From mis-selling and big bonuses to supporting the arms trade, we talk to disenchanted people who sought out an alternative
Barely a month goes by without another tale of a major UK company mis-selling to customers, dodging taxes, or generally behaving badly. Among the most notable, Barclays was fined £290m last summer as banks were caught rigging market rates and, earlier this month, energy giant SSE was slapped with a record-breaking £10.5m fine for mis-selling.
But is all this bad behaviour by corporations having any affect on customer behaviour? Apparently so. A steady stream of disillusioned consumers are seeking out better alternatives among the small providers who still know how to value their customers and deliver on their promises. We talk to five of them about their experiences.
Screen printer Jane Foster, 43, makes toys, quilts and cushions using vintage fabric. When she started eight years ago she sourced fabrics on eBay and sold her wares through the site as well, but has since turned to Etsy.
Etsy is a site designed to showcase and sell a wide range of hand-crafted goods supplied directly by the maker. Originally started in the US by a craftsman, it now has followers in Britain and the rest of Europe.
“It gives me confidence buying on Etsy as you get background on the seller, see pictures of them in their studio and it makes you trust them more,” says Jane who lives in Totnes, Devon with her five-year-old daughter Polly and her partner Jim Palmer, 63.
“I bought a lot of vintage fabric on eBay before it got so huge. Now it’s often not accurately described or arrives stained and in poor condition. And I’ve struggled in the past to get a refund. eBay used to be quite cheap but now everyone is charging more.”
She also doesn’t shop on Amazon except when she’s looking to add to her collection of second-hand children’s books: “I like to help small, independent booksellers, but you do get bombarded by emails from Amazon.”
As a student at the University of Birmingham, Philippa Parry, 25, opened a bank account with NatWest.
She is doing a post-graduate degree in sustainable development run by a London charity, Forum for the Future. But it was when she was working in Barcelona for three years at a business school that she started to question the ethics of Britain’s big banks.
“There were so many examples of where they were not acting in people’s best interests with the banking crisis and bailouts. Why haven’t more heads rolled and why are they still getting big bonuses?” she says. “I was also concerned about what they were doing with my money, whether they were supporting the arms trade and not trading ethically.”
She looked at different options for an ethical bank on campaign site Move Your Money. She chose the Co-operative Bank when she moved back to the UK in August, a switch that went through smoothly.
“It’s a little difficult when I need to cash a cheque as the Co-op hasn’t got branches in my area,” says Philippa who lives in Amersham, Buckinghamshire. “But most of the time I do online banking. Customer service is always great, I don’t have to wait for ages and the people I speak to are always pleasant. But it’s more about ethics. That’s what bothers me.”
Sales account manager Kate Brooks, 37, has experience of two major energy providers – nPower and EDF – and felt she was always treated as though she was a nuisance whenever she contacted either.
“I was really fed up with their attitude,” says Kate who lives in a three-bedroom house in Polegate, East Sussex with her partner Fred Faust, 56, and their eight-month-old baby Oscar. “They always made me feel like I was in the wrong if I rang up, even if it was simply to provide my meter reading. The people on the end of the phone just seemed to be reading from a script and I was always put in a long queue before getting through.”
She looked around and found Ovo Energy, a smaller provider. Not only was it one of the cheapest in the market for her but she liked the way they presented themselves.
“Ovo came across as keen, open and honest, and I liked that they explained about how they invest in renewable energy,” she says. She applied to move through uSwitch and found the whole process very easy.
“I’ve been so impressed with them I’ve been telling other people about them including my Dad.”
This time last year Joanne O’Connell made the decision to live for a year supermarket free. “I had ethical qualms about shopping in a supermarket, and it’s not even that cheap, so why bother?,” she says. Twelve months on and O’Connell – who you can follow on Twitter at @byesupermarkets and who wrote about her experiences online at guardian.co.uk/money/blog – is still supermarket free.
“When I started I wasn’t sure if I could manage for a fortnight, and when friends asked me how I’d celebrate the end of my challenge, I used to say ‘with a major blowout in Sainsbury’s',” she says.
“But what a difference a year makes. Swerving the supermarkets has forced me to change my approach to buying, growing and cooking food. I am spending less, but also eating better, healthier meals.”
To achieve her goal, O’Connell used the year to grow a lot of her own produce. She also took to foraging for food, such as nettles, and learnt to bake bread. For dried foods and other essentials she took to bulk buying from a wholesaler, which she says saved her around a third on supermarket prices.
IT developer Onkar Pathre, 31, was disillusioned with Virgin Media when he moved a month ago to his new home in Crystal Palace in south-east London with his wife Priya, 29, a dentist.
He was part way through an 18-month contract with Virgin for broadband, TV and landline but, despite wanting to stay with Virgin, he was told he’d have to cancel his existing contract and start a new one.
