Private Equity insiders admit that that running supermarkets in Britain has been way tougher than they expected. ‘The masters of the universe can usually spin straw into gold,’ said one commentator. 'But their efforts at British supermarket chains Asda and Morrisons makes them look really stupid. It’s embarrassing.’
It should have been easy. Take over a so-so supermarket chain, make a few whizzy changes, watch the valuation soar, and sell out at a massive profit. Bosh!
But Asda and Morrisons have languished, weighed down by the piles of debt issued by the private equity owners. The interest on those debts is massive, and means that neither chain can invest in stores, staff or supply chains. All the masters of the universe can do is to cut costs, sack staff and amp up the marketing campaigns.
The superhero private equity geeks are being beaten hands down by people who actually have some experience in running stores. One of those geeks sobbed to us privately. ‘It seemed like a really easy gig. Put in a few months working 24/7 to turn things around, and then walk away with millions in bonuses. Instead, I’ve been working 24/7 for years, and all I’ve got is a shopping card that gives me ten per cent off. The stores are dirty, understocked, understaffed and expensive - even I don’t want to shop there. Why didn’t I choose a deal in financial services, software or health?’
Meanwhile, all those dyed-in-the-wool, nation-of-shopkeepers types are twisting the knife, doing all the things that the private equity owned shops can’t do. Like selling food at a competitive price in a store that shoppers actually want to visit.
image from pixabay
