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

Photo: Getty
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The NHS's sustainability is under threat if more isn't done to look after its staff

More work is needed to develop the health service's most precious resource.

As the NHS nears its 70th anniversary, the time is ripe for a workforce rescue plan. Staffing worries, even more than funding pressures, are the biggest cause of concern for NHS trust leaders. There are not enough trained health workers in the UK to meet today’s needs, let alone those of the future.

Demands on hospitals, mental health and community trusts, and ambulance services are growing. More patients need treatment. Increasingly, they require complex care, with specialist expertise. This is not just about numbers. We need a clinical workforce that is skilled and equipped to work in new ways to deal with the changing needs of the population it serves. 

That means improving the supply of people coming to work for the NHS, and doing more to develop and motivate them so they want to stay. These problems are not new but the scale of the challenge has reached a tipping point which threatens the future sustainability of the NHS.

Ministers rightly point out that the NHS in England has more clinical staff than ever before, but numbers have not kept pace with rising demand. The official "shortfall rate" for nurses and midwives across England is close to 10 per cent, and in some places significantly higher. Part of this is down to the recognition, after the events at troubled health trust Mid Staffordshire, of the importance of safe staffing levels. Yet for successive years during the coalition government, the number of nurse training recruits fell.

Far from being a problem just for hospitals, there are major nursing shortages in mental health and community trusts. Between 2009 and 2016 the number of district nurses employed by the NHS in England fell by more than 40 per cent. Just as the health service tries to accelerate plans for more treatment closer to home, in key parts of the workforce the necessary resources are shrinking.

There are also worrying gaps in the supply of doctors. Even as the NHS gears up for what may prove to be its toughest winter yet, we see worrying shortfalls in A&E consultants. The health service is rightly committed to putting mental health on an equal footing with physical health. But many trusts are struggling to fill psychiatry posts. And we do not have enough GPs.

A key part of the problem is retention. Since 2010/11 there has been a worrying rise in “leaver rates” among nurses, midwives, ambulance staff and scientific technical staff. Many blame the pressures of workload, low staffing levels and disillusionment with the quality of care. Seventy per cent of NHS staff stay on for extra hours. Well over a third say they have felt unwell in the past year because of work-related stress.

Add in cuts to real basic pay, year after year, and it is hardly surprising that some are looking to other opportunities and careers outside the public sector. We need a strategy to end pay restraint in the NHS.

There is also a worrying demographic challenge. Almost one in three qualified nurses, midwives and health visitors is aged 50 or older. One in five GPs is at least 55. We have to give them reasons to stay.

NHS trusts have made important strides in engaging with their workforce. Staff ratings on being able to report concerns, feeling trusted to do their jobs, and being able to suggest improvements are encouraging. But there are still cultural problems – for example around discrimination and bullying – which must be addressed locally and nationally.

The NHS can no longer be sure that overseas recruits will step in to fill workforce gaps. In the early 2000s many trusts looked beyond Europe to meet nursing shortages. More recently, as tougher immigration and language rules took hold, a growing proportion came from the EU – though not enough to plug the gap.

Now we have all the uncertainty surrounding Brexit. We need urgent clarity on the status of current EU nationals working in the health and care systems. And we must recognise that for the foreseeable future, NHS trusts will need support to recruit and retain staff from overseas. The government says it will improve the home-grown supply, but that will clearly take time.

These problems have developed in plain sight. But leadership on this has been muddled or trumped by worries over funding. Responsibility for NHS workforce strategy is disjointed. We need a co-ordinated, realistic, long-term strategy to ensure that frontline organisations have the right number of staff with the right skills in the right place to deliver high quality care.

We must act now. This year's long-delayed workforce plan – to be published soon by Health Education England – could be a good place to start. But what we need is a more fundamental approach – with a clear vision of how the NHS must develop its workforce to meet these challenges, and a commitment to make it happen. 

Saffron Cordery is the director of policy and strategy at NHS Providers