Thursday, May 29, 2003

More on British Sunday trading laws.

Following up what I was saying about these a few weeks ago, supermarket chain Tesco have just opened a new mini-supermarket a couple of blocks from where I live. This has all the departments you expect in a larger supermarket (fresh fruit and meat, groceries, prepared meals, liquor, even an on premises bakery) but has a floor area of almost exactly 280 square metres. This is the maximum size that a British store can have and be allowed to open all day on Sunday. (The store is open 6am to midnight, seven days a week). Clearly, the supermarket chains are now quite adept at cramming everything they want to offer into a shop this size. It will be interesting to see just how much business the new store does after 4pm Sundays, because every other (larger) supermarket nearby closes at that hour. This may be a large amount of the rationale for the new store.

This is an interesting example of how things such as shopping hour regulation can affect building design, but it is all very silly.

Update: The other factor that is crucial in getting a supermarket business to work on a very small floorplate is the quality of your logistics. If you have a large selection of goods in such a shop, then you are going to only be able to carry a small number of each item at any one time, and you are going to have to restock much more frequently than is the case if you are running a larger shop. Also, you are going to have be be able to keep track of just what is selling how fast and what needs to be restocked when. This is only possible with modern computerised inventory systems. Tesco are the leader in the supermarket business precisely because their logistics systems are the best in the UK, and it is interesting to see this example of additional flexibility in store design that they have due to this.

Further Update: After five days, the new Tesco store looks a success. Every time I go in it appears to be doing a roaring trade, despite the fact that there is a larger Tesco probably 15 minutes walk in one direction, and a Sainsbury's 15 minutes walk in the other. This is London for you. Lots of people do not own cars. Twice I have seen a large delivery truck parked outside, and this evening a staff member was wandering around restocking various shelves, so I seem to have been right about the logistics issues. The store's first Sunday is in two days, and I will drop in at about 6pm to see what business is like then.

What does this prove? Well, for one thing, Tesco is very well run. If I had figured this out ten years ago and bought shares, I would have made a lot of money. As it is, this fact is now well and truly priced in.

Even Further Update: (Sunday June 1). Yes, the shop did appear to be doing a roaring trade this evening. It's (small) carpark was packed, too, suggesting that customers had come from further afield than during the week. There you have it. The Sunday trading laws have not prevented Tesco from selling people groceries on a Sunday, but have merely made it less convenient and more expensive for Tesco's customers. (This little Tesco store uses the standard way that supermarket chains make their little urban stores more expensive while pretending not too - which is they have the same "normal" prices as their larger stores, but no weekly discounts at all. (Indeed, few discounts of any kind, although I did get a perfectly decent pizza marked down due to being close to its "Best By" date, which made a perfectly pleasant dinner).

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