Tesco boss Dave Lewis is right to take issue with the government over burdens on the grocery sector
It really wasn’t that long ago that we were talking about the near total domination of one supermarket: Tesco.
Indeed, Tescopoly was published in 2007, setting out a variety of charges against the retail giant. Tesco’s dominance was, according to the book, based on “profiting from poverty” as it plundered the world’s resources. Everything was attacked, from the “banality of its clone stores” to its sinister-sounding quest for “global food domination”.
Ultimately, all the individual charges stemmed from a central complaint that the supermarket chain was just too big, too dominant and too powerful.
Fast forward eight years and talk of Tesco’s untouchable supremacy seems a little old hat. Its market share is in decline, an accountancy scandal dogs the company’s finances and analysts bemoan the group’s lack of direction.
Chief executive Dave Lewis may have a lot on his plate, but when he takes to the stage at the CBI conference later today, he will voice concerns that are widely held among his peers and rivals. He will demand reform of business rates as a quid pro quo for implementing the government’s National Living Wage.
Lewis has warned previously that the growing tax burden on the grocery sector is becoming unmanageable, adding his voice to that of Sainsbury’s boss Mike Coupe who has warned that “the increasing burdens on our industry will soon prove unsustainable”.
Lewis is absolutely right to take the fight to the government. Tesco may not be as unassailable as it once was, but it is still Britain’s biggest private sector employer, with 310,000 staff, and it knows a thing or two about overheads.
The National Living Wage, the apprenticeship levy already announced by the government and a failure to reform business rates could produce a perfect, and devastating, tax storm.
The British Retail Consortium warns that retailers face an extra £14bn of costs by 2020, a bill that could rise to over £40bn without reform of business rates. Lewis is attempting to strike a deal with the Treasury: we’ll find a way to pay the higher wages you’ve promised, but throw us a bone in return.
Though he’ll be speaking for many employers, he may be thinking more specifically about a time when the words “Tesco” and “dominance” go hand in hand once again.