Retail prey in the hunt for bargains

THE news that three former Tesco executives have been charged with fraud over the group’s recent accounting scandal caps what has been a grim couple of years not just for Tesco, but for the whole retail sector.

The three executives – Carl Rogberg, the former finance director of Tesco UK; Christopher Bush, the former managing director of Tesco UK; and John Scouler, the former commercial director for food – were charged on Friday in relation to the £263million black hole that appeared in Tesco’s accounts in 2014. Combined with the public scandals over the BHS pension scheme, working conditions at Sports Direct and even M&S coming in for a browbeating by MPs over staff and boardroom pay, Britain’s senior shopkeepers are under the commercial and moral spotlight.

We cannot pre-judge whether the Tesco executives committed a fraud – the law must take its course. And it should be noted that one of the three – Christopher Bush – has already made a brief statement saying he is innocent and will defend himself against any charge.

We can be sure that what went on at the group, the way it managed its relationships with suppliers and how that flattered its own figures was unacceptable.

Equally, I am not suggesting that other retailers have, or will, suffer an accounting issue like Tesco. The Tesco case is relevant to the wider retail sector as a symptom, unique and extreme, but a symptom nonetheless of an industry facing huge pressures to keep delivering results while battling tough and radical challenges.

It is no exaggeration to say the big retail names are facing a revolution. Consumers became bargain hunters during the recession and have remained so. Overseas competitors with lower cost models – think Aldi and Lidl – have invaded and the online explosion has allowed upstart competitors to establish themselves faster.

Few of our established retailers saw this revolution coming and they are losing out to those who did. This week we report on the ambitious expansion plans of Andy Bond, the former Asda boss who is leading an aggressive retail takeover spree in the UK by South African billionaire Christo Wiese. We also report on the fact that online retailer boohoo.com – largely unheard of just three years ago – has surged in value to £1billion.

Few of our major retailers appreciated the challenge that online would come to pose. Even fewer acted quickly enough to adjust their old-fashioned bricks and mortar strategy.

The transformation of our retail sector is only just beginning and the new generation of bosses have their work cut out for them.