Leading us up the aisles

Supermarkets conquered the high street a long time ago. Now, says Jane Hughes, they are beginning to gobble one another up. Tim Dowling, right, profiles typical shoppers

irst there was price. Pile it high and sell it cheap was Tesco's saying. Good food costs less at Sainsbury's boasted its staunch rival. Then came the era of supermarket choice: thousands upon thousands of product lines, from fresh fruits we'd never heard of before to cook-chill foods, tempting us to sample a different culinary tradition every night. But now it looks as if the days of choice are also coming to a close for the supermarket shopper. Not because the consumer will have less to pick from in the racks and aisles of the big chains, but because those very businesses are becoming ever bigger, swallowing smaller fry to enlarge their market share.

Last week's announcement of the merger of Asda and Kingfisher - the retail group that owns Woolworth's - was a significant sign of less choice in the future rather than more. The pounds 18bn deal will create the biggest retail chain in Britain, and could well lead to American-style supermarkets, with a range of stores housed under one roof.

Other supermarket chains are likely to follow suit, with a wave of mergers leading to even fewer choices of shops. The result, say retail experts, is that within 10 to 15 years, the battle for supremacy within the pounds 60bn sector will see the survival of only three or four large chains. There is, it seems, an unstoppable momentum to the aggrandisement process. All the major chains are aiming for a "critical mass" where they achieve the kind of economies of scale that strengthen their buying power and allow them to double up on desk jobs.

However much we all pine for the days of butcher, baker and candlestick- maker high streets, our shopping habits have long been dominated by supermarkets. Britain has the highest proportion of large supermarkets to population in Europe, and big brand stores are now as ubiquitous as corner shops once were. And they do appeal to most customers, who, according to research conducted by the retail consultancy Verdict, have three things on their mind when planning a weekly shop: product range, convenience and price.

The one-stop shop a la continental hypermarket, which the Asda merger has brought a step closer, may be just what they want. There is likely to be considerable crossover of merchandise between Asda and the Kingfisher stores, which include B&Q, Comet and Superdrug, with the possibility of Asda's ground-breaking clothing line, George, going on sale inWoolworth's.

The move will no doubt have concentrated the minds of Asda's rivals. According to Mike Godliman of Verdict, the biggest firms are under pressure to lure in shoppers with sweeteners, be they special offers or loyalty cards. That means their profits have been put under severe pressure, leading them to cut costs further. One way of doing this is through mergers and acquisitions.

Just how fierce the competition already is in supermarketing was illustrated by Friday's announcement that Sainsbury's was cutting 300 jobs in its attempt to revive its flagging fortunes. Two years ago Sainsbury was the number-one chain, but it lost out to Tesco, which has since increased its market share from 15.2 per cent to 15.8 per cent. Sainsbury's problems, say analysts, are due to losing its core middle-class shoppers. A disastrous multimillion-pound advertising campaign, "Value to shout about", did nothing to restore their support.

At this level it's hard to see how mistakes could be made, yet alone tolerated. Yet the indications are that while Tesco raced ahead with its strategy of innovation, particularly in sectors such as health and beauty, Sainsbury's did an M&S and took its eye off the ball. "Over the last few years Tesco has become more aggressive and more focused on what their customers want," says Professor Ian Clarke of Durham University.

"Sainsbury's moved more slowly because of its bureaucratic culture and the number of people involved in decision-making."

For supermarkets today, two other shadows hang over them. One is the investigation by the Competition Commission into pricing. The other is competition from cost-cutting newcomers who may try to find a niche at the bottom of the market.

In today's global economy the enemy without is as ferocious as the enemy within. Any let-up in the battle for market share could simply lead to interest from foreign buyers. The American retail giant Wal-Mart is thought to be an increasing threat with speculation that both it and Carrefour of France might expand into Britain. Sainsbury's could be particularly vulnerable, again possibly from Wal-Mart, following the fall in its share price over the past six months.

