A nation of shopkeepers falls on hard times — there's
poverty in the midst of plenty
CHRISTOPHER FILDES
The first Ho-ho-ho of the season can only be around the corner of the High Street. Cotton-wool beards are being glued into place, robes adjusted and breath tested. Already a corps d'elite of sub-editors are pol- ishing up their traditional headlines, JINGLE TILLS and YES, IT'S SPEND, SPEND, SPEND. The economy is picking up speed and the Bank of England, hoisting interest rates to cool the fever, is also running off reserve sup- plies of spending money, just in case we run short as the millennium approaches. Cheer and spending are spreading — except in the High Street itself. There, the household names of this nation of shopkeepers now exhibit a pitiful spectacle of poverty in the midst of plenty. Business is so bad that they have got as far as sacking the directors. Safe- way (gloomy figures this week) got a new chief executive last month. Sainsbury (gloomy figures this week) has kept its chief executive but has taken away quite a lot of his job. Storehouse parted with its chief exec- utive in May, has given up trying to replace him and will now dissolve into its constituent parts. Selling paperclips, nappies and lamp- shades never made any sense in the first place, except in the mind of the merchant banker who put it all together. More fees, soon, for his successors. At Marks & Spencer the fees will go to the headhunters, if they have at last found a successor to the imperi- ous Sir Richard Greenbury, thus allowing the stopgap chairman, Brian Baldock, to stand down. Price-cutting has spread to the shares, which are as low as they have been for most of the decade. Even if M 8t S's new fishcake recipe is a misjudgment, this cannot be the whole story. Have all the big names got it wrong? Or has prosperity bypassed the High Street? That plaintive sound you can hear is the first Oh-oh-oh.
Where the money goes
WE certainly seem to have found new ways of spending our money and new places to spend it. We spend more in pubs and restau- rants as the economy happily carries on overeating. We want almost anything elec- tronic, and have done wonders for Voda- fone. Our pattern of spending is shifting away from goods (where inflation is flat) to services (where it is rising). Having bought all these electronic toys, we spend more money using them. Even in the High Street, fashion- minded shops with short supply lines make
the big stores look flat-footed. In the back- ground, two bogeymen loom. One is Wal- Mart of America, the world's meanest retail- er, now twinned with Asda. The other is the Internet shopper who, at least in theory, surfs from site to site and never goes into a street. I do not believe that the High Street is a dead end, but the gap between winners and losers is widening, and those with no clear reason to be there or stay there are doomed.
A tip from Bismarck
VODAFONE has now turned the Phoney War into a real European war. Invading Westphalia, moving its tanks on to Mannes- mann's lawn, going over the heads of its boards to its owners, coolly offering to print £80 billion worth of shares to take it over — this is something new. Bismarck once said that, if a British army ever landed, he would send the police to arrest it. His successor, Gerhard Schroeder, cannot do that, or not quite. His trouble is that the owners of most German businesses do not value them par- ticularly highly. Deutsche, which calls itself the world's biggest bank and this year paid top dollar for Bankers Trust of New York, is still worth no more than Barclays, while HSEiC is worth more than Deutsche and Barclays put together. What this tells you is that owning a big German bank, even if you could get your bid past the local police, would not be all steins and skittles. At Lloyds, Sir Brian Pitman maintains that he does not want to buy a bank in any country where the local rules forbid you to economise on people, or, if you do, you are required to go on paying them. Perhaps, in Germany and France, that too will change, but not in this millennium.
Courtesy costs nothing
GERMAN companies look cheap to British buyers, now that the pound is up on its feet and the euro is flat on its back. The chart of the two currencies' relative value tells its own story. My railway correspon- dent, I.K. Gricer, mistook it for a gradient profile of the mountainous Settle and Carlisle line, with the euro beginning the year at Ala Gill summit and tobogganing down towards sea level. This week Eddie George, the Governor of the Bank of Eng- land, could be heard whistling to keep the euro's spirits up. 'As the euro-zone econo- my picks up,' he told the House of Com- mons Treasury Committee, 'I would expect the exchange rate to strengthen.' He was repaying a favour. In the long years when sterling was on the slide, it would always get a kind word from Otmar Emminger, over at the Bundesbank. Undervalued in the mar- kets, Dr Emminger would call it, and over- due for an upward correction. When asked whether, if pounds were as cheap as all that, the Bundesbank would buy some, he would change the subject. I trust that Mr George will follow his example.
One down
LORD Levene was an outstanding Lord Mayor of London, and when he handed over the keys of the Mansion House I fan- cied him to complete a classic double. 'At the other end of town' (so I was saying a fortnight ago) 'the search is on for a Mayor of London, and if, as seems perfectly possi- ble, all three favourites are nobbled or scratched, my money would be on Levene.' This is the kind of apparent coincidence that brings a chap under suspicion of insid- er trading, most unfairly, as Lord Archer would agree. One down, two to go.
Labour in vain
THE excuse of the week for not paying a bill reaches me from Richard Shepherd- Barron, whose company was told: 'Sorry, but the cheque signatory has just gone into labour.' This is a worthy rival to last week's excuse, which (as you may recall) was: 'Sorry, but the accounts clerk has gone on a pilgrimage to Mecca.' There was a happy ending, Mr Shepherd-Barron tells me: 'She had her baby satisfactorily and even man- aged to sign our cheque for a very overdue account between pains.' A truly resourceful slow payer would have given birth in Mecca.
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