United Kingdom- Tesco and the power of the consumer.

UNITED KINGDOM-Trust in the power of the consumer, not government, to see us through the economic crisis was the key message from Tesco boss Sir Terry Leahy.

Speaking to an audience made up of food industry leaders, Sir Terry, said following those market forces had led to "lower prices, more choice, higher living standards, more jobs, more government revenue to fund public services and more prosperity".

"Our belief in the free market and trust in consumers has created the market we have today. It’s delivered considerable benefits and industry needs to hold fast to those beliefs as we go into recession," he said, adding it was the only course of action if we are to rebuild the economy in the years ahead.

He said consumer satisfaction would be key, and businesses would have to earn consumer loyalty. "Succesful retailers are those that change fast to reflect demands of consumers, and in recession you have to change faster."

He also warned that with rising unemployment, pressure on prices would continue to grow – he highlighted the fact sales on Tesco economy lines were up 65% on a year ago. He urged suppliers to pass on lower commodity costs as quickly as possible.

Sir Terry was speaking at the annual City Food Lecture, organised by the seven City of London Livery Companies with roots in the food sector, including the Worshipful Company of Butchers.

His over-riding message was trust people, not governments and said the best markets were where the consumer was king and the best regulations were those that underpin, rather than replace, the consumer.

He warned against further regulation in the market: "Siren voices, calling for ever more regulation and intervention, must be ignored. That way lies the rocks, and the reason is simple enough. The more we regulate business, and the more that a government spends, the greater the burdens on the private sector."

He accepted that the market economy was not perfect, but said it was the best system we had.

He said the solution to problems like climate change also lay with the consumer. Too often the solution is seen as the problem of government, he told the audience, yet everyone must play their part, with consumers being key. "Get the consumer on side and the task of tackling climate change becomes possible." He said consumers will reward the businesses which offer lower carbon products and this will stimulate competition and research in the sector.

However, Professor Lord John Krebs, speaking during the panel session, criticised Sir Terry’s reliance on consumer power saying that it did not "ring true".

He said the gains Sir Terry highlighted – lower prices, more choice – had been "gained at enormous cost" to the environment, and was something we had yet to repay.

He said the environmental problems had been known for sometime, yet the consumer driven market had not delivered a solution because consumers only think about the short-term benefits, not the long-term disadvantages.

He highlighted Sir Terry’s point that while there had been growth in economy products, there was no comparable growth in greener, lower-carbon products.