May 02 2008
Supermarkets have not only shaped our weekly shop, but de-skilled our cooking and reshaped our bodies. They've driven the enlargement of the road system and changed the way we use transport.
They've shifted the focus of our communities away from traditional town centres and they've transformed our urban landscape. More than a third of the UK's consumer spending passes through their checkouts, but we have no direct say in how they behave.
These are the uncomfortable facts about what represents, after our employers, the most powerful commercial relationship in our lives. Tesco, Sainsbury, Asda, Morrison and the rest say that they are entirely shaped by what the consumer wants. How else did they grow so big? Opponents maintain they curtail not only retail choices but lifestyle and community ones. They are both right.
Angst and uneaseAt one level, government recognises the unease and angst that the power and dominance of supermarkets causes. They know something is deeply wrong, but seem incapable of addressing it.
There have been dozens of investigations into the industry by either the Competition Commission or the Office of Fair Trading over the last two decades. These have covered everything from allegations of bullying small suppliers to price-fixing relationships with big ones, from stockpiling land to destroying small grocery rivals.
New raids by the OFTJust this week the OFT demanded e-mails and documents from a number of supermarkets, plus big suppliers like Unilever, Reckitt Benckiser, Procter & Gamble and Mars in an attempt to find evidence of price-rigging in various products.
On Wednesday, the Competition Commission released the results of a two-year inquiry into supermarket land and planning issues. This inquiry, the third full-scale investigation into the industry in seven years, focused mainly on competition between supermarkets, rather than what they are doing to smaller retailers. As usual, they came up with some detailed recommendations none of which will significantly hinder the expansion of the industry.
Full details of the inquiry findings
Wrong tools for the jobThis ants' nest of regulatory activity always fails to address the real problem, because the regulators have a narrow remit and the wrong tools for the job.
Take the Competition Commission. It was designed, under the original name of the Monopolies & Mergers Commission, to fight the creation through takeover of companies that would dominate an industry. Any company that exceeded a limit of 25% market share would be deemed a monopoly.
Tesco has 30% of the grocery market, but got there largely by growth not acquisition. The commission is reluctant to say that Tesco is operating against the public interest at 30% seeing that it was the public that put it there. But you could be sure that if Sainsbury wanted to buy Asda, to make an equivalent-sized firm, it would be ruled out. Yet surely a monopoly behaves like a monopoly, however it got there.
Doomed interventionsLikewise, The OFT probes into the treatment of small suppliers are as doomed as attempts to stop playground bullying.
Under the watchful eye of the OFT headmaster, they'll all say "please" and "thank you", but behind the bike sheds the six-foot tattooed 16-year-olds will have no trouble extracting dinner money from the new boys. It's intrinsic to relationships of such unequal power.
Same troubleIt is the size, power and economies of scale of supermarkets which power both the things about them that consumers like and those that we don't. Squeezed suppliers, heavy food miles, edge-of-town developments, ugly but functional architecture and the boarded-up shops of smaller retailers are the flip side of cheap convenience food, long opening hours and one-stop shopping.
The CC and OFT don't really examine the wider, softer issues of supermarkets, it's not in their remit. They won't make the connection between the generations of young adults who can't boil an egg, never walk to a shop and are often overweight and where they buy their ready-to-microwave food. It's part of a bigger story in society, of course, but it does need untangling.
Loss of consumer choiceSupermarkets like to say they are about choice, but they restrict choices to meaningless areas. We may be able to get 120 types of sugar-coated breakfast cereal in Asda or Tesco, but there's no-one who knows the difference between de-scaling a fish and skinning it, or how to prepare a rising rib of beef. Neither is there anyone to ask, as your local shopkeeper might, how the hip operation went, and how many A-levels James got.
We like the fact that we can get the latest Harry Potter book at half price from Tesco, but don't like the fact that competing bookshops are closing down. They stock thousands of titles rather than just 20 but lose money because no-one comes to buy the top-selling titles from them. That's a real loss of consumer choice.
To my mind, the threat of supermarkets transcends the Lilliputian tools of regulators, and is best described in the language of the conservationists: a threat to retail diversity from a dominant species.
The butcher, the baker, the jobless makerThere are many large towns in Britain now without a single independent greengrocer, butcher, fishmonger or baker. The skills which combine baking with business are being lost. Butchers retire and the shop closes, even when it has a loyal clientele, because there are few apprenticeship schemes to encourage a new generation in the craft.
A conservationist answer could be to create reserves around the thriving market towns which still survive, to protect independent shops in the same way as we do rare frogs or butterflies.
These could be designated retail heritage parks, safe from supermarket encroachment, with planning protection akin to those seen in national parks plus local apprenticeship schemes to keep continuity of skills.
Some answers are possibleThey would act as a beacon and a resource, aided by tourism, for the preservation of worthwhile commercial traditions. It would have spin offs in community and in architecture.
Wouldn't it be better for those lovely old Georgian or Victorian shops to have a living breathing local food business within it rather than a charity shop?
Elsewhere, where most local shops are already gone, planning rules could perhaps have a nationally enforced clause, that approval will only be given where 10% of a superstore's floor area is allocated to local food businesses, operating independently, but whose heating, light and rent would be covered by the supermarket.
So while you buy your Sainsbury baked beans and chicken tikka, you would have the benefit of local goat's cheese, wild game and organic vegetables from a farmer's market under the same roof.
While supermarkets may collectively baulk at the cost, those that agreed would have a powerful new competitive draw over rivals in the area. Impossible? No, it is exactly the regulatory approach which forced BT to open access to rivals.
None of this may come to pass. But it could, if we want it enough. I just hope someone in government is listening.
