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cardsharp
Grocers’ Game Of Thrones Recent newspaper headlines alleging profiteering by the major supermarket chains and the decreasing government tax revenues being levied from them, have recently made Cardsharp reflect on the whole big grocery sector. Then came the news that UKG has won the Morrisons’ greeting card contract, to add to its Asda, Sainsbury’s and Tesco accounts. Cardsharp grabs a shopping trolley to try and make sense of it all. Let’s face it, the supermarkets really are in the public eye at the moment. Record levels of food inflation, accompanied by a cost-ofliving crisis has meant that the supermarkets have been accused of blatant profiteering. An accusation that Cardsharp feels perhaps suited both the government and the Bank of England, as they would have hoped it would take some of the heat off them a bit, especially as both were being seen as dual architects of the inflationary surge in the first place.
Cardsharp feels a little sympathy for the supermarkets on this issue. If the supermarkets were exploiting the consumer and over charging to boost profits, then the grocers’ profit margins would be high. But if you look at the financial results of all of them in recent years, profit returns have been relatively modest, especially considering the gigantic levels of turnover they all generate. A more serious accusation could be made of Asda and Morrisons - specifically their lack of contribution to our tax base. In
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fact, both of these did not pay a penny of corporation tax last year, due to an anomaly in the UK tax laws that surely needs to be addressed. Both are now heavily loaded with borrowings, which means that these borrowings are deducted to show a technical loss. Hence, they avoid paying the 25% corporation tax to which Tesco and Sainsbury’s have been subject. Tesco and Sainsbury’s, who are conventionally financed paid £247million and £120million respectively. Asda was bought with debt by the Issa brothers, while former Tesco boss Sir Terry Leahy led the Clayton Dubilier and Rice (CD&R) deal (also the American private equity owners of UKG) for Morrisons. Prior to the buyout, they paid an average of more than £200million in corporation tax a year between them. All interesting stuff thought Cardsharp. The big four UK supermarkets, Tesco, Above: Game of Thrones has been praised for its scope, production values, storyline and complex characters. Similarities with the greeting card grocery plotline?! Above left: The grocers collective share of the greeting card market has increased hugely over the last 30 years. Below: Tesco won Best Greeting Card Retailer of Greeting Cards in The Retas 2023 for the second year running for its varied selection, and it is yet to be seen how its acquisition of the Paperchase brand will pan out.
Sainsbury’s, Asda and Morrisons, have a huge impact on UK greeting card sales. The massive displays of greeting cards these players have instore probably collectively constitute 40% of all greeting cards sold in the UK, and Tesco competes with Card Factory for the crown of being the largest greeting card retailer. So, whether you are a publisher who is represented in one of these grocers’ brokerages or a retailer competing for sales, there is a massive amount of interest in what is happening in the grocery sector, and that is without even mentioning Aldi, Lidl, Waitrose, Co-op, Booths and the convenience chains. It’s hard to believe, especially for anyone under the age of 50, that this development is relatively recent. Some 30 years or so ago, supermarkets stocked very few greeting cards. In the early 1990s the supermarkets’ market share of the greeting card pie was a piffling 6%. The now defunct Woolworth’s was then the market leader on Christmas cards and