Note to British retailers: don't try to take on America

Did anyone really think Tesco could do it?

When Tesco announced it was going to take on America, I thought, ‘When will they ever learn?’ and waited for the Yorktown Bugler of 1781 to sound the retreat all over again.

This escapade by the UK’s biggest retailer was always destined for disaster, and so it has proved as Tesco is forced to write off a cool (reported) £1 bn – money they now urgently need at home to invest in the underperforming original UK business.

The record of British grocers and other retailers in the Land of the Free is littered with failures: remember M&S’s ill-fated venture? That’s the M&S which was a penny bazaar in Manchester, then became a wardrobe for the ladies of Middle England, before turning to food, where it was the first ever retailer to put an acceptable chicken Kiev on the nation’s dining tables.
 
Then it screwed up in America when it bought Brooks Brothers, a purveyor of up-market (in America, that is!) men’s suits, shirts and ties – the sort of offerings which would be considered offensive in Savile Row. The suits were surely cut by lumberjacks and the shirts were made by tent-makers. (Don’t even talk about the ties!)

M&S had made a bad mistake, and the bugler sounded the retreat.

Then J Sainsbury had a gamble and lost their shirt too, with something called People’s Stores, before the Bugler was called on once again.

But when the mighty Tesco said it was going to sell frozen chips and carrots in California, everyone had forgotten its rivals’ track record. Tesco, however, wasn’t going to spend zillions on an acquisition – it would build from scratch, with a new brand – called, after endless market research, "Fresh & Easy".

Well, the chips and carrots never took off, and are now definitely off the menu.

The shares rose on the announcement, leaving that Old Sage of Omaha rubbing his hands with glee: he had bought the discounted shares, but not the chips and carrots.

What is it about America, and British grocers? Here are some of the answers: British retail management doesn’t work there; they can’t bully suppliers there like they can here, in our much smaller market; the distribution logistics are far more complicated – bigger distances, more media outlets for adverts, far greater shopping around for price; much less consumer loyalty, and so on. Then you are only ever working on tiny margins – just 3 per cent, which get easily squeezed at both ends.

The only British retailer to make a bit of a success in America that I can recall – as they didn’t end up a loser, at least – was British American Tobacco.

Having wrung every ounce of profit from the addictive nicotine, before it was realised that cigarettes were just cancer-sticks, it then joined the trend towards conglomerates, so-prevalent in the 1960s-80s, and went into insurance and financial services, and retail in America: it acquired established chains like Marshall Fields in Chicago and Saks Fifth Avenue, both profitable department store chains, and sensibly left the incumbent American management in charge.

When the stock market M&A teams had made two generations of income from creating such conglomerates – remember Hanson, BTR, Pearson, Williams Holdings? – the mood music changed again and the next generation made the same fees in reverse, by taking it all apart again...

Such are the City’s fashions and its zero added-value. The City’s new love affair was with single product/sector companies, with global markets and expertise who knew exactly what they were doing – like Tesco.

So, it is worth pondering which sectors of the British economy have made real money in America. One starts with pop music, actors, TV and films – entertainment is the second biggest industry in America, and in export terms too, only behind defence.

And the UK has done well in defence in niche sectors – BAE, Rolls-Royce, Smiths Industries, Dowty-Messier, Cobham, Chemring and so on – which all depend on world-beating technology. Banking and financial services have their fair share too.

Cars have been hopeless in the past, but now Jaguar Land Rover is the fastest-growing marque in the world, and doing well in America too, as are those hardy perennials Rolls-Royce and Bentley.

And certain non-computer parts of the digital world, such as mobile phone services, and luxury brands too – Burberry, Barbour and fashion generally – and the advertising that goes with it.

Anything except frozen chips and carrots, in fact.

This article first appeared in Spear's magazine

Photograph: Getty Images

Stephen Hill writes for Spear's

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Labour can be populist and English without copying Donald Trump

There's nothing deplorable about discussing the common interests of the people.

As Labour’s new populism gears up for Copeland and Stoke-on-Trent, it will be tested on voters who are, by a significant measure, more likely to see themselves as English. In the 2011 census, both constituencies scored "English" identity nearly 10 per cent higher than the English average and still 5 per cent higher than England outside of London.

It’s no surprise that both Ukip and the Tories have polled well in these places. In the 2015 general election there was strong correlation between feeling "English", or feeling "more English than British", and voting Ukip and Conservative. Indeed, amongst the "English not British" Ukip took about a third of the votes across England, and the Tories a fifth. Labour lagged below 15 per cent.

