August 23, 2012

Populist crusades against retailers

Spanish protests (photo: Martin Deutsch_Flickr.com)
Carrefour: One of several foreign retailers facing the ire of protesters in Spain
Are retailers Robin Hood or the Sheriff of Nottingham plundering farmers and consumers alike?

They are certainly an easy target for a growing number of populist agitators throughout Europe.

The current financial and economic crisis gripping the peripheral countries of the eurozone has not only hurt consumer pockets.

It has also dramatically increased the number of the unemployed, marginalised, and disaffected.

This leaves the door wide open not only for the sincere social reformer, but also for instigators, self-appointed tribunes of the people, and Pied Pipers of Hamelin.

One political agitator, Juan Manuel Sánchez Gordillo, mayor of the small southern Spanish town of Marinaleda, seems to bear a particular grudge against foreign retailers.

Anti-austerity march

According to the Financial Times, Sánchez Gordillo has embarked upon an anti-austerity march across Andalusia, Spain’s most populated region with the highest level of unemployment (more than 30 per cent).

Some of Sánchez Gordillo's 500-odd supporters, including trade unionists, have been arrested for occupying banks.

It is also claimed that they have stolen food from supermarkets, which Sánchez Gordillo considers hurt local farmers, in order to donate it to food banks for the poor.

As a member of the regional parliament, Sánchez Gordillo enjoys immunity from prosecution for such action, but claims that it would be “an honour” for him to go to jail.

Is this legitimate protest, a revolt against order, or merely misinformed?

A question of maths

Let us work on the premise that the average retailer makes food roughly one quarter more expensive in the chain from plough to plate.

This gross margin, which is regularly undercut by discounters, represents the difference between what the retailer pays for produce from the farmer and the price the consumer is prepared to pay for it at the supermarket.

Depending on how efficiently the retailer works in between, he will make a profit or a loss. Here one must think distribution logistics, property and sites, shop fittings and refrigeration, staff and training, insurance etc.

Such activities and costs are not always seen or taken into consideration by the consumer. Understandably, vulnerable people in regions suffering from swingeing budget cuts and high unemployment are not likely to be interested in such niceties.

Thus, the discontented can become an easy prey to emotional arguments and can be radicalised for political purposes.

The only two German food multiples active in Andalusia, Aldi Nord (Aldi North) and Lidl, confirmed to Lebensmittel Zeitung that none of their stores have been affected to date.

Civil unrest — a European phenomenon?

However, if it is not Andalusia or Greece, then it will be the recent riots in Amiens or in several UK cities last year. And the fact remains that retailers are easier targets than banks.

Unlike the banking industry, where customers expect savings deposits to be physically protected, the whole point of retailing is to make fast-moving consumer goods as easily accessible to as many people as possible.

Put another way: it is more than sensible to barricade gold bars in Fort Knox, but you always want to sell your peaches in the open.

Should European activists continue to encourage attacks on supermarkets, retailer gross margins will not be able to contain spiralling costs for metal shutters, security personnel, CCTV, insurance etc. for ever.

Therefore, if retailers do not wish to exit swathes of troubled Europe in the long term, they must reclaim the moral terrain they have obviously lost within consumer minds.

Surely, there could be more social engagement, as once demanded by the great Swiss retail visionary Gottlieb Duttweiler?

But this is quite a request to make of those who thought they were only in the food business!


Related article in German: By Mike Dawson in Lebensmittel Zeitung, no. 34, 17.08.2012


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Comments for this article are closed.

  1. paddy19
    Created 24 August, 2012 17:14 | Permanent link

    Your argument loses some of its cogency by its name calling. "self-styled representative of the dispossessed masses". He appears to be a mayor I assume elected by his townspeople. In your many interviews with the titans of the retail industry you never questioned who they represent except themselves, their hedge funds or to a lesser degree their shareholders.

    Yet you agree that the number of the unemployed, marginalised, and disaffected has increased and needs to be represented. Who would you have represent them the hedge fund managers of Europe?

    As you know, the large retailers are far from a soft target, they have immense financial and political muscle. They have rarely occupied the high moral ground in the use of their immense power.

    Low wages, poor working conditions, post invoice discounts, dodgy promotions, false advertising, the list goes on and on. The recent sucessful campaign to stop traffic light food labelling shows how powerful and malevolent the whole industry can be.

    I think rather than calling for more social engagement, which sounds like a lot like more PR, large retailers might try to set some minimal standards for how they treat suppliers, employees and customers.

    Then the unemployed, marginalised, and disaffected might not see them as legitimate targets.

  2. Mike Dawson
    Created 25 August, 2012 12:02 | Permanent link

    To calm sensibilities, the "name calling" has been toned down to a more neutral stance.

    Point taken that the "titans of the retail industry" have not been asked about those they claim to represent. It is a legitimate question to raise in the future.

    That said, the role of the trade journalist is essentially to help the industry, our readers, and advertising customers to make money. An editor at, say, the New Statesman or Marianne would clearly be able to take a different stance.

    Even as writers for a B2B publication, however, it might be argued that tooth-and-claw capitalism (low wages, poor working conditions viz. many of the points you raise) is ultimately contra-productive; hence the occasional "moral tone" in these blogs without, however, any pretension to deep political insight.

    Who should represent the unemployed and marginalised? Whether technocrats, plutocrats, or Che Guevara, whose picture was paraded by the demonstrators, let us hope that they truly care for the interests of those they claim to want to help.

    Point also taken that large retailers are anything but a soft target. However, something else was meant: it is relatively easy to throw a brick through a store window and steal something, whereas robbing a bank is usually a more complicated matter. To avoid misunderstanding, "soft target" has been changed to "easy target".

    Don't forget, though, that it was not only the stores of big retailers that were attacked in Andalusia, Amiens etc. In the UK, for instance, small immigrant businesses were plundered and petrol-bombed although it was probably known to the perpetrators that the owner-families lived immediately above the premises.

    Yes, in retrospect, the call for more social engagement does sound a little woolly, but this passage has been left as it stood because your criticism deserves to be read in context.

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