Uncharted Territory

March 9, 2009

Dear Sainsbury’s. Just. Put. The Price. Of Warburton’s Seeded Batch. Back. Up.

Filed under: Cambridge, Economics, Inefficiencies, Markets, Undercover — Tim Joslin @ 9:09 pm

Maybe I should start Twittering, as perhaps I’ve already said what I want to say – and I was able to use the letter format again. Nevertheless, I’ll explain, since I consider myself a trainee Undercover Economist, although I prefer to point out failures rather than successes. I’m just a monitor evaluator kind of guy!

A little earlier on – before I was distracted into a short riposte in order to save capitalism – I stopped by Sainsbury’s in the centre of Cambridge.

One of the key items I wanted to purchase was a loaf of Warburton’s Seeded Batch (WSB) bread. I don’t consider myself overly fussy, but, after a long period of trial and error, I have established a clear preference for this particular loaf.  A slice toasted and with marmalade goes nicely with a cup of tea in the morning.  I recommend WSB, though it may not be the right bread for everyone. A while ago I was mildly concerned when a report suggested that WSB contains more than the average amount of salt compared to other loaves.  But in the end I found myself laughing in the face of excess dietary electrolytes.

It was around the time of the sodium chloride exposé that Sainsbury’s started a promotion: £1 rather than £1.51 for a loaf of WSB. Over several months when this offer has been in place much of the time, I have never once succeeded in profiting from it. The casual observer might notice that Cambridge is full of students, for whom the chance to save 51p is an opportunity not to be passed up. Loyal customers end up suffering. If there is a logical, Undercover explanation for this pricing policy I have not yet identified it. Today the inferior and more expensive (£1.59) product I ended up with is a Hovis Granary Original. Original in the sense that it was apparently unevenly sliced by hand.

Does the manager of Sainsbury’s in Cambridge city centre understand supply and demand? The idea surely is to find the highest price at which the day’s supplies of WSB sell out just before the shop closes, disppointing the minimum number of customers who may choose to shop elsewhere next time. Or, perhaps the price should be that at which profit is maximised, although, given the cost of clearing unsold product and, again, the risk of losing customers, this may be at the same point. Reducing the price to £1 and selling out by lunch-time on many days over a period of months does not seem to me the most intelligent promotion. What about giving free sample slices instead?

The Cambridge Sainsbury’s manager is obviously a bit of a keenie. Today he was also offering lemons at a special price of 10p each! What is this, the Soviet Union? Don’t we import citrus fruits from around the world in order to provide a constant supply? Is a promotion really necessary? Cambridge is an international kind of place. Are there perhaps potential lemon customers who’ve never tried one, and may baulk at 30p for a strange subtropical fruit? I suspect the true explanation is a glut of lemons in the store-room after over-enthusiastic marketing of the ingredients for pancakes with lemon and sugar for Shrove Tuesday a couple of weeks ago.

But that doesn’t explain the pile of cross-cut shredders (for paper, I presume, rather than lemons) at £10, reduced from £29.99, that I nearly stumbled into on my way out of the store. What is this? A recession warehouse clearance outlet or a supermarket?

One wonders what the manager of the Cambridge Sainsbury’s does understand, as the store can’t be accessed by car, so those shopping there arrive by bicycle or on foot. Many customers are students who, by and large, do not have access to a freezer, or at least a secure one. Why, oh why, then, all the BOGOFs and other offers on heavy, bulky items? Tomato juice is my “favourite” of the “offers” – I say it is an “offer” as this one has been in place for years, it seems. I enjoy a slurp with lemon juice (am I lucky today!) and Worcester sauce before dinner. But there is a significant saving – relative to the price of industrially squeezed tomatoes, that is – if you buy 3 cartons at once. Is there a car-park outside the Cambridge city-centre Sainsbury’s full of SUVs owned by the purchasers of these cartons? No, they have to lug them home on foot or bicycle. Smart. But this is less an offer by Sainsbury’s than a payment to the customer for tomato-juice storage.

