Another business story – Tesco’s sales figures ‘sent a shudder‘ through the retail sector on tuesday because they were lower than expected. They didn’t make a loss, they just didn’t report quite as vast a profit as everyone expected 3.1% growth rather than 4%.
Sainsbury’s sales grew by 3.7% in the same time and Waitrose grew by 4.1%. It doesn’t take a genius to figure out that growth levels are not a sensible way to measure success. Even if we have an outbreak of obesity, make children consumers and throw away more, all of which we do already, there’s still only so much stuff that we as a British population can buy from the supermarkets. Sooner or later there’s nowhere left to grow, surely?
For example, Tesco already controls 1 in 8 pounds spent in the UK. A growth rate of 4% means a doubling time of 17.67, so if it were to continue to grow at that rate every year, it will control a quarter of the economy by 2025. By the summer of 2076 it would own the entire country and we’d be the United Kingdom of Tesco. What would the growth rates of Sainsbury’s and Waitrose be then? Let alone any other non-supermarket businesses that feel they want a share of our spending.
Obviously Tesco will be expanding overseas and conquering foreign markets in the name of shareholder interests, so it’s not a closed system, but you see my point – measuring success by growth alone is an inherently unsustainable strategy.