If only we could sprinkle this magic in other shops

Now, I like to think that I know my way around the supermarket tills and I’m particularly proud of the way I’m conserving the family’s fortune by shopping sensibly. However, this shop was a real eye opener.

The owner of the shop claims that his prices are magic, but I think they are simply due to hard work, innovation and a clever buying and distribution network. If only we could sprinkle a little of this magic dust on our other food suppliers.

The St Helier shop that made my day – which happened to be a Sunday, which was a bonus as well – is only a discount store, of course, and the main supermarkets will tell you that you can’t really compare prices between the two. There are a lot of factors that are different and sometimes supermarket prices will even be cheaper than the discounters, when it suits their marketing strategy. But it does show you what can be done when you try hard enough.

Prices are very much in the news again (are they ever not so). The current flurry of interest stems from the Treasury Minister’s complaint at budget time that profit margins on items such as tobacco, petrol and alcohol, have appeared excessive for years. High prices for these items are not due solely to the duty the Treasury Minister imposes on them, he said, and of course this is a verifiable fact. You just have to compare the price of a bottle of whisky or a litre of petrol, deduct the taxes and duties and, hey presto, you are left with a very much higher retail price in Jersey than in the UK, for example.

Wholesalers will claim that it costs more to operate on a tiny, remote island stuck out in the English Channel and that can’t be denied, either. The question is how much more? Does it really cost ten, 20 or 30 per cent more to handle each bottle of whisky or each litre of petrol? If it does, then fine, the Treasury Minister’s complaint is groundless. But I know who I believe.

Certainly my little piece of Heaven in St Helier would seem to indicate that you can produce low prices even in a high cost environment. I fully appreciate that some of those prices are designed as ‘loss leaders’, but I couldn’t see where they were making up the difference with other items. They were all cheap.

So perhaps the answer – at least in part – is that this heavenly shopkeeper is happy with the lower margins that can be achieved with a ‘pile them high, sell them cheap’ kind of strategy.

You wouldn’t want every food store to be like that, of course, but Jersey could certainly benefit from the injection of more varied competition. We seem to have plenty at the bottom and the top end of the market, but not a lot in the middle.

The Treasury Minister’s comments were only to do with those items on which he regularly raises taxes, but of course there is also an issue with other food and grocery prices. These have also been shown to be very much more expensive than in the UK, although one local supermarket boss doesn’t agree. In the columns of this newspaper, the chief executive of the biggest food supplier accused the Treasury Minister of making ‘cheap pot shots’ and creating headlines through ‘glib comments’ at budget time. And all because the Treasury Minister said that prices were too high.

Now the Treasury Minister doesn’t need any help with his defence from me, but I think it worth pointing out that if anyone can be accused of glib comments, it’s the supermarket boss.

For example, in the article about him he is quoted as saying that it’s ‘difficult to understand claims that food prices in Jersey were 30% more expensive than in the UK’.

‘We know our differentials and they are nothing like 30%,’ he is quoted as saying. Well, that’s pretty glib. So how much is it then? Is it 29% or 1%? Isn’t this the information that would answer the question about high prices once and for all? Perhaps he considers this information commercially sensitive, although I would be surprised if his competitors didn’t already have similar information.

It’s not as simple as producing one figure, of course, and there will be a range of figures. Who knows, we might find some items where Jersey is even cheaper than the UK. The States Statistics Unit has produced such figures but the chief executive is not very impressed with them, either. However, he didn’t say why he thought the statisticians would produce misleading information.

He’s also not very impressed with the Channel Islands Competition Regulatory Authority. They have ‘done a lousy job of ensuring there is competition on shipping freight by sea’, he is reported as saying.

The impact freight costs have on higher local prices is still very much a ‘work in progress’ for the CICRA. However, even if a lack of competition in freight services is found to be a significant factor in high prices, it’s difficult to know what the CICRA can do about it. Shipping companies are not queuing up to serve the Channel Islands and the potential for making good profits is apparently not attractive enough to make them change their minds.

Perhaps the main logistics problem facing food importers is the loss of one of the major chilled distribution shippers, as mentioned by the chief executive. That leaves only one available at the moment. However, you can’t blame the CICRA for that either. In fact the chief executive, as a large importer of frozen foodstuffs, is probably in a better position to do something about it.

As you might expect, the article about the chief executive and his business empire includes the usual complaints from businessmen about a failure to cut States spending and bureaucracy. Those are the more important things the Treasury Minister should be concentrating on, he said.

Well, perhaps the chief executive should be concentrating more on trying to bring down prices. He has shown he can do it. After all, it’s only fairly recently that his group found that they could produce reasonably-priced bread. That’s after years of complaining that costs were too high in the Island for them to do so.

Peter Body is a business journalist