The future, as Asda has acknowledged, lies not only in merger but diversification - into banking, clothing, on-line and home shopping. As Mike Godliman says, Sainsbury's way of turning the corner will be through this route. Its banking arm, with nearly 900,000 customers, could save its bacon yet.

WAITROSE:

In spite of recent price-cutting promotions, Waitrose is still frequented by people who believe one can never pay too much for six eggs and a pint of milk. The limited range and large number of organic products attract busy singles, puffa-and-pearls Sloanes and anyone else willing to spend a little more in order to shop in its faux-genteel atmosphere. Also in the scrum are men in suits, dowagers trying to give the impression that someone normally does their shopping for them, dinner party guests who forgot to buy wine at Tesco that afternoon, and bewildered tourists who don't know there's another way.

KWIKSAVE:

Populated mainly by harried mothers and old women, with a fairly high proportion of troubled loners thrown in, KwikSave is the preserve of people who remember the days when shopping wasn't supposed to be fun. If Sainsbury is home to Audi Man and Asda the first choice for Mondeo Man, KwikSave is the place for people who don't have cars. Why else would you shop there when there's a gleaming new superstore just 35 miles down the road? For all that, there is a forthrightness in KwikSave's pile it high, sell it cheap ethos, and no one there will ever ask if you have a loyalty card.

TESCO:

On Sundays in particular, Tesco's clientele seems divided between people who think they are at an amusement park and people who think they are at church. Impulse-buyers outnumber shoppers proper. Regular customers include couples who are too much in love to realise that only one of them has to do the shopping, designer-cardigan-wearing men using mobile phones to describe to their wives the range of seafood on offer, and children begging their mothers for mortadella. There are also an increasing number of Sainsbury defectors looking lost in the nappy aisle. Loyalty is not that big a factor since, for most people, choosing between Sainsbury

and Tesco is still a matter of working out which is nearer to home, and going to the other one.

ASDA:

As Mondeo Man's second home, Asda may be the Tory party's grocer in the same way that Tesco is New Labour's. White socks and baseball caps are still the rule for men, mismatched track suit top-and-bottoms for women. It's also a good place to catch office managers and secretaries bulk-buying instant coffee and UHT milk. Consistently low prices attract those with an eye for a bargain. The cavernous aisles and large stock of non-food items make it ideal for the one-stop, eggs-and-jeans-in-one basket shopper. Despite being the spiritual home of trolley rage, Asda is nevertheless an up-and-coming supermarket with a clientele who are just beginning to realise that there is a third way between the sliced white loaf and the sliced brown loaf.

REFUSNIKS:

There remains a small proportion of shoppers who eschew greenfield-sited superstores, preferring instead a daily pilgrimage to a specialist fishmonger, free-range butcher, Portuguese baker and organic greengrocer. While such shoppers appear to be motivated by an altruistic desire to save the high street, they're more likely driven by snobbery, and they clearly have a surplus of two things few of the rest of us possess in sufficient quantity - time and money. It's also very unlikely they can go for any length of time without patronising the nearest supermarket, since their children will eat nothing but a particular brand of Day-Glo orange processed cheese. In the end they send the au pair to Tesco, so they can keep their appointment with the olive oil importer.

SAINSBURY:

Big-list shoppers and two-trolley families abound. Sainsbury is a family kind of place, frequented by the sort of people who aren't afraid to bicker in public. It's also just behind Asda in the child tantrum stakes. The truly aspirational - young couples with his-and-hers designer eyewear - have now mostly forsaken it for the nearest Tesco, leaving behind the ruthlessly devoted and people who are too lazy to learn another aisle system. When you hear about people running out and buying millions of eggs because Delia said so, you somehow imagine that they're going to Sainsbury. By and large the clientele seems wearily self-satisfied in a way that clearly got right up that Mardi Gra Bomber's nose. It is Stepford shopping at it finest.