NO one can blame those affected by the Tesco takeover of Quinnsworth suppliers and even opposition politicians for expressing apprehension and seeking assurances about its implications. However, they can remove most of their fears by picking up the phone to Jimmy Millar. Jimmy Millar?
He's the man who ran Scottish food retailers, William Low before it was bought by Tesco in 1994. Speaking yesterday from "What Everyone Wants", the Scottish retail clothier he's busy dragging into the black, he said, "Every promise to me personally and every public commitment Tesco made, they kept."
Mr Millar didn't want to sell the supermarket chain he had taken from profits of £1 million sterling to £20 million in just 10 years, but the inexorable trend towards rationalisation that Ireland is now experiencing swept his patriotic sentiments aside. Now he acknowledges the job that the English giant has done. In 1994 William Low spent £85 million with Scottish suppliers. The Tesco figure now stands at £400 million. Although 250 head office administrative jobs went in the early days, the Dundee offices that it vacated now house the 220 people running the company's new Customer Services Division which Scotland won in competition with England and Wales. Poorer quality jobs certainly, but avidly welcomed in this area of high unemployment.
The sensitivity with which Tesco treated its Scottish foray may well have been a reaction to the well organised local political lobby which caused the likes of Guinness's Mr Ernest Saunders so much grief over that company's takeover promises to Distillers. It may, however, have more to do with Tesco's own experiences. In the late 1980s Tesco acquired Hillards in the English midlands. Its almost total disregard of local management was a major factor in the failure of that venture. Mr Ian McLaurin, Tesco's chairman, is said to have sworn, "never again". Add that to Tesco's unsuccessful incursion into Ireland in the late 1970s which proved an expensive mistake and you begin to understand Mr McLaurin's determination to listen to local voices.
They will tell him of the quality of Irish suppliers who already send £500 million worth of product to Tesco. Other industry insiders are sure that Tesco will be pleasantly, surprised by the quality of the Irish staff and the variety of goods already available in Ireland. Said one: "Ireland is not a backwater in this business. For example, Irish supermarkets were way in front in selling local bread and a good five years ahead retailing a wide range of vitamins and vitamin supplements. ,Quinnsworth will bring lots to the Tesco party."
While Irish consumers may not be able to look forward to the merger bringing prices down, the Irish scene is already very competitive - they can expect to be offered more value for money products in the form of Tesco's own label which consists of about 40 per cent of its British business. To the extent that these replace Irish products then local suppliers will suffer. But, if the Scottish experience is a guide this need only be - if it happens at all - a short term phenomenon. To take the most obvious example, given the present health scares, surely one can see Irish beef replacing English rather than the other way around?
Britain offers a big, big market where Scottish products now sell in 558 Tesco stores. Again, Tesco's management philosophy was better suited to maintaining and developing Low's in fill stores - those outside the major conurbations. This culture has not changed and Ireland's demography conforms to the Scottish, rather than the English model.
However, the Irish road system is not of the best and suppliers still tend to deliver store by store rather than to a central distribution point as is now the common British practice. Will Tesco change this? The answer will be eagerly awaited by suppliers and customers alike. Consolidation of the Irish retailing sector is an inevitable market consequence. Staff and suppliers should be relieved that the predator is a company as sensitive to local issues as Tesco.
Back to Mr Millar - "It is not every company that would give the ousted management a direct say in stopping perceived prejudicial treatment of affected staff. Tesco extended that privilege to me. The Scots, like the Irish, are never happy to see control of their companies slip away. There is no disguising that this move will benefit Tesco. How else could it add 10 per cent to its turnover at a stroke? A glance at Scotland suggests that the advantage will not be at the expense of the staff and that local suppliers will be better off. Consumers? The advantage to them is less likely to be seen in price reductions than in more variety and improved standards.
The last word comes from Scottish financial wizard Mr David Smith whose breath taking acquisition of the Gateway supermarket giant in the late 1980s set British business records. He is intrigued by the opportunities for Irish industry that this move opens up. "Ireland has always been hot on variety. This will get even more wide ranging." Tongue in cheek, he adds: "Harrods, however, will still be the only place, where you can buy edible flowers. No doubt there is already an Irish vegetarian horticulturalist determined to prove him wrong. If there is, Tesco will be listening.