Browse books written by Nick Louth
Supermarkets have not only shaped our weekly shop, but de-skilled our cooking and reshaped our bodies. They've driven the enlargement of the road system and changed the way we use transport.
They've shifted the focus of our communities away from traditional town centres and they've transformed our urban landscape. More than a third of the UK's consumer spending passes through their checkouts, but we have no direct say in how they behave.
These are the uncomfortable facts about what represents, after our employers, the most powerful commercial relationship in our lives. Tesco, Sainsbury, Asda, Morrison and the rest say that they are entirely shaped by what the consumer wants. How else did they grow so big? Opponents maintain they curtail not only retail choices but lifestyle and community ones. They are both right.
Angst and uneaseAt one level, government recognises the unease and angst that the power and dominance of supermarkets causes. They know something is deeply wrong, but seem incapable of addressing it.
There have been dozens of investigations into the industry by either the Competition Commission or the Office of Fair Trading over the last two decades. These have covered everything from allegations of bullying small suppliers to price-fixing relationships with big ones, from stockpiling land to destroying small grocery rivals.
New raids by the OFTJust this week the OFT demanded e-mails and documents from a number of supermarkets, plus big suppliers like Unilever, Reckitt Benckiser, Procter & Gamble and Mars in an attempt to find evidence of price-rigging in various products.
On Wednesday, the Competition Commission released the results of a two-year inquiry into supermarket land and planning issues. This inquiry, the third full-scale investigation into the industry in seven years, focused mainly on competition between supermarkets, rather than what they are doing to smaller retailers. As usual, they came up with some detailed recommendations none of which will significantly hinder the expansion of the industry.
Full details of the inquiry findings
Wrong tools for the jobThis ants' nest of regulatory activity always fails to address the real problem, because the regulators have a narrow remit and the wrong tools for the job.
Take the Competition Commission. It was designed, under the original name of the Monopolies & Mergers Commission, to fight the creation through takeover of companies that would dominate an industry. Any company that exceeded a limit of 25% market share would be deemed a monopoly.
Tesco has 30% of the grocery market, but got there largely by growth not acquisition. The commission is reluctant to say that Tesco is operating against the public interest at 30% seeing that it was the public that put it there. But you could be sure that if Sainsbury wanted to buy Asda, to make an equivalent-sized firm, it would be ruled out. Yet surely a monopoly behaves like a monopoly, however it got there.
Doomed interventionsLikewise, The OFT probes into the treatment of small suppliers are as doomed as attempts to stop playground bullying.
Under the watchful eye of the OFT headmaster, they'll all say "please" and "thank you", but behind the bike sheds the six-foot tattooed 16-year-olds will have no trouble extracting dinner money from the new boys. It's intrinsic to relationships of such unequal power.
Same troubleIt is the size, power and economies of scale of supermarkets which power both the things about them that consumers like and those that we don't. Squeezed suppliers, heavy food miles, edge-of-town developments, ugly but functional architecture and the boarded-up shops of smaller retailers are the flip side of cheap convenience food, long opening hours and one-stop shopping.
The CC and OFT don't really examine the wider, softer issues of supermarkets, it's not in their remit. They won't make the connection between the generations of young adults who can't boil an egg, never walk to a shop and are often overweight and where they buy their ready-to-microwave food. It's part of a bigger story in society, of course, but it does need untangling.
Loss of consumer choiceSupermarkets like to say they are about choice, but they restrict choices to meaningless areas. We may be able to get 120 types of sugar-coated breakfast cereal in Asda or Tesco, but there's no-one who knows the difference between de-scaling a fish and skinning it, or how to prepare a rising rib of beef. Neither is there anyone to ask, as your local shopkeeper might, how the hip operation went, and how many A-levels James got.
We like the fact that we can get the latest Harry Potter book at half price from Tesco, but don't like the fact that competing bookshops are closing down. They stock thousands of titles rather than just 20 but lose money because no-one comes to buy the top-selling titles from them. That's a real loss of consumer choice.
To my mind, the threat of supermarkets transcends the Lilliputian tools of regulators, and is best described in the language of the conservationists: a threat to retail diversity from a dominant species.
The butcher, the baker, the jobless makerThere are many large towns in Britain now without a single independent greengrocer, butcher, fishmonger or baker. The skills which combine baking with business are being lost. Butchers retire and the shop closes, even when it has a loyal clientele, because there are few apprenticeship schemes to encourage a new generation in the craft.
A conservationist answer could be to create reserves around the thriving market towns which still survive, to protect independent shops in the same way as we do rare frogs or butterflies.
These could be designated retail heritage parks, safe from supermarket encroachment, with planning protection akin to those seen in national parks plus local apprenticeship schemes to keep continuity of skills.
Some answers are possibleThey would act as a beacon and a resource, aided by tourism, for the preservation of worthwhile commercial traditions. It would have spin offs in community and in architecture.
Wouldn't it be better for those lovely old Georgian or Victorian shops to have a living breathing local food business within it rather than a charity shop?
Elsewhere, where most local shops are already gone, planning rules could perhaps have a nationally enforced clause, that approval will only be given where 10% of a superstore's floor area is allocated to local food businesses, operating independently, but whose heating, light and rent would be covered by the supermarket.
So while you buy your Sainsbury baked beans and chicken tikka, you would have the benefit of local goat's cheese, wild game and organic vegetables from a farmer's market under the same roof.
While supermarkets may collectively baulk at the cost, those that agreed would have a powerful new competitive draw over rivals in the area. Impossible? No, it is exactly the regulatory approach which forced BT to open access to rivals.
None of this may come to pass. But it could, if we want it enough. I just hope someone in government is listening.
Browse books written by Nick Louth
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