Brown and Alistair Darling know that in the current economic climate, the economy is their soft spot. Any decision they make that could be seen as damaging to business is, right now, potentially fatal.

What’s strange is that the government hasn’t – until now, at least – taken high-speed rail more seriously. Spain is throwing 220mph lines across their country like confetti. France has had the TGV for years. We’ve got… er… the Channel Tunnel Rail Link. Eventually.

If you’re flying from London to Scotland, the plane is a) cheaper b) quicker and c) more convenient.

Perhaps allowing a third runway is just politically easier. If flights are delayed, airlines get the blame. If a high-speed rail link is delayed, the government is blamed by association.

But by the time a new rail line is built, or a new runway is constructed, Gordon Brown will be gone and forgotten.

This is a long-term decision being taken for a short-term reason: Fear.

March 09, 2007

A British Car… In British Hands? Surely not!

Aston Martin, one of the finest car makes in the world. Traditionally a British brand.

But how’s this for a shocker? It might actually be bought – i.e. paid for – by a BRIT!

This is shocking news for the world of cars. It’s rumoured Dave Richards and his team might even launch a Formula 1 team in 2008. Finally some good news for the British car industry.

January 24, 2007

How much Tescofication are you willing to take?

Go on, you know you’re feeling guilty. Every time you go under the strip lighting there’s a tug on your moral conscience. You’re screwing with African farmers, filling the ozone layer with food miles and making small businesses go bust.

And yet you can’t stop yourself.

Don’t worry, neither can I. Our society’s changed so that convenience matters more to us than conscientiousness.

The supermarkets even bitch about each other. Sainsbury’s reckon their rivals Tesco will have 43% of the market by 2010, and that something should be done to stop them. They don’t mention the fact that, while smaller, they are as guilty as anyone else.

Only around 15% of the cost of a loaf of bread goes back to the farmer who grew the wheat. It’s about 30% for eggs and 40% for carrots. Few goods offer more than half of their store price to the producer.

Dairy farmers have been particularly badly hit. In 1995 they got around 59% of the retail price of milk. Today it’s just 35%. The supermarket’s share has risen from 3% to 30%. So it’s pretty clear who’s winning that battle1.

And there’s been a double-whammy for farmers. Because while most products have seen inflation of 48% since 1990, food prices have risen just 27%. It means farmers’ incomes have been plummeting in relation to everyone else’s.

So at what point do we stop praising the international success of a British business and start telling them to get their house in order? Do we expect them to start closing stores? Would a greater variety of supermarket owners make any difference to producers? Are we happy with the inevitable situation where there are only four or five food retailers in the UK?

I spoke to a greengrocer today who was annoyed not just with Tesco’s attitude to producers and small rivals, but with the people who accept it and only shop there. He works alone, in the cold, for ten hours a day, starting very early. He pours blood, sweat and tears into his job.

Is it about time Tesco and others started being put under the same pressure as him by consumers and government? Or are we happy with the convenient monopoly which makes life easy for the big supermarkets?

1. National Farmers’ Union figures

January 23, 2007

Supermarkets are getting an easy ride from the Competition Commission

Supermarket share prices, 23rd Jan 2007 It’s several years since supermarkets were last checked to see if they were anti-competitive. Since then, the answer’s become even clearer. Corner shops and convenience stores are lucky if they’re reporting declining sales. At least they haven’t shut up shop already.

But despite this, the Competition Commission has given the supermarkets plenty of breathing space while outlining their ‘emerging thinking’ today. And where’s the evidence? Well, it’s on the right. If the stockbrokers think that an across-the-board rise in supermarket share prices is appropriate, it probably means they’re going to get an easy ride.

The inquiry says it’s now going to “go local”. But you have to wonder if they’ll bother to speak to any of the thousands of people put out of business by the 800lb gorillas in the market.

January 05, 2007

The High Street takes a hit, and it's their own fault

Just as the post-Christmas blues seem to be a great time for people to declare bankruptcy, it seems it’s the same for businesses too, especially if they’re High Street retailers.

Music Zone have gone into administration as Amazon rake in millions of orders. HMV are facing similar problems.

Today Games Workshop issued a profits warning, with its margins kindly described as ‘wafer-thin’. Little Chef has made heavy losses and has also gone into administration.

The first three can all blame the internet, but maybe there’s another factor which explains the fall from grace of all four.

HMV and Music Zone have both tried to meet the challenge of the modern entertainment industry. And both have failed. Their websites are no match for Amazon or any of the other online success stories. Their stores still offer virtually the same goods as they did twenty years ago.

But importantly, the atmosphere in their shops isn’t good enough to tempt people to pay High Street prices. Where bookshops have caught onto the idea of installing coffee shops in their stores, HMV and Music Zone could have had juice bars where you can sample the latest music. They could have walled off areas for classical and jazz, creating different atmospheres under one roof. They didn’t, and so their shops are little more than warehouses charging relatively expensive prices.

Little Chef failed to modernize too. The decor, logo and style is very 1980s, but their prices have risen with inflation. The food they turn out isn’t good enough to justify the prices.

And it’s the same story at Games Workshop. Although there is a more interactive element to their stores, prices are still too high in relation to internet stores. The shops don’t look very modern or inviting, and they’ve been going backwards – in image terms – for years.

All four have image problems to overcome, but show little sign of doing much to make themselves interesting. I’d be surprised if more than two of them were still in business in 2008.

October 03, 2006

Is a monolithic Tesco a bad thing?

Tesco has announced half-year profits of over £1bn today, double what they were getting only five years ago. As usual, the news generated as much fury in the media as when the big banks reveal how much they’re ripping us off by.

But should we be getting uptight about Tesco doing so well? For one thing, almost all of the growth has come from the supermarket’s 949 foreign stores, which are growing three times faster than the UK ones. Having said that, second-quarter sales in the UK alone rose 6.6% (up from 4.5%), partly through the growth of non-food items.

Environmentalists and farmers will probably be up in arms. But are there advantages to having a dominant player in the market? Let me give you an example. Pressure groups can focus on beating one giant easier than tackling a thousand minnows. For instance, if you want better standards for cooped-up chickens, you’d have a much bigger impact trying to convince Tesco of the need for improvement than lobbying the thousands of butchers in the UK. When Tesco changes something for the better, they take between a fifth and a sixth of the grocery market with them.

True, the opposite can also occur. And despite Terry Leahy’s protestations, Tesco has had a major impact on the vibrancy of the British High Street. But we should give Tesco credit where it’s due. It’s commitment to Dolphin Friendly tuna (yes, even Tesco Value tuna is dolphin safe), minimum standards in agriculture, policies on GM and recycling is commendable, and has a big effect.

While we might shout at Tesco for being so dominant, we need to recognise that when they change something for the better, their influence spreads a long way. Not only that, but on many issues concerning the public, Tesco is starting to be a market-leader rather than a follower.

So well done to Tesco on making big profits: it’s not a natural reaction for Britons to praise such a feat. But Sir Terry Leahy mustn’t rest on his laurels. There’s many more battles which Tesco should be leading on.

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