Private Investor: If you don't like Tesco, vote with your feet

Is the fact that Tesco is making so much money a good thing or a bad thing? I mean for shareholders, mainly, but there's always the nagging question of "corporate responsibility" to consider. Let's have a go.

On the face of it, a profit of £1.1bn in six months, even for a business the size of Tesco (£16bn of sales), is impressive. Some people think that making such huge amounts of money is evil, but I fail to see why. If there's anything wrong with the way Tesco operates, that is down to us. The main reason for Jones the butcher and all the other little shops failing is that we don't shop at them any more.

Maybe in a few twee market towns you'll still find them, and some farmers' markets are certainly thriving (they're mostly very good, in my experience), but, by and large, most of us make the weekly trip to the supermarket to buy everything from magazines to beer without giving the small retailer a second thought.

And if Tesco and the other chains really are abusing their market position by treating the farmers unfairly, or abusing the planning rules, or selling too much "bad" food, then that is a matter for us, too - at least through our elected representatives.

There have been many inquiries into the supermarkets (and such official investigations are being conducted even now), yet few have found much evidence for the usual charges of rape and pillage laid at the door of the big stores.

One thing the Government could do is to introduce an "organic target", like the targets we have for carbon emissions. Thus, either voluntarily or statutorily, Tesco and the others could be told to achieve, say, 10 per cent by value of its food sales in organic and/or locally grown produce. They would then comply, and the world might be a better, greener place. But would we buy the stuff, or would they have to give it away?

So, if you think that Tesco is going to eat Britain, you know what to do: shop elsewhere. There's nothing God-given about Tesco's success: look at Marks & Spencer or French Connection, or even Bhs. No one in retail ever has a licence to print money. Not even Tesco or Waitrose.

Well, are the shares a buy? I suppose the answer is that I think they're a strong hold because that's what I've done. Having seen them go from the 250p at which I started buying them a couple of years ago, to within sight of 400p, I'm quite happy with their showing. They have certainly defied the worst doomsters so far.

Now, though, the emphasis is more on the company's overseas strategy, because there is surely a limit to how much of market shares it can command in the UK. Tesco is an easy target for politicians on the make, and there are plenty of them around. If consumers complain about rising prices, the easiest thing for a minister to do is blame the retailers. Forget the monetary policy or the budget, it's all down to the evil supermarkets, isn't it? (Just as, when we have had high interest rates, the banks usually get blamed.)

The growth has to come from a brand. Some 60 per cent of Tesco's space will soon be outside the UK, making it much more of a transnational than any other group based here, although still in the shadow of Wal-Mart and, to a lesser degree, Carrefour. With Tesco overseas, I think there are two tales: inside and outside America.

Outside America, the Tesco plan has been to look at particular markets and adapt very strongly to local tastes and ways. It has worked a lot of the time, with Hungary, Japan and Taiwan being less strong than, say, Ireland.

The more worrying operation is in the United States. This is where Tesco wants to build up a West Coast retail operation and appear to be having a degree of success. Yet it makes me nervous. So many British companies have tried to make it big "over there", and come back wounded or worse. Everyone from Midland Bank, whose acquisition of Crocker Bank basically broke what was once the biggest bank in the world, to Marks & Spencer's futile purchase of Brooks Brothers, to Stagecoach's Coach USA, to name but three. Tesco may succeed where the others failed, but like British light-entertainment stars, I'm not yet convinced the Americans will "get it".

So, no more purchases at Tesco for me (the shares I mean, not its wonderful value-for-money groceries).

s.ogrady@independent.co.uk