Thursday, 8 October 2009

Another Beautiful Idea

Sir Terry Leahy has told us that we are on the path to recovery. He should know, his Tesco Group sales are up by 8.3% to £30.4bn for the half yeat to the end of August.

I find it astonishing that he has grown so aggressively in a recession. Tesco pre-tax profit for the same period is up 8.6%. It would be easy to suggest that Tesco have grown as cost-conscious shoppers have been pulled to Tesco by the lure of lower prices. Would that be true, we would see corresponding drops in sales at the high end, like Waitrose, but I do not see the same correlation. Indeed, Leahy tells us that people have stopped trading down and the hardest hit sectors like 'finest' and 'organics' are recovering.

Meanwhile, out on the web there is a massive demand for 'shopping around'. Now many sites like,, and many. many more offer comparisons for like-for-like buying. This is not always effective with too many of them offering subsets of insurers' main products or low cost offerings only with premium sales only direct but they serve their purpose. If you just want to ensure your 3 year old Ford car, the chances are the comparison sites will serve you well. If you have a few points on your licence, no no claims bonus or some other unique, to be frank these sites are far less useful and brokers who still maintain direct relationships can get you bespoke help.

We can now compare car prices, electronics goods, flights, hotels - just so long as the source companies play ball. But one of the last main bastion of comparison remains in the world of advertising - supermarkets. Asda would tell us that they are bashing down the prices of staple things to the extent they tell us the number of lines they have decreased the prices on compared to others like Tesco. That, frankly, is misleading at best but it serves its purpose as people get the perception that Asda are better 'value'. However, would it not be great if we could have a virtual shopping trolley in which we put all the items we want and the brands we favour too and then, instantly, shop around to find out which stores can offer the best price on exactly the contents of that trolley.
No 'Bogoffs' or other deals, just straight forward 'bidding' if you like for that trolley's contents. The winning company may well then add in offers but basically it has to win the 'bid' in order to play.

In business to business sales, we have seen this go on for some time with electronic auctions for something as valuable as recruitment services for the next generation of employees - reverse auctions to see who will source talent for the lowest cost. It's madness but it has been effectively applied to many products and services across the board and is at the heart of long-winded, often ill-conceived tenders too.

Yet at the most basic commodity levels, companies like Tesco are actually making tremendous profits as they squeeze suppliers for the last penny and then make huge profits on the back of the consumers. Clever advertising gives the impression they are hacking down the cost of shopping when the reality is that their net profits are rising faster than their revenues - their net margins per sale are rising, not falling. The chances are, they are making more money than their suppliers and they are not passing through all the savings on the products they make.

Much like the principle of Google, who make far more on collecting news and presenting it to us than the people who write it, companies like Tesco are making fortunes on commodities that are cheap and basic, and just presenting them conveniently and well. Yet we, the consumers, have no way of driving a harder bargain - we have no way of saying, 'I will take my trolley elsewhere if you do not offer me a discount for my business' as any normal powreful buyer could. There are loyalty schemes - but if profits were being set aside for loyal customers then surely these companies would be making less. The fact remains, that we, the consumers, do not have a great deal of say in the matter.

There are some websites that offer rudimentary comparisons on specific foods. I have found which compares the prices of some brand commodities from 4 major stores. It's pretty small beer to be frank and the number of lines it offers effectively just make it another marketing forum for those brands and the supermarket companies involved. It does not hand the 'power of negotiation' back to the buyer. And let's face it, Tesco is the brand leader whose market alone is over £60bn a year in products we buy.

Our spending power is enormous - perhaps it is time we got something back for this awesome power.

So here's a thought. Imagine my virtual shopping trolley and I fill it up with all my usual barnds of goods - foods, hardware, drinks and more. I then click a button and 'see' supermarkets and online shopping companies effectively 'bid' for my business. The basic thing they would need to do is to allow me to minimise the cost of my staple purchases - so the best offer would win. The offer may be swayed by the fact I live in a certain area so delivery or my travel has to be taken into consideration, maybe some extra loyalty points may be chucked in, but the essence of the idea is to drive down the cost of our staple weekly shopping trolley and make supermarkets work on our behalf rather than just their shareholders.

Once the trolly is bought, the winning 'bidder' would have ample opportunity to entice us to 'upgrade' or increment our spend on other items or offers - but their right to do so must revolve around their aggregate pricing on the staple goods in my trolley.

Could it happen? It would not happen if it were left in the hands of the supermarkets or marketeers. It would also never happen if big business got involved. This has to be entrepreneurial consumers who drive it, whose mandate is from all or many consumers. It has to be a collective thing where any profits are distributed back to those who subscribe through the savings they make. That would probably mean consumers signing up to a portal to have a 'trolley facility' and maybe paying a small fee each time they do like £1. Then they can use the facilities and get their savings. Meanwhile, supermarkets and online shopping companies would have to subscribe to the service in order to 'bid' for the trolleys, which would probably mean daily automated feeds of the latest pricing across all lines - something all computer distributors offer today on their own websites. Given moderm technology and computer software, this is not a show stopper.

Again, if anyone is interested in the idea, register at and make sure you put 'My Trolley' on your registration. At this stage it's a germ of an idea - tomorrow could be different.

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