SAINSBURY’S boss Mike Coupe is in trouble. In an unguarded moment, while waiting for an interview with ITV News on his company’s £7.3bn merger with Asda, he started bobbing his head side to side and belting out musical hit “We’re in the money”.
Although we’re assured no store closures or job losses are planned and the company is going to cut prices by ten per cent, I don’t think anyone really believes that. And the arrogance of a top CEO celebrating greed, while ordinary people face an uncertain future, just exemplifies the grasping gluttony of our businesses. He’s apologised, but the damage is done.
Sainsbury’s and Asda are at the opposite ends of the spectrum of the Big Four supermarkets – a bit like the House of Fraser and Matalan of the food retail world.
Sainsbury’s has its head office in upmarket central London, not far from the West End; Asda’s is in down-to-earth, and significantly cheaper, Leeds – probably one of the many reasons its prices are lower.
Merging the two will give them a buying power unsurpassed by any others.
If you speak to anyone in food retail, they’ll tell you that supermarket buyers can be ruthless, can make or break a small company, and their negotiating power on price is unrelenting.
The Competition and Markets Authority may insist the newly-merged company sells some of its supermarkets, but the damage will have already been done.
Supermarkets are already aiding the destruction of high street shopping, with the internet acting as a more-than-effective catalyst. Now they sell clothing and homeware, and are open late at night, there is hardly any need for the high street. And when the Big Four turn into the Big Three, mergers and liquidations will inevitably take place among their suppliers too, leading to fewer jobs, overall, and more people out of work.
Everything is about short-term profit, about confidence and about making the right noises. Sainsbury’s shares jumped on the merger news, prompting Coupe’s little song and dance routine.
He’ll be off to pastures new, or get his gold-plated handshake in a few years’ time, having made the synergies, aka job losses, that he needs to satisfy the shareholders. Then where will the annual jump in profits come from? That’ll be someone else’s problem.
It’s the same in politics. It’s not a long game. Governments have a life span, cabinet ministers come and go, interested in their own careers and opportunities. There’s no incentive to look too far into the future.
But what will we do when we have cut back our businesses and public sector back so far that there is barely anything left? We will be plunged into a longer, and deeper recession than we have ever known. Businesses now employ a tactic of constantly cutting staff costs to boost profits, to satisfy shareholders.
It’s like a dreadful Darwinian game where only a handful ultimately survive. At some point so many businesses will have run themselves into the ground or merged so that those that are left – and some of these huge conglomerates are already more powerful than many Governments – will effectively rule the world.
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