Member Article

Tesco: What goes round comes round

So Tesco has announced losses of more than £6 billion following on from finding an accounting black hole of £263 million whilst facing an investigation from the Groceries Code Adjudicator that could land some bosses in jail. Never mind falling sales, deserting customers and a plummeting share price.

I used to sell water butts to Tesco Direct. Mini ones that could easily be sold by mail order. We also ran a few-store based promotions. Tesco were not our largest customer for these lines, not by a long shot, but they behaved like they owned us. Tesco would not pay our bills on time and actually did not even pay them when overdue. We would be paid outrageously late and if we threatened not to deliver until we were paid we were threatened with being delisted. This, however, was the thin end of the wedge. Tesco Direct would buy some of our goods, use our photography and branding in their catalogue and on their web site and then buy some or all of the goods they sold from someone else. As we prided ourselves on the quality of our products this was a bitter pill to swallow.

They would sell at a price point way below everyone else even if this failed to generate major volumes. It just trashed the market for everyone. This was done without discussion. There never really was any real relationship between the parties. Looking at what they were selling a delivered product for, I could not believe they were actually making any money. It seemed they were just sucking sales away from other retailers for no real benefit.

We were not a big account for Tesco but we are now beginning to hear how they may have behaved with their larger suppliers. Some of the falling outs are very public and some brave suppliers are now speaking out. I have seen suppliers delisted with Tesco who then fill the gaps with an own-brand offering rather than pay a fair price for goods they may have sold for years. Again this activity is well documented.

I have long argued that the only way for businesses to be successful over the long term is by operating in a transparent, moral and ethical manner. My own experience and much of what is coming out in the press now would suggest that Tesco has behaved otherwise for a long time.

It should be no surprise that this business is in big trouble. There may be much debate about what Tesco should or should not do next. In my view what it needs is a great big dose of honesty and until that comes we should expect more of the same.

This was posted in Bdaily's Members' News section by Jonathan Straight .