There was a charge of £174 for discontinuing the service and he would have to pay £24.99 a month on his new 18-month contract. And the fee only covered broadband and phone because Virgin couldn’t provide TV in his area.
“I’d been with Virgin for more than three years but it wasn’t prepared to simply switch the service to my new address. A friend told me about Utility Warehouse,” he says.
“It doesn’t advertise, just relies on word of mouth. And it pays the termination charges if you switch to them. I don’t have to take out a contract for broadband, so I can leave at any time.”
It turns out Pathre was given the wrong advice by Virgin and he should have been able to move without paying the disconnection charge. However, he has no regrets.
His new deal works out cheaper – costing £14.99 a month for the landline and £3.99 for the first nine months, rising to £7.99, for 14MB broadband. “The customer service seems very good so far,” he says.
New cash-counting machines to replace 689 workers, six months after 165 jobs scrapped at supermarket’s Bradford HQ
Nearly 700 back office staff are to lose their jobs at Morrisons as the UK’s fourth largest supermarket chain cuts costs after last year’s fall in profits.
New cash-counting machines are being installed in stores, meaning that 689 cash office managers and supervisors would no longer be needed, the company said. It added: “The introduction of new technology is an ongoing programme to ensure that Morrisons continues to improve its competitiveness.”
The decision comes six months after 165 jobs were scrapped at the company’s Bradford headquarters when its financial transaction processing service was outsourced to an Indian firm.
A four-week consultation has started with staff; however, it is understood that they are unlikely to be redeployed to other jobs.
The last major round of redundancies by the company was in 2006, when about 2,000 workers were axed as a result of the closure of three depots, in Kent, Bristol and Warrington.
Morrisons has been struggling recently, despite coming through the horsemeat scandal unscathed, thanks to its integrated supply chain.
The lack of an online groceries operation and its limited number of convenience stores – the two biggest growth areas in food sales – mean the company is lagging behind competitors.
The most recent data by analysts at Kantar Worldpanel revealed Morrisons’ market share fell to 11.7% in March, compared with 12.3% at the same time a year earlier; it was the only major supermarket to suffer a fall.
At its annual results last month, the company reported its first decline in profits for six years – a 7% fall in pretax profits to £879m on sales of £18.1bn. Like-for-like sales were down 2.1% and 400,000 shoppers went elsewhere.
Morrisons is the only big four supermarket yet to launch a groceries website. However, chief executive Dalton Philips said one would start in early 2014 and it was revealed bosses had been in discussions with Ocado.
The market is worth £5.6bn a year and is expected to double within a decade, with rivals at Asda, Sainsbury’s and market leader Tesco all reporting double-digit growth in online sales.
Another double-digit growth area which Morrisons has failed to capitalise in is convenience stores, which has been dominated by Tesco and Sainsbury’s.
Philips said he wants to focus attention on opening about 100 new M Local branches, mainly in London and the south east, where the business is least exposed. Earlier this year the company snapped up 62 former Jessops, Blockbuster and HMV stores from administrators after all three businesses went bust.
Supermarket teams up with council to give out ‘crisis welfare payments’ to neediest residents in form of prepaid cards
Asda has joined the UK’s biggest local authority to provide emergency welfare to some of the country’s poorest people.
Birmingham council, which represents around 1 million people, said that from 1 April Monday it would give out crisis welfare payments in the form of prepaid cards that could be redeemed only in Asda supermarkets.
The Labour authority said the cards – which Asda said were similar to their gift cards – would restrict spending to a list of predetermined goods, which would exclude tobacco, alcohol, phone-related expenditure and fuel.
As part of welfare changes in April, local authorities will take over running the non-statutory emergency welfare loans and grants known as the social fund, which are meant to help people deal with crises such as leaking roofs, broken boilers and lack of food.
After the Department for Work and Pensions said it would no longer administer social fund payments centrally, Birmingham said that, unlike other councils, it had decided not to give out small one-off cash grants and loans from its newly devolved £6.1m fund.
Instead it would offer prepaid Asda store cards and directly provide bigger items such as white goods to those in emergencies.
Last year the fund, described by Labour peer Lady Lister as “a safety net under the safety net”, helped more than 50,000 people in financial crisis in the city.
The council said it was working out how to stop people purchasing inappropriate items but said the cards were not food vouchers or tokens, and were indistinguishable from other prepayment cards accepted by supermarket chains.
Other councils have said they would also use voucher schemes or plough their social fund budget into food banks. But Birmingham appears to be the first local authority to pair up with just one supermarket chain.
Asda, which is owned by US retail giant Walmart, said its low prices offered an “efficient use of the public purse”.
Asked why Birmingham was restricing choice by partnering only with Asda, a council spokesman said the chain had been “the only main supermarket in the city willing to work with the council”. He said the council hoped the scheme would be extended to other stores after a period of evaluation.
