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THE WEEK IN RETAIL ISSUE 34
EDITOR’S COMMENT
HATS OFF TO TESCO FOR LEADING FROM THE FRONT
It’s easy to be cynical about these things, but whatever the reasons behind Tesco’s decision to repay its Business Rates Relief – all £585m of it – the move is unquestionably Good News. Clearly Tesco had come under huge pressure after declaring massive profits and over £300m in dividends, all after having accepted the half billion pound Government handout in the first place.
However, you could argue, as they did themselves, that all they did was accept what was offered to them at a time when the world was in freefall and the future was unknown, the same way many other businesses did.
Tesco boss Ken Murphy hailed the Government’s decision to introduce the Relief in the first place as “hugely important” and not just for Tesco, but for delivering some much needed confidence into a retail sector that at the time was in panic mode.
But the decision to ultimately repay the relief was welcome for more than just the £585m that UK taxpayers will get back. Tesco knew full well that the decision would heap enormous pressure on the other supermarkets to follow suit. And, to be fair, many others did likewise – some of them within hours of Tesco’s announcement.
You could get cynical about that too, but let’s just be thankful that over £2bn will be returned to public coffers from businesses that demonstrably don’t need it.
But it’s not quite as uplifting a story as it might be. While many supermarkets have already committed to repaying (including Morrisons, Asda, Sainsbury’s, Aldi, Lidl and Whole Foods Market), several big retailers are still digging their heels in. Among them are Waitrose and Coop, which have traditionally taken their ethical credentials very seriously.
And very revealingly, there are extensive reports from insiders suggesting that in private conversations, many of the supermarkets felt like they had been ‘bounced’ into making the repayments by Tesco’s decision. It’s anyone’s guess whether that implies that they would have repaid anyway, but felt forced to do it quicker than planned, or whether they had no intentions to repay but now felt like they had no choice.
