Don't forget the shopkeepers

Don't forget the shopkeepers

Bulletin article
Bernard Hughes
01 October 1999

Commission President Romano Prodi has promised a fundamental review of the EU's priorities. He should encourage the Commission to think more about service industries. The Commission's very structure reflects a Europe that no longer exists, that of the 1970s. Thus it still pays great attention to car manufacturers, although the number of people directly employed in British motor manufacturing is only 30,000 more than the 180,000 who work for Tesco in the UK.

That comparison illustrates the profound changes that have reshaped our economies over the past 20 years. The previous Commission struggled to notice the massive growth in the contribution of services to both jobs and wealth creation. But if the Prodi Commission is serious about promoting innovation and entrepreneurship, it must recognise the contribution that services can make to the creation of wealth. In particular the Commission needs to boost its knowledge and understanding of retailers. One reason why retailers have not been taken seriously is that they do not have the geographical concentration of cars, coal or steel. Being ubiquitous, they lack political clout.

Yet few industries are so exposed to such a broad range of EU regulations as supermarkets and chain stores: policies on the environment, food, agriculture, the single market, transport, tax, consumer rights, employment and external trade all affect retailing.

Consider some examples of the EU failing to listen to the concerns of retailers. First, the EU fixed the changeover to the euro for 1 January 2002. This will be a nightmare for staff, who will have to cope with this massive organisational exercise during the holiday period, when it will be hard to explain the changes to customers. In contrast, the British government has sensibly said that, if Britain joins the euro, the switchover to notes and coins will be in February.

Second, the proposed extension of the Working Time Directive to cover lorry drivers creates problems for the retailers' distribution networks. For example, the proposal to limit night-time driving to a shift of eight hours undermines the retailers' attempts to reduce day-time lorry driving. If implemented, this proposal would add to congestion on the roads during day-time.

Mr Prodi's decision to abolish the Commission's industry directorate, and to replace it with a Department for Enterprise and the Information Society, under Finnish commissioner Erkki Liikanen, is welcome. Hopefully this new department will recognise that Europe's leading retailers are complex enterprises deploying much new technology - such as second-generation bar coding, internet-based home shopping and electronic data interchanges between suppliers - that enhances the competitiveness of the European economy.

With more than 22 million EU citizens working in commerce, policy-makers must come to terms with its crucial role in the expansion of employment, competitiveness and consumer choice. At present, not many Commission staff understand the importance and subtlety of the supply chains which link manufacturers to retailers. The efforts of supermarkets to cut waste, inefficiency and delays out of supply chains help to bring about not only a culture of leanness in manufacturers and retailers, but also lower prices and additional wealth.

Commission staff should appreciate that the retail business is closely in touch with what consumers want. Thus if the regulators do not listen to the views of retailers, their regulations may ignore consumer interests.

Does the new Commission understand that the service sector can create wealth? Does it recognise the tremendous challenges and opportunities offered by retailing? And are its staff equipped to address the many policy questions and regulatory details - ranging from electronic commerce to the practicalities of implementing the euro - which affect retailing?

Retailers do not want a directorate general of retailing experts, drafting special laws for supermarkets; they do want commission officials to talk to them and make an effort to understand their businesses.

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