“The scheme is being introduced and will be closely monitored and evaluated for the first three to six months. This is so we can assess how the scheme is being used, by whom, and the levels of grant, crisis payments and overall expenditure.
“This will entail very close working with the supermarkets to address any issues that arise and make further improvements .”
The council added it had decided not to issue cash payments in order to “build in an element of control by utilising payment cards”.
Asda said: “We responded to an approach from Birmingham city council, which was looking for a simple way of delivering social fund payments to claimants.
“Making money available via Asda gift cards rather than cash is a safe way to ensure claimants have access to a huge range of products at low prices, and is an efficient use of the public purse.”
Claudia Wood, deputy director of thinktank Demos, said that by using store prepayment cards, it was not possible to stop people spending on certain products. “In a supermarket you can also buy alcohol, toys, pet food, lottery tickets, everything else … you can’t stop particular products.”
Wood, who recently wrote a report on prepay cards and the benefit system, said that – aside from officials going through receipts retrospectively – the only other way to ensure spending was restricted to certain items was to get checkout staff to monitor goods as they were being bought.
“The only thing you could do would be to have someone at the checkout picking out the things you’re not allowed to use. But … the idea that checkout staff would be enforcing government policy is just ludicrous.
“[It would be] a massive inconvenience, really humiliating at the checkout, a massive imposition on staff to apply that ruling … It just wouldn’t work … I don’t think the supermarkets would stand for it.”
The supermarket chain Sainsbury’s reports higher sales for the year to the end of March and record customer numbers.
Continued here: Sainsbury’s annual sales grow 2.1%
The chancellor faces a stern test in the Commons; Greggs is urged to cut down its ambitions; retailers look to the internet
As you may have read elsewhere, George Osborne has a big week coming up. On Wednesday he will deliver what must be the most eagerly unanticipated budget in decades – not least, presumably, by the chancellor himself, who after last year’s debacle, will attempt to redefine the term tax relief by escaping from the chamber with his red box intact.
Those who claim to know about these things are expecting a dull speech as, firstly, Osborne cannot really risk another downgrade to his political credit rating; and secondly, the country’s finances are still in such a pickle that he possesses few real options.
Still, the standard tactic in such situations is to launch an attack on tax avoidance – as Osborne did last year. Then he railed against dodgers holding expensive properties within “corporate envelopes” warning: “I will not hesitate to move swiftly, without notice and retrospectively if inappropriate ways around the new rules are found.”
Let’s hope he’s limbered up. Tax advisers have been peppering wealthy clients with notes suggesting clever ways of restructuring their property portfolios, while, as one expert puts it: “I don’t use the word lightly, but this whole [clampdown] is pretty much a farce and will have cost a fortune to set up and operate”.
City wants Greggs to start slicing back stores
Of all the measures George Osborne has been tempted to introduce this week, sticking VAT on freshly baked goods probably never attracted him.
You’ll recall he tried that last year with a move dubbed the “pasty tax”, leaving the bakery chain Greggs (among others) to claim that the move could have a “material impact” on its profits and force it to close some stores.
Osborne doesn’t talk much about that aborted effort these days, but the issue of Greggs and the odd store closure does recur – as we will likely hear this week when Roger Whiteside, the chief executive who is just a month into the job, has his first stab at a major results statement.
He needs to come up with something approaching a strategy to make Greggs look more appetising to parts of the City. Top of the menu, according to analysts at Liberum, will be greater investment in the shops, cutting the rollout of new stores, and being more aggressive on closing underperforming outlets. Still, the early signs of Whiteside’s ability to slash are not encouraging. The company’s corporate website features a video of his predecessor, Ken McMeikan, gushing about ancient plans to add 600 new stores.
Retailers hope for net gains
Not long ago, retailers were preoccupied by acquiring more and more stores. It used to cause a right old stink (particularly with the supermarkets), but now that a glorified version of mail order is back in vogue this dash for more shops seems oddly quaint.
Tesco is so worried that internet shopping will make its vast warehouses even more unattractive places to shop that it spent £50m last week in the hope that the prospect of a Giraffe burger (it’s the brand, not a food scandal) will make a trip to the supermarket a family day out. If that shows how desperate things have become, we will get another reminder about the growing influence of internet retailing this week with two key clothing companies updating the City.
The biggest of these will be Next – which you may have noticed still possesses the odd store. That’s fine, but the City is more interested in the website, a business perfected years ago with Next Directory and which prompted a Panmure Gordon upgrade last week.
Then comes pure internet retailer Asos, which is expected to continue impressing, as well as unveiling a US warehouse plus updates on new websites in Russia and China. It’s a sign of how fashionable Asos has become that these projects are viewed as exciting. For other sectors, they’d be risky.