No one can accuse the supermarket groups of failing to innovate. The big three - Sainsbury, Tesco and Argyll (which owns Safeway) - spent almost pounds 2bn last year on capital investment, mainly building superstores complete with ever more ingenious facilities. The trolleys may not steer any straighter, but there is one designed for you.
Sainsbury is experimenting with 'scan-and-pack' check-outs. These contain a well beside the moving belt so the groceries automatically fall into a waiting carrier bag, saving the customer the trouble of filling it. Safeway is opening creches in some stores: at its Coventry superstore, children can be left in the care of qualified staff for pounds 1.50 an hour. It has a baby-changing area and free nappy-wipes.
But there is a catch. If these innovations indicate the future of shopping, then we have to pay for it, in more senses than one. The wide aisles, convenient parking, free carrier bags, automatic doors - they all add up. A new superstore costs pounds 15m- pounds 30m, depending on location. That is why a tin of Heinz baked beans is 3p, 4p or even 5p dearer in a modern superstore than in a discount shop such as Kwik Save, Costcutter or Food Giant.
Until now we have been happy to pay the extra prices. But there is a growing fear that the bubble will burst. Demand for food is barely growing, so how can companies go on building these costly superstores?
Doomsday scenario A is of a blighted high street, with many independent retailers sent to the wall. Once this traditional competition is destroyed, the superstores can start exploiting their monopoly power by raising prices. The customer loses.
Doomsday scenario B is that the hubristic superstore groups overreach themselves. They build far too many stores. Competition intensifies. They start to lose money. The value of their assets - mainly stores and land - plunges. Their balance sheets are shot through. The shareholders and the banks lose and the countryside is littered with decaying supermarket shells.
British supermarkets make colossal profits. Measured by operating margin, our supermarkets are outrageously profitable compared with their Continental and US counterparts: but by return on capital they score little more than average.
Each year the big three open another 70 superstores - defined as having a selling area of more than 25,000sq ft (about nine tennis courts). The explosion of new space looks set to go on for another few years. Sainsbury's chairman, David Sainsbury, says he has identified sites for 150 more stores, only 50 of them replacing existing supermarkets.
Until now, large numbers of better-off British shoppers have been happy to pay the premium price for the extra choice and convenience. Despite the outcry from environmentalists and small local traders, the arrival of a superstore in town usually meets little serious resistance. But, with poverty and unemployment on the increase, even the grocers themselves are beginning to wonder privately how much longer the growth can go on. The bogy of 'saturation' is already a common fear among their shareholders, to whom two big grocers have already had to go cap-in-hand for more money.
Britain has 800 superstores. There will be well over 1,000 by 1996, according to retail consultants Verdict Research. Supermarkets all agree that cannibalisation - whereby their new stores take trade away from their neighbouring stores - is getting worse. And the more the older stores lose trade, the more likely they are to be neglected: Safeway's eight trolley models are not available in its older shops.
The impact is already showing through in the sales figures. After stripping out inflation and the benefit of new openings, sales volumes are barely growing at all for the upmarket grocers. For a while last year, Tesco, the great success story of the Eighties, was going backwards.
That compares with healthy increases in volume by the discounters, which continue to see real increases in sales per square foot of 10-15 per cent despite, or possibly because of, the recession. Kwik Save, controlled by the Jardine Matheson trading empire, has achieved phenomenal growth. It is now the third biggest retailer of packaged groceries and is one of the biggest 100 quoted companies in Britain.
Other discounters such as Aldi of Germany and Netto of Denmark are also expanding. Carrefour, the French supermarket giant, opened its first UK discount store, Ed, in December outside Maidstone in Kent. The first of the US warehouse clubs, CostCo, bought its second site in the UK this month. Its giant sheds will offer food, clothing and household items at low prices to 'members' who pay a modest annual fee.
The customer base of the big three is shrinking. Fewer shoppers than two years ago now patronise them, but those who do still shop there are filling their trolleys higher and higher. By diversifying into new product areas, the three hope to persuade their affluent but shrinking customer base to spend more. It is a telling strategy.
In the Seventies and Eighties, the supermarket groups greatly reduced the ranks of independent high street butchers, bakers, greengrocers and off-licences. The number of independent grocers fell from 116,000 in 1962 to 32,800 in 1992. In the Nineties, the independent chemists, florists, dry-cleaners, post offices, video shops and newsagents are threatened.
Every sign points to the superstores winning any contest with their high street competitors. They offer long opening hours and the convenience of a one-stop shop. Safeway claims there is only one place in the UK where you can renew your passport on a Sunday: the post office in its Glasgow branch.
Superstores have another advantage. They can schedule labour to meet peaks and troughs in demand. Part-timers are cheap to employ and provide flexibility. Of a superstore's complement of 200 staff, perhaps only 30 will be full-timers.
The polarisation of grocery shopping has accelerated. The prosperous with jobs and cars use a superstore, choosing their food from 15,000 different lines and taking in a large chunk of non-food shopping at the same time, then have a quick cuppa at the in-store cafe and buy petrol on the way out. They have neither time nor inclination to worry about bargain-hunting. They want quality and convenience.
It is very different from the shopping trips of the poor and the penny-conscious, who arrive by bus at discount stores. They fill their wire baskets from boxes. The no-frills range is narrow because the check-out girls have to memorise the prices.
Both types of store are highly profitable. It is the middle-ranking stores that look most vulnerable. Gateway is the glaring loser. Bought for pounds 2.5bn in 1989 in a leveraged buy-out that went horribly wrong, its parent, Isosceles, is heading for its third financial restructuring in as many years. Shareholders acknowledge that their investment is worthless and its bankers are expected to write off hundreds of millions of pounds of loans.
The dismantling of the 600-store group, with includes Somerfield, SoLo and David Grieg, must be a possibility, despite denials from Isosceles.
Meanwhile, the big three continue to plough money into superstore development, confident that shoppers are prepared to pay the premium price. Sainsbury, stung by Safeway's trolley range, is retaliating with adjustable safety straps on its trolley toddler seats. How long before air-bags are fitted as standard?
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