There’s a website that has been set up to allow people to comment on the proposed fourth Tesco store in Inverness. Tescotown.co.uk was established, not when the original proposal was first mooted – which was well over two years ago if I recall correctly – but when a BBC news item was published remarking the ‘near monopoly’ that Tesco have already.
There’s surprise at the alleged amount of money Tesco will spend in developing infrastructure for the new store. A sum of £13m has been mentioned, although both Tesco and the Highland Council deny this. Some people expect the council to pay for road developments, but others report that the Highland Council prefer to invest in areas outwith of Inverness. Either way, if the city gets improved infrastructure as a side-effect or as a direct result of the store, it surely must be a good thing. Many people will shop at Holm rather than other stores, reducing congestion in those areas. In any case, Inverness has been for many years an expanding city. Planning and building must compensate for this continuing trend.
What about job losses? It’s undeniable that jobs would be lost. There’s only a finite amount of shopping people can do, and a Holm Tesco will divert people from some local stores and other supermarkets. But Tesco expect to employ 250 full and part-time workers at this store.
In any free-market economy there will be people who win and others who lose. Businesses that innovate or exploit niche markets will invariably be more successful than those who rely on a static client base. Just because you’re indigenous doesn’t give you a right for people to shop with you. When we established our company, we were extremely disappointed that work was going to other businesses that were cheaper and provided lower quality. As a result, we repositioned ourselves in the market. We don’t compete with local design companies. We’re different now and we’re innovating: we have two upcoming products that will prove this. If you’re threatened by something you don’t stick your head in the sand for two years and then moan. You change. Two years is a very long time to try new things out. And there’s still time to embrace the change.
When I started writing this post, I expected to find that Tesco would have the upper hand with value, but not necessarily the other two important measures of shopping: quality and convenience. Sure enough, convenience is an inevitable draw of local shops, but quality isn’t necessarily so. However, it’s these two factors that local shops need to exploit. My local Drumblair Store will always get my business because it’s convenient. But it comes at a price: Happy Shopper is a major provider of products to Drumblair Store. Today I bought a Kingsmill Square loaf for 92p. You can buy the same loaf from Happy Shopper for 70p, if you’re a trade customer. That’s a 30% markup. You can buy the same loaf from Tesco for 82p. Which you will note is still more expensive than if bought direct from Happy Shopper. It seems therefore that everyone has opportunity to compete.
Quality is another issue. For years I’ve been surprised that convenience stores don’t do more to promote local producers. Locally, I can get peculiarly coloured cheese that is made in Orkney, but that’s not exactly local. Compared to every other ‘real’ cheese, it’s hideous. Why doesn’t Drumblair sell cheese and other products that comes from The Gourmets Lair in Inverness? Probably because of price. Probably because most customers wouldn’t dare try such exotic products. Tesco have an advantage in that their catchment area allows them to cater to a very wide range of desires and expectations. Indeed, it’s a necessity. It appears that some local shops cut down on their potential market by attracting just a subset of that market. But they really ought to try something different, especially if they feel threatened by a fourth Tesco store.
Threatened businesses that survive despite the arrival of a fourth store will do so not because of luck, but because they will anticipate the consequences, change and innovate. Some might even welcome the threat. Every threat is an opportunity. If you’re in business and you don’t recognise this, then perhaps you shouldn’t be in business. Sometimes, it really is change or die.
