Cooking the Books: Supermarkets and sub-profits (2023)

The Cooking The Books column from the March 2023 issue of the Socialist Standard

The cost of living crisis has presented supermarkets with a problem. They depend for sales on what workers spend in their weekly shop but, with workers having to spend more on energy, they have less to spend on other essentials. This is why supermarket bosses have been pressing the government to reduce the amount workers have to spend on energy and to increase the money it pays to those on benefits. Prominent among these has been Richard Walker, the owner and boss of Iceland, which specialises in selling cheap frozen food to the lower-paid and those on benefits.

Last year, in an interview on BBC Radio 4, besides calling on the government to increase universal credit, he called on supermarkets to accept making less profit. Under the headline ‘Iceland boss suggests supermarkets should be willing to make zero profits during cost of living crisis’, Yahoo News reported:

‘A supermarket boss has said businesses like his should commit to making fewer, or even zero, profits during the cost-of-living crisis as food prices continue to rise (…) Richard Walker, managing director of Iceland, has urged supermarkets to show “responsible capitalism” and reduce prices – even if it means a hit to company profits. “I think [there should be] responsible capitalism, I think businesses [should be] accepting lower or no profits”’ (tinyurl.com/9e6ru542).

Actually, this was making a virtue out of necessity. Forgoing some profits is not a case of ‘responsible capitalism’ but something imposed on supermarkets by the state of the market for their wares. As workers are having to spend more on energy and so have less to spend on their weekly shop, if supermarkets put up their prices in line with the increase in the price of their supplies they would lose sales and so profits anyway. No wonder they are calling on the government to give workers more to spend — in their outlets.

But there is another side to the story. In another, TV, interview, he told Laura Kuenssberg:

‘… we pay minimum wage at £9.50. I’m not proud of that and I wish we could pay more, but the reality is to pay £10.90, the Real Living Wage would cost us £50 million, and that’s money we don’t have’ (tinyurl.com/2ca8f7fv).

The minimum wage is already a government subsidy to employers as workers on or just above it with family dependents can get their income topped up under the tax credit scheme.

Capitalists firms catering for the weekly consumption needs of the workers who buy from them are asking to be further subsidised by the government or, rather, ultimately, by other sections of the capitalist class.

This brings out a conflict of interest within the capitalist class. Supermarkets want other capitalist firms to pay more taxes to provide their customers with more money to spend. They would even like them to pay higher wages, but they are not prepared to do this themselves. What they are out to protect is not the pockets of their customers but their own profits, short and long-term.

Richard Walker wants to become a Tory MP. If elected, he will be able to continue to campaign to further the sectional interests of his section of the capitalist class. He might not get his way, though, as governments are there to look after the general interest of the capitalist class as a whole.