Slowdown of store giants good news for the small players

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The news that Sainsbury’s is committed to its Yorkshire store opening programme despite the end of the so-called supermarket ‘space race’ will receive mixed reactions.

Both Sainsbury’s and market leader Tesco are reducing their expenditure on new sites, something that will come as welcome news for high street butchers, bakers, fishmongers and greengrocers, many of which are struggling for survival in this cut-throat environment.

Some may argue that Sainsbury’s foray out of its Southern heartlands into Northern territory could spell bad news for two of Yorkshire’s biggest and most successful companies, number two supermarket Leeds-based Asda and number four, Bradford-based Morrisons.

Yet the UK supermarket sector is one that thrives on competition.

Few other sectors of the UK economy have such highly successful rivals

Indeed a trip to a French hypermarket will have you scurrying back to the UK and embracing your trolley.

While Asda is still digesting its purchase of Netto, the one supermarket that could do with beefing up its expansion plans is Morrisons.

Morrisons was late to step up to the plate on convenience stores. At the moment it has four M Locals.

This is less than half the number of convenience stores Sainsbury’s plans to open in Yorkshire this coming year. Morrisons promises it will have 20 M Local outlets by the end of the year.

Dalton Philips and his crew need to beef up this number if they are not going to fall hopelessly behind.

n There is a certain delicious thrill about the so-called ‘shareholder spring’ that has rocked boardrooms over recent weeks.

The investor rebellion has been driven by anger that huge salaries and gigantic bonuses are out of kilter with falling share prices and pressure on profits. Finally, investors are waking up to the fact that they do have the ability to stop fat cats getting fatter.

By voting down pay deals shareholders can teach boards that poor performance does not merit salary increases.

Business Secretary Vince Cable is working on welcome changes to pay deals that would require the support of 75 per cent of shareholder votes. He will update on progress next month.

Alan MacDougall, managing director of shareholder action group Pensions and Investment Research Consultants (Pirc), has backed the proposals and said they should be brought into effect.

He said “investors’ powers are relatively limited” and shareholders “must have the right tools to do the job”.

It’s hard to feel sorry for Andrew Moss, the Aviva boss who fell on his sword this week after two major investors called on Aviva to replace him at the earliest opportunity.

Blackfriar would happily fall on his sword if it meant a £1.75m pay-off. It came after some 59 per cent of votes failed to back Aviva’s pay report last week, in one of the biggest ever shareholder protest votes.

There was more fun and games at bookmaker William Hill on Tuesday when almost half the group’s shareholders voted against chief executive Ralph Topping’s pay package, which includes a £1.2m retention bonus and an 8.3 per cent salary rise.

The shareholder rebellion has already got rid of Sly Bailey of Trinity Mirror and David Brennan of pharma group AstraZeneca.

There is also talk that Martin Sorrell could be in for a rough ride at advertising agency WPP over the pay deal awarded to the founder and chief executive, who is understood to have made over £12m in salary, bonuses and benefits last year.

Matthew Lynn, chief executive at Strategy Economics, puts it nicely: “The weapons might be proxy forms rather than Molotov cocktails and the rebellions might be staged in hotel conference rooms rather than on the streets, but there is still a whiff of insurrection in the air.

“After a decade during which executive pay spiralled higher and higher, the patience of the people who actually own the world’s largest companies – the shareholders – looks finally to have snapped,” he said.

There is now speculation from some quarters that this shareholder anger could be used retrospectively to ask questions about what happened at the failed banks and those that were deemed too big to fail and had to be bailed out by the tax- payer.

While shareholders can’t vote down the pay packets of the former HBOS directors, there is talk that the Financial Services Authority, or its new incarnation the Financial Conduct Authority, could launch an investigation.

The shareholder spring might have come too late to bring HBOS to heel, but it could still bring the former directors to account.

n If you have a view on this or any other City story please contact Blackfriar at citydesk@ypn.co.uk