BBC News, 17th February 2013
Morrisons is to buy 49 stores from the failed Blockbuster film rental chain, the supermarket has announced.
The Bradford-based retailer will use the purchase to build a new convenience store franchise, especially in London and the South East.
The firm has previously declared its intention to open 70 convenience stores by the end of this year, primarily in the Greater London area.
To this end, it has already bought up seven stores from the failed camera retailer Jessops, and announced the rebranding of the 12 “M Local” stores that it already owns.
Furthermore, Morrisons has acquired a 100,000 sq ft (9,300 sq m) distribution centre in Feltham, west London.
The firm is expected to announce the inauguration of an online delivery service when it unveils its full-year results on 14 March.
“The convenience market is growing, as more people shop locally and we want to be in a position to take advantage of this.”
Robert Peston, 15th January 2013:
The evidence of past recessions is that economic growth doesn’t resume at any great velocity until unviable and inefficient businesses are put of their misery and excess capacity in various industries is eliminated.
Now, although there has been a fair old number of retailing collapses in the past year or so (according to FRP Advisory, HMV is the 32nd significant retail chain to go into administration in just over a year), there have been many fewer corporate collapses since the financial crisis of 2008 than was predictable on the basis of past economic experience.
As you will know (don’t yawn) if you read this column, this economic malaise has been characterised by many weak businesses being put on life support and turned into the living dead, or (to use what is now a cliche, so sorry) zombies.
This is good for the employees of these companies, for a while at least.
But, many would argue, it is not good for the economy in the long run. Because it preserves excess capacity, in a way that makes it more difficult for new business to grow and thrive, and it also holds back the progress of bigger more successful businesses.
So if HMV’s demise signals a rising incidence of banks and other creditors being more ruthless in putting lame companies out of their misery, that might in a fundamental sense be quite a good thing.
And if those rising corporate mortality rates were real, it would also show that banks were feeling increasingly confident that they have sufficient capital to absorb the consequential losses – which would also be a very positive sign, in that banks would also have sufficient capital to extend necessary credit to viable businesses.
So, obviously, a sensible and caring government would step in with taxpayers money to support these failing businesses and keep the, err, zombies, umm, alive so that we, ah, stay in recession. No, wait, that can’t be right…
You mean you don’t think that bailing out RBS et al. and then subsidising the whole finance industry by printing money for them was such a great idea in retrospect?
Well, I’m not an expert in financial systems, and I know how well people do when they try to assert things in my specialist field. But, that said, here goes nothing.
No, I don’t.
If the failure of RBS would have caused problems for others, then the solution is to help those others, not help the people that caused the problem in the first place. Yes, there are very many of them and they are widely dispersed, so there is an argument for taking over the bank for a few weeks, long enough to let them move their accounts. But that is long enough; let it close after that and after the loan book has been sold.
If a subsidy to the rest of the industry is merited, then it should be debated openly and handed out with honesty and openness, rather than being smuggled out of the back door of the Treasury under a different name.
If all the non-RBS bankers realised that the effect of their mistakes would, quite simply, be the complete loss of their bank, that one lesson would be far, far more effective than any form of regulation or legislation.
I agree entirely, strangely!
A friend of mine who works in finance was trying to convince me that RBS bankers et al. are getting bonuses because they are making money. I asked why I still needed to subsidise the bank then. Because that was much-needed capital he said. Why are the bankers bonuses not being used to pay back some of the debts instead. Because they’d leave RBS to work for Morgan Stanley or Goldman Sachs. But if MS or GS could get cheaper staff from RBS why do they pay bonuses to “keep” their staff? Umm.
This was during a discussion on how QE had made it impossible for me to ever buy the same sort of house that my parents had because all the bankers were getting free cash from me via the government. There was a lot of “but, but, but”…
So, what he’s saying is, if we didn’t support RBS, then all the good staff would get jobs elsewhere while the ones who cocked up would have to leave the banking industry. Quelle horreur…
As you say, the system works. People can’t help but fiddle with it until it doesn’t, though.
Pretty much. I put it the other way around, that if there were too many workers chasing fewer jobs the remuneration would fall.
I don’t actually mind that people get huge salaries and bonuses even when they lose colossal sums for a bank, except when I am an unwilling shareholder in that bank and when my savings are being used to prop up their profits and income.