Executives, such as Michael Green, have lost their jobs to it. Philip Green, the retail entrepreneur attempting to buy Marks & Spencer, has become acutely attuned to it, although he does not like it. Shell yielded to it yesterday when it agreed to publish details of a corporate governance review.
For Tesco, however, bowing to shareholder power remains an option rather than an obligation.
Pensions Investment Research Consultants, or Pirc, the investor lobby group, urged investors at Tesco’s annual meeting today to block agreements which allow departing directors a bonus worth up to a year’s salary.
However, when the retailer had, hours before, announced a breath-taking 7.8 per cent rise in like-for-like sales in the first-quarter, when it fattened an already robust 27 per cent share of the UK grocery market and sold 2.5 times as many clothes as a year before, Pirc’s call appeared optimistic.
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When Tesco is enjoying a Christmas-type sale boom every day, investors are unlikely to deny generosity to the company’s wise men (the company has but two women on its 15-member board). Especially when Tesco’s success so evidently involves the opposition getting stuffed.
Industry figures suggest that J Sainsbury, which in March reported a decline in sales, is continuing to suffer, with Wm Morrison, the UK’s strongest growing grocer last year, struggling to digest Safeway.
Tesco’s only serious rival has been viewed as Asda, the second-ranking grocer, which is owned by Wal-Mart. Yet even here, Tesco is believed to be increasing its lead.
Indeed, Tesco is more often being mentioned in the same paragraph as Wal-Mart than the US retailer’s British charge. Certainly Wal-Mart is of a different scale, with group sales of $256 billion (£140 billion) compared with Tesco’s £33.6 billion. The “Beast of Bentonville”, as Wal-Mart is known with a nod to the name of the Arkansas town where it is based, attracts 80 per cent of American shoppers every year.
Yet in relative terms, Tesco’s performance is outstanding. It attracts more than 12 per cent of total UK high street spending. Wal-Mart manages 8 per cent on home turf.
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In neutral territory, Tesco is showing an ability to compete on actual terms. The company this morning reported sales at foreign stores up 27 per cent in local currency terms, eclipsing even the 22 per cent growth reported by Wal-Mart from its international stores.
Wal-Mart may hope to open 140 foreign stores this year. Tesco has plans for more than 100 extra shops abroad.
Nonetheless, if Tesco is to be mentioned in the same breath as Wal-Mart, it will have to accelerate international expansion. The signal area missed by a footprint covering Japan, Taiwan, Malaysia, Korea and Thailand is China – the one country where the march of Tesco has appeared unsure. Reports have linked the company with a variety of Chinese retailers, most lately Hymart-Hymall, a 25-strong chain. Tesco’s last official announcement on the country, in April, suggested plans for Chinese expansion could be scrapped altogether.
China has already played a key part in shaping the global retail industry – Wal-Mart’s purchase of $15 billion of goods from the low-cost economy a year ago has been key to the company’s domestic price-cutting campaign.
Now the country represents the battleground on which Tesco must succeed if it has any chance of emerging as a world champion.