monopolies The City Editor of the Evening Standard has made some interesting comments on the declaration by some of the retailing chains that they will not increase prices. He writes: “WT’S all very well to pledge stable prices — but what will it do to profits? That is the plaintive cry one hears from investors as company ait2r company announces that it will cu'> rising shop prices — despite his 1er operating costs. “Ts the Government’s fault,’ they say, ‘that things are going up. Why should we, the shareholders, be penalised for its thoughtlessness?’ Well, friends, you can relax. The big retail chains who have made known their brave decision this week reckon it’s not going to hurt them aPalle.. “British Home Stores told me today: ‘We hope it will make no difference to profits. You see, we don’t intend to do this pegging completely on our own. We shall go back to our manufacturers and try to get them to streamline and improve their processes so that they won’t find it necessary to raise their prices. We’ve got to maintain profits, otherwise our shareholders don’t like us.’ ““Tesco’s Jack Cohen told me: ‘T don’t think the pledge will interfere with our profit margins at all, if we can do more business with our own brands. Then the proprietary brands will be the only ones to suffer...’ “There are, obviously, some interesting implications for the investor in all this. Chief of them, I suggest, is the growing power of the large retail chains. This is likely to increase further rather than ‘diminish: the Tesco bid today shows that the big boys mean to grow bigger still— and fast... “The ambitious retailer starts by making a big name with the exploitation of nationally known branded goods. Then, when he has built up a loyal following, he switches more and more to his own branded goods on which the overheads are far less. “This eliminates his dependence o1 firms making proprietary goods, and gradually increases his power over the factories who agree to manufacture the things he sells under his own brand names .. .”
In fact the “public-spirited” sac-
rifices of the big retailing chains are
nicely calculated to take advantage
of the repeal of. the Resale Price
Maintenance Laws, to undercut
their smaller competitors and to
strengthen their control over their
suppliers.
Should socialists be enthusiastic
about this new wave of “rationalis-
ation”? Clearly not, unless. one
relishes the idea of the new retail-
ing oligopolies acquiring an even
firmer hold on the High Streets. In
Jan, 27, 1965 — THE WEEK
the short run this may lead to some
price cuts but as soon as competitors
are eliminated and the suppliers
disciplined the big companies will be
able to raise-prices even higher. In
America this process has already
occurred, On the other hand, social-
ists have no interest in defending the
small inefficient retailers. or in
defending the independent manufac-
turer. In fact there is no reason to
take sides in this rivalry between
two capitalist interests — but there
is every reason to be clear about
what’s actually happening. R.B.