Tesco's "indie" coffee shop should worry defenders of capitalism

Free markets rely on informed choices, and those seem lacking in the case of Harris + Hoole.

There's been a lot of chatter about an article in today's Guardian (by which, I guess, I mean that I've been talking about it a lot). Headlined "Customers criticise 'indie' image of the coffee shops part-owned by Tesco", it details the reaction of customers in North London to their discovery that Harris + Hoole, an independent-looking coffee shop, is actually part of a ten-branch chain, of which 59 up to 49 per cent is owned by Tesco.

Rupert Neate writes:

"I thought: 'That's very brave, opening up next to Starbucks,'" Bridget Chappell, a full-time mum, said of Harris + Hoole, a new coffee shop in north London next door to a branch of the US behemoth and four doors down from a Costa Coffee.

"I like to try independent shops, and it was really very nice with great coffee," she said. "But when I got home, I looked it up and discovered it was a chain."

The people who are shocked to learn that they've just had a pleasant cup of coffee at a shop part-owned by Tesco have come in for a fair amount of criticism. After all, they clearly don't care about anything that matters, otherwise they'd have been unhappy before they learned the technical fact of the shop's ownership.

More to the point, this is supposed to be what capitalism's about, right? Tesco has identified a desire that customers have, and joined forces with a coffee chain to provide that desire. As the lead barista tells Neate:

We try to be independent. We want to be independent. We want to have that feel.

The question which no-one seems to have addressed is what it is that the customers actually desire. If what they want is an independent-feeling café, with mismatched furniture, blackboards for the menus and stacks of hand-made sandwiches, then Tesco can fulfil that need. But if what they desire is an actual independent café, then Tesco can't profit from that desire without the customer being mislead.

That's not to say that Harris + Hoole is necessarily to blame for those customers' mistake. As its chief executive tells the Guardian when asked about Tesco's stake:

If you Google it, you'll find it. Go to our webpage – it's not hidden. Putting it any more prominently would not reflect who we are as a business.

We can't know conclusively whether customers do desire independence or an independent feel, but my hunch is the former. That's certainly what the three interviewed in the Guardian piece claim, anyway.

The problem is, if you desire independent coffee, that's a relatively tricky desire to satisfy conclusively. You could research the corporate ownership of every coffee shop you go in to, but that would get difficult the first time you needed coffee in a strange city with no internet access. As a result, people have developed proxies to work out whether somewhere is part of a chain or not. Blackboards, mismatched furniture, hand-cut food: these things don't normally scale to a big chain, and so are usually a good indicator that somewhere has at most a couple of branches.

It may not seem that important, but it's pretty key to the claims free markets have for being an efficient way to run things that, when people think they are handing over money for a specific reason, they are in fact doing so. That's why we ban calling something organic when it's not, or slapping a union flag on Danish bacon. That even stretches to things which, in your opinion, may not be a choice that matters. Homoepathy is bunk, but it still would be bad for capitalism if anyone could put "approved by 90 per cent of homeopaths" on their sugar pills without that actually being the case.

But unfortunately for these specific customers, Harris + Hoole didn't mislead them. Purposefully or not, making yourself look like an indie coffee shop is not the same thing as telling customers you are an indie coffee shop.

If ethical consumerism is your bag, you're going to have to start putting a lot more effort into making sure you're doing it right, because these things are only going to get more common.

Baristas take part in a latte art competition. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Owen Smith promises to be a "cold-eyed revolutionary" - but tiptoes round Brexit

The Labour leader challenger takes Jeremy Corbyn on at his own anti-austerity game. 

Owen Smith may be challenging Jeremy Corbyn for the Labour leadership but it seems he has learnt a thing or two from his former boss. 

One year on from abstaining from the Tory Welfare Bill - a decision he now says he regrets - Smith attacked the former Chancellor George Osborne’s austerity policies from Orgreave, a former steel plant which was pivotal during the miners’ strike.  

Listing frustrations from library cuts to delayed trains, Smith declared: “Behind all of these frustrations is one cause – austerity.”

Borrowing the rhetoric that served Corbyn so well, he banged the drum about pay, labour rights and fair taxes. 

Indeed, a spokesman from Jeremy for Labour popped up to say as much: “We welcome Owen’s focus on equality of outcome, reindustrialisation and workers' rights - and his support for policies announced in recent months by Jeremy Corbyn and John McDonnell.”

On policy, though, Smith showed a touch of his own. 

His description of the Department for Work and Pensions as “a byword for cruelty and insecurity” resonates with the deep fear many benefit claimants feel for this faceless but all powerful authority. His promise to scrap it will not go unnoticed.

Another promise, to end the public sector pay freeze, is timely given widespread expectations that withdrawing from the EU’s single market will push up prices. 

He also appealed to the unions with a pledge to scrap the “vicious and vindictive” Trade Union Act. 

The policies may be Corbynite, but where Smith stands out is his determination to be specific and practical. He is selling himself as the Corbyn who actually gets things done. Asked about what he would replace zero-hours contracts with, he responded: "Well it could be one [hour]. But it can't be zero."

As he concluded his speech, he promised “revolution” but continued:

“Not some misty eyed romanticism about a revolution to overthrow capitalism.

“But a cold-eyed, practical, socialist revolution, through a radical Labour Government that puts in place the laws and the levers that can genuinely even things up.”

Smith’s speech, though, steered clear of grappling with the big issues of Brexit. He stands in favour of a second referendum on the Brexit deal, which may appease Labour's inner city voters but could frustrate others who voted Leave.

On the free movement of people – widely viewed as a dividing line between Labour’s Corbynite members and the wider voting population - he has been vague. He has previously expressed support for the "progressive case against freedom of movement" and criticised Corbyn for failing to understand patriotism. But this is not the same as drawing up policy. Whether he can come up with strong views on immigration and still appeal to both voter bases will be his biggest challenge of all. 

Owen Smith's 20 policies

1.      A pledge to focus on equality of outcome, not equality of opportunity 
2.      Scrapping the DWP and replacing it with a Ministry for Labour and a Department for Social Security
3.      Introducing modern wages councils for hotel, shop and care workers to strengthen terms and conditions
4.      Banning zero hour contracts
5.      Ending the public sector pay freeze
6.      Extending the right to information and consultation to cover all workplaces with more than 50 employees
7.      Ensuring workers’ representation on remuneration committees
8.      Repealing the Trade Union Act
9.      Increase spending on the NHS by 4 per cent in real-terms in every year of the next parliament
10.  Commit to bringing NHS funding up to the European average within the first term of a Labour Government
11.  Greater spending on schools and libraries
12.  Re-instate the 50p top rate of income tax
13.  Reverse the reductions in Corporation Tax due to take place over the next four years
14.  Reverse cuts to Inheritance Tax announced in the Summer Budget
15.  Reverse cuts to Capital Gains Tax announced in the Summer Budget
16.  Introduce a new wealth Tax on the top 1 per cent earners
17.  A British New Deal unveiling £200bn of investment over five years
18.  A commitment to invest tens of billions in the North of England, and to bring forward High Speed 3
19.  A pledge to build 300,000 homes in every year of the next parliament – 1.5 million over five years
20.  Ending the scandal of fuel poverty by investing in efficient energy