Labour’s problems may be getting worse. A recent YouGov poll, commissioned by the Centre for English Identity and Politics at Winchester University, showed "Englishness" gaining at the expense of "Britishness" in the year of Brexit. At the extremes, "English not British" rose by 5 per cent (from 14 per cent to 19 per cent), with ‘British not English’ falling by a similar amount. If past relationships hold, these voters will become harder for Labour to reach.

Although most people in England would favour an English Parliament, or English MPs alone voting on English issues, these have not yet become the political demands of an explicit nationalism as we might find in Wales, Scotland or Catalonia. Indeed, there’s no actual evidence of a direct link between feeling English and the way people vote. It well be that the underlying factors that make someone feel English are also those that incline them, overwhelmingly, to vote Brexit or to support Ukip.

We may identify the drivers of English identity - the declining power of the idea of Britain, the assertiveness of devolution, rapid migration and the EU - but we know little about the idea of England than lies behind these polls. There’s almost certainly more than one: the England of Stoke Central imaginations may not be identical to the Twickenham RFU car park on international day.

One of the most persistent and perceptive observers of alienated working class voters sheds some light on why these voters are turning towards their English roots. According to The Guardian’s John Harris:

"When a lot of people said ‘I’m English’, they often meant something like, ‘I’m not middle class, and I don’t want to be…. I’m also white, and coupled with the fact that I’m working class, I feel that somehow that puts me at the bottom of the heap, not least in the context of immigration. But I am who I am, and I’m not apologising for it.'" People who said "I’m English" seemed to be saying, 'I’m from somewhere' in a ways that politicians and the media did not."

Given Labour’s history in seats where support is ebbing away, it’s reasonable to think that the party’s target must be the voters who Martin Baxter of Electoral Calculus describes as "left-wing nationalists". In this definition, "left-wing" attitudes tend to be be anti-capitalist, hostile to business, generous on benefits, support the welfare state and redistributive taxation. "Nationalist" attitudes are seen as isolationist, against immigration, disliking EU freedom of movement, thinking British means "born here" and that Britons should be put first.

For many in Labour, those nationalist attitudes might bring "a basket of deplorables" to mind.  In recent days both the Corbyn left, and centrist MPs like Alison McGovern and Wes Streeting, have warned against meeting these voters’ concerns. Progressive Labour populists must also calm those fears. But Labour will be doomed as a party of government it it can’t reach these voters (even if it does hang on in the forthcoming by-elections). The obstacles are formidable, but with the right language and framing, Labour may find an appeal that could cut through without alienating the party's more liberal support.

Just acknowledging that England, and the English, exist would be a start. The reaction to Birmingham mayoral candidate Sion Simon’s appeal to England in a campaign tweet simply emphasised how much of Labour prefers to say Britain, even when they mean England. We don’t need a swirl of St George crosses at every event; we just need to use the word in normal everyday conversation. At least we would sound like we live in the same country.

The defiant cry to be recognised and heard should trigger another Labour instinct. The demand that the nation should be run in the common interests of the people runs deep through radical history. Jeremy Corbyn reached for this with his talk of "elites rigging the system". But no ordinary English conversation ever talks about elites. Instead of "mini-me Trumpism", English Labour populism needs careful framing in the language of day-to-day talk. Labour's target should be not be the wealthy per se, but those powerful people whose behaviour undermines the national interest and by doing so undermines the rest of us.

This language of national interest, both conservatively patriotic and politically radical, meets the mood of the moment. The select committee challenges to Amazon, Google, Philip Green and Mike Ashley struck a chord precisely because they revealed something deeply true and unpleasant about this land. We can defend the national interest without invoking a racist response. Why are our railways sold to other governments, and our companies sold abroad for quick profit? Why should it be easier for a foreign gangster to buy a house in Surrey, and hide their ownership overseas, than for an English family to get their own home?

By asking what any change means to the people of England, we might bridge the divide on immigration. If the impact of migration is exacerbated by the pressure on housing and service, let Labour make it clear that the rate of immigration should not exceed the pace we can build homes for those already here, as well as any newcomers. The government must be able to expand services to meet additional needs. If every policy should work in the interests of the people of England, migration which improves our services, creates jobs and grows the economy is to be welcomed. It is hard to see a genuine liberal objection to posing the migration challenge in that way. With the exception of refugees, immigration policy cannot be designed to benefit the migrant more than the resident.

Let the test of every policy be whether it works in the interests of the people of England, or works only for a few. That’s a simple test that would appeal to widely shared values. It could be the foundation of a genuine Labour populism that speaks to England.

 

John Denham was a Labour MP from 1992 to 2015, and a Secretary of State 2007 to 2010. He is Director of the Centre for English Identity and Politics at Winchester University