A Voice For Supermarkets
November 6, 2007
In recent decades, the British weekly shop has undergone a revolution. Supermarket giant, Tesco, now controls over a quarter of our massive £128 billion grocery market and, along with its main rivals, provides us with everything from televisions and insurance to clothing and credit cards as we rumma…
In recent decades, the British weekly shop has undergone a revolution. Supermarket giant, Tesco, now controls over a quarter of our massive £128 billion grocery market and, along with its main rivals, provides us with everything from televisions and insurance to clothing and credit cards as we rummage through the vegetable aisle and pick up our bread and milk. But with the rise of Tesco and its rivals, talk of our shopping habits seems to have taken on the language of a horror story. People now bemoan the emergence of ‘ghost towns’, decry the ‘death’ of the local store and fear the looming, inexorable power of a monstrous monopoly that swallows land, spits out small businesses, destroys community spirit and ruthlessly subdues suppliers.
Amid fears over the power of supermarkets, the Competition Commission has been conducting an investigation into Britain’s grocery market to work out whether consumers are receiving the benefits of vigorous competition. After 550 submissions, 65 hearings and data from 14 000 grocery stores, the Commission released its provisional findings last week. Its initial conclusions indicate a ‘not guilty’ verdict for supermarkets on the charges of pushing competitors out of the market, bullying suppliers and limiting choice.
Predictably, these findings have caused outrage in certain quarters, with the investigation being branded a ‘whitewash’. Small businesses, environmentalists and even anti-poverty campaigners have all attacked the Commission’s report. They believe the Commission has only addressed competition between big supermarkets, ignoring smaller shops and the difficulties they face, and has not heeded concerns about supermarkets’ relationship with suppliers and the problems of shops’ environmental impact. What these groups would have us believe is that supermarkets are the root of all evil.
Unfortunately all these organisations ignore the one inescapable fact of the groceries debate. Supermarkets are primarily successful not because of unfair and immoral practice but because consumers are well served by them. It may be an unpopular view but as an inner city MP (without an agricultural lobby to satisfy) I can articulate what others in rural seats cannot ? that supermarkets have by and large been a positive force in an ever busier world. They provide excellent value for money and a phenomenal choice of highly quality produce, bringing to consumers goods they had not even heard of a decade ago. Whilst some folk whimsically reminisce about the days when one separately visited the local butcher, the baker and the greengrocer, most working people would admit that they in fact have neither the time nor the desire to queue at a range of stores on a Saturday afternoon. Even if they did, it is quite likely that local stores would not have the capacity to serve the needs of our growing population. Nor, too frequently, do such small stores appeal to the desire for innovation by an increasingly discerning consumer.
Supermarkets understand the intense competition within the groceries market and are constantly looking at ways to diversify and appeal to new customers to gain an advantage over rivals. As a result, they are generally receptive to the fast-changing desires of the consumer and lead the way in best practice. Marks and Spencer, for instance, is now aiming to be one of Britain’s most environmentally responsible retailers and is currently phasing in a charge for plastic carrier bags and beginning to use food waste to power some of its stores. Similarly, Asda is aiming to cut its packaging by a quarter over this year in response to customer complaints. Supermarkets have the power to drive through positive change which smaller businesses may not be able to initiate but can certainly follow.
Despite some of the advantages supermarkets may have over smaller rivals, the Competition Commission believes that ‘Large retailers do not always get the best price from suppliers. Convenience and specialist store numbers are not in such a state of decline to suggest that a waterbed effect exists?.The evidence is that convenience stores and specialist grocers that provide consumers with a strong retail offer will prosper.’ This is certainly true of the situation in my own constituency where the popularity of farmers’ markets in Marylebone and Pimlico has proved that smaller suppliers and stores can prosper if they are adaptable and tap into consumer demand.
The Commission does acknowledge that the practice of landbanking (where stores buy surrounding land to prevent competition from setting up shop) has the potential to reduce consumer choice. It also recognises that the relationship between supermarkets and their suppliers needs to be re-examined to ensure that supermarkets offer a fair deal and do not transfer unexpected costs and unfair risks to their suppliers. It therefore intends to recommend changes to planning laws and introduce a strengthened Code of Practice, perhaps under the jurisdiction of a ‘supermarket ombudsman’, to give suppliers a voice. This is sensible, but in no way justifies the hysteria against our successful and thriving supermarket sector.
These issues are important and it is right that they are properly addressed. However, in spite of those who believe that all problems require greater regulation and interference, the grocery issue will always boil down to consumer choice. Shoppers will vote with their feet and spend their money at the stores which cater to their needs. On that principle, supermarkets will continue to be rewarded so long as they offer value, choice, quality and ? increasingly ? an ethically and environmentally sound approach to their practice. Provided that smaller retailers are given the opportunity to do the same, local businesses will survive as long as the local shopper wants them to.