Friday, 27 January 2017

It's not a game of Monopoly... well, it is actually.

Via MBK from The Times:

Tesco, the country’s biggest supermarket group, has announced a surprise £3.7 billion merger with the food wholesaler Booker.

The deal, which has the unanimous backing of both boards, will create one of Britain’s largest wholesale and retail food businesses that aims to improve the quality, choice and price for customers, independent retailers, caterers and small businesses.

1. Tesco is trying to increase its monopoly power, so whole idea is to reduce "the quality, choice and price for customers, independent retailers, caterers and small businesses".

2. That's a kick in the teeth for the 1,000 workers at the two distribution centres which Tesco is shutting down.

3. Tesco is still my favourite supermarket though. As a consumer, I see little to complain about.


Lola said...

Tesco's diesel killed my wife's car - temporarily. Massively contaminated. Complained. Never heard a word. Never been back.

Dinero said...

Why so cynical.
If the efficiency of the supply chain is increased there is room for a drop in prices if they want to gain market share or sell more.

Mark Wadsworth said...

L, that's unlucky.

D, supermarkets use their oligopoly power to grind suppliers down. Shoppers do quite well out of it.

Sean Vosper said...

Actually I have heard that not all petrol/diesel is the same - that supermarkets buy the crap left over by the majors - scraping the bottom of the (oil) barrel you might say. Also, probably an urban myth.
I always thought Booker was pretty niche. Plus they must have felt up the other supermarkets. Unless they're in difficulties I would still be somewhat inclined to block it if I was Emperor Overlord.
I suppose being pedantic it's strictly "Oligopsony" power.

Mark Wadsworth said...

SV: "I suppose being pedantic it's strictly "Oligopsony" power"

That is not pedantic, that is actually a good point. But the title of the post is a line from one of my favourite songs ("Public Image" by Public Image Limited). I don't know any songs which mention "oligopsony".