Tesco and Booker

27th January 2017

This morning’s announcement has surprised everyone and reflects a shift in strategic thinking at Tesco. Previously, it has been looking beyond its backyard. People might think restaurants and coffee shops are close to home but their business models are totally different and not surprisingly, didn’t really work. In fact even Dobbies, the garden centre business and certainly a retailer, proved to sit outside Tesco’s skill set and was sold last year.

The attractions of Booker are clear. Whether the competition authorities will sanction the deal is another matter. History shows that they can sometime adopt rather perverse definitions of markets, betraying an inability to fully understand how the people they are meant to be acting for (shoppers/consumers) actually behave. This instance should be easier than many – Tesco already has a huge share of the convenience market and this would give them a substantially bigger one. It would also give the company considerable influence over independent retailers. Some of these might think they didn’t sign up to this and rail against the idea.

Perhaps the most intriguing question raised by this deal, if it happens, is what happens to Charles Wilson, CEO of Booker? In a retail era where leadership has been dumbed down and true commercial skills have become a rarity, Charles Wilson is truly outstanding. He has a unique combination of strategic and operational skills coupled with a tiny ego which lets him put the business and its needs before all others. He is a leader who can truly transform any business – just look at what he has achieved with Booker.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

Trading statements – reading between the lines

9th January 2017

Every year history repeats itself. Christmas trading is talked up, a stream of statements gradually emerge, and they are mostly misinterpreted. This year is no exception. These statements at headline level are about as indicative of where we really are and might be soon as the Premier League Table is after two games at the start of the season.

Christmas trading statements are unaudited and produced internally. I’m not suggesting that they are simply made up – God forbid!! However, there is latitude to adopt a flexible approach with definitions and timeframes. And there is massive pressure to deliver what a company’s stakeholders want to see. Goalposts are regularly picked up and plonked down in a different spot. Definitions and timeframes can be adjusted to suit.

Beyond this, the obsession with year-on-year comparisons has encouraged most people to look at the headline percentage figures, and ignore the absolute numbers on which they are based. So Next’s numbers last week have been massively misread. That’s not to say they were not poor and disappointing. However, Next is still light years ahead of its peer group on virtually every issue that counts, and when it comes to its future trading performance, that point is by far the most critical. There will be quite a few retailers posting numbers far better than Next’s. Don’t be fooled by the packaging and look at the contents!

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk