Unfortunately, I’ve got some bad news for a few local businessmen. The news is that competition for the goods and services they provide will get ever more intense, and will not ease off just because they would like their markets protected.

So there’s not much point in them bleating about Jersey Post delivering an Argos catalogue to every household in the Island. If Jersey Post hadn’t done it, someone else undoubtedly would have. At least with Jersey Post, Islanders will benefit as shareholders, apart from having much better access to suppliers outside the Island.

It could so easily have been someone from outside coming in to cream off the profits.
Most businessmen don’t need to be told that it’s a cruel, competitive marketplace in which they operate. So what’s their problem with Jersey Post who are simply trying to grow their business in that same competitive environment?

Is it that they believe Jersey Post has some kind of unfair advantage? Yes, there might be an advantage of size and they’ve managed to attract some clever managers who come up with good ideas for diversifying their business.

Perhaps it’s not Jersey Post they are worried about and that their primary concern is that Argos will now have access to their customers and they will lose business. Apart from the fact that some UK-based suppliers already take orders over the internet and deliver locally, Argos is unlikely to clean up unless local businesses can’t compete on price, quality or service.

Admittedly it will be difficult for some local retailers to match the prices of the huge UK chains, although many of them have joined co-operatives to benefit from increased buying power. But they should be able to compete on service and customer experience.

Some shoppers will undoubtedly prefer the simplicity of buying online and getting their items delivered by Jersey Post’s Ship2me service, but they will have to pay for that service. Many others, however, won’t know exactly want they want and will prefer to go into a local shop to talk to knowledgeable staff before they buy.

They will also want to benefit from the superior after-sales service that local businesses can provide.

But wait, did I hear a snigger? Maybe so, because the problem is that some local businesses don’t know the meaning of the word ‘service’ and they have been largely protected against outside competition so don’t have to learn.

They might now be forced to change so that everyone will benefit from the increased competition. That’s what the Treasury and Economic Development Minister tells us is needed in the Jersey economy.

The truly professional local businesses will adapt their business models and compete with the likes of Argos head-on.

But even if they can’t do that, should we be protecting them from outside competition? No of course not. It’s up to customers where they shop. Most reasonable people will prefer to buy locally if they can get a good price and good service. They might even be prepared to pay a small premium for buying locally. That’s why the Think Twice, Buy Local campaign was pretty pointless.

What we can’t do is tell people that they must not buy something just because it’s in an Argos catalogue.

What seems to incense the businessmen quoted in this newspaper is that the process is being facilitated by a States-owned company. Jersey Post is encouraging people to buy off-island to the alleged detriment of local businesses, taxes and jobs.

Of course the same arguments used to be made for protecting the British car industry, coal mining and shipbuilding, but we’ve learned a thing or two since then.

But the involvement of Jersey Post does raise an interesting issue which needs clarifying. Why precisely does the States own the whole of Jersey Post as well as 62% of the Jersey Electricity Company, the whole of Jersey Telecom – which admittedly they would like to sell – and most of Jersey Water?

The States say that these are ‘strategic nvestments’. But precisely what does that mean?

There are no longer States members on the boards of these companies. Indeed, interestingly enough, the board of Jersey Post includes the immediate past president of the Jersey Chamber of Commerce so presumably he doesn’t believe the company is doing anything to the detriment of chamber members.

So the States has no day-to-day involvement in how the company is run. As long as the States receive dividends and taxes, they appear to be happy and any regulatory issues are left to the Jersey Competition and Regulatory Authority.

But it’s a very confused area. On what basis could or should the States intervene? Does their holding of a strategic investment mean that they can change the direction of the company if they want to?

In Jersey Post’s case, it’s unlikely they would want to do so because the attempt to diversify business by introducing Ship2me is probably of more benefit to the Island than trying to mollycoddle local traders.

Not only will it help Jersey Post’s bottom line and produce more dividends and taxes, the additional profits generated will help to subsidise the enormous cost of providing the loss-making daily postal delivery to every home and business in the Island.

As the chairman of Jersey Post said in the company’s latest annual report: ‘The board’s strategy is to embrace the reality of increasing competition, regulation and therefore falling profits in the company’s traditional postal business, but to drive diversification in its activities, with the overall aim of generating sufficient earnings from unregulated business (not the postal services) to cover 120% of the subsidy needed to deliver the Universal Service Obligation (loss-making postal services).’

The chairman said that this subsidy is expected to rise to more than £5m a year by next year. If the company can’t find that money, the taxpayer will have to pick up the tab or daily household and business delivery of post will need to be seriously curtailed.
In other words Jersey Post are facing up to the reality of markets as they are, not as they would like them to be. A good message for everyone in local business.
Peter Body is editor of Business Brief magazine