The Director of my MBA programme was fond of pointing out that, on more than one measure, the Cambridge city centre Sainsbury’s is the busiest in the country. Part of the reason, I reckon, is that rents in the centre of Cambridge are so high that only a small number of competing food stores would be profitable.

Because it has a de facto monopoly, there’s no way to tell whether or not the bizarre pricing policies at the city centre Sainsbury’s are what the market wants. True, there’s an M&S foodhall, but that serves the sort of people – of which there are quite a few in Cambridge – who don’t go to Sainsbury’s. And vice versa.

True also, there are a couple of other food stores near where I live, a little way from the centre, but I always feel I’m in a movie when I go to them. The sort of movie where men with guns walk in and shoot the place up.

Competition would be somewhat improved, I suspect, if campaigners hadn’t objected to Tescos plans for its store on Mill Road (the store will open, I understand, but without some of the facilities Tesco wanted). At least some people would have a practical choice between the new Tesco and Sainsburys.

Denying people a choice of shop hardly seems democratic to me. Where is the need to apply the political process? – shops are not mutually exclusive.

The idea seems to be to preserve “independent” stores in Mill Road. Why the locals want to pay over the odds for milk is beyond me. And isn’t it possible that the specialist food stores on Mill Road would benefit from freeing space up from staples for higher value-add specialist products?

The concern is that Tesco would be too strong a competitor – as I pointed out en passant to my MP, if we bar Tesco from the location are we saying that we’ll close down the nearby Co-op if it sharpens up its act?

But the way to level the playing-field is to eliminate distortions of the market for – say – milk due to supermarket chains’ buyer power. If smaller retailers are at a disadvantage this should be addressed by the competition authorities, not through the planning process – as I noted in another context earlier today, the planning process is overused – arguably abused – in the UK.

I expect, insofar as the anti-Mill Road Tesco campaign has achieved its objectives, it will be counter-productive as the specialist food-stores, cafes and so on on Mill Road – which does have character – would gain more from passing trade to and from Tesco than they would lose to the new competition.

Cambridge is clogged with traffic, and it is also part of the environmental agenda to get people out of their cars.  Blocking companies’ plans for local food stores seems a perverse way to achieve a transport modal shift in the town. Green revolutionaries needs to be a bit smarter than this.

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5 Comments »

  1. Nice post! It was both amusing and interesting.

    Might I recommend the green ‘superthick’ Warburtons bread. One slice fills you up for a month and it makes toast the size of a guided bus budget.

    Comment by Steve Tierney — March 9, 2009 @ 10:55 pm

  2. […] had no idea local politics could be so interesting. It seems like only a fortnight ago that I mentioned the campaign against the Mill Road Tesco store: “…the anti-Mill Road Tesco campaign … will be counter-productive as the […]

    Pingback by Tescos and Taxis: Sanity in Cambridge Shock! « Uncharted Territory — March 23, 2009 @ 4:20 pm

  3. […] and a new supermarket of provenance as yet unrevealed (at least to me) on a site in West Cambridge. I’ve also commented on some of the shortcomings of the supermarkets that do exist in […]

    Pingback by Confessions of a Cambridge Shopper « Uncharted Territory — March 24, 2009 @ 11:17 am

  4. > Blocking companies’ plans for local food stores seems a perverse way to achieve a transport modal shift in the town.

    Are you seriously suggesting that having a 34ft Tesco lorry stopped on Mill Road twice a day for 41 minutes a shot is going to be good for Mill Road, its traffic, or its traders? That is what Tesco proposed and put forward to the government inspector who said:

    “I find that both of the realistically available servicing options would pose unacceptable risks to highway safety, which would not be outweighed by benefits or the fallback position. I therefore conclude that both appeals should be dismissed.”

    Comment by Martin — April 11, 2009 @ 4:06 pm

  5. […] of choice are limited by dominant suppliers. Supermarkets is one. I gather from the hits on my rant complaining about the Cambridge Sainsbury’s misguided promotions and on my wide-ranging discussion of attempts to reduce competition by blocking Tesco in Mill Road […]

    Pingback by Virgin on the Ridiculous – and All Tied Up « Uncharted Territory — October 23, 2009 @ 8:31 pm


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