Outlook: Wal-Mart's hare runs a little faster
Saturday 26 June 1999
According to the conspiracy theorists, Tony Blair has entered a Faustian pact with Wal-Mart whereby it will deliver lower prices for shoppers provided he allows the company to concrete over large swathes of rural England with more ghastly hypermarkets and their obligatory car parks. It was sealed, don't you know, over a glass of sherry in Downing Street in March.
This is news to John Prescott's Department of Environment, Transport and the Regions, which is telling anyone who will listen that planning policy towards such developments has not changed one jot. If you do not believe Mr Prescott, then just ask the Prime Minister's official spokesman.
This policy, introduced originally by the Conservative environment minister, John Gummer, is quite explicit. It obliges local authorities to adopt a "sequential approach" towards new superstores. This means they can only be built in the countryside when there are no suitable sites in the centre or the outskirts of towns and then only if the livelihood of city- centre shops will not be threatened.
In a country where one in three people do not own a car, this seems an eminently sensible way of keeping town centres alive at the same time as protecting the environment from all those car fumes and encroaching developers. It has also produced a commercial response from the supermarket giants, as the growth of the Tesco Metro chain demonstrates.
The only snag is that Mr Blair is also very keen on another policy which has considerably more popular appeal than saving the countryside, and that is the Government's campaign for lower prices.
Even though supermarket price wars generally turn out to be more illusory than real, the big chains would have us believe that prices would come tumbling down if only they were allowed to compete more effectively.
Asda says solemnly that its store development plans will continue to comply with the intention and spirit of current planning regulations. Moreover, it gets quite indignant at the suggestion that it has an understanding with the Government, formal or informal, that the rules will be relaxed.
But there can be no doubt that if its new owner were allowed to, Wal- Mart would roll out its pile 'em high, sell 'em cheap format like a shot, especially across southern England where Tesco and Sainsbury's are the dominant players.
There are, however, other ways that Wal-Mart and Co could achieve their objectives. One is to push for greater flexibility in the planning rules so that existing out-of-town sites are allowed to stock a wider range of goods. If Wal-Mart is indeed interested in adding MFI to its stable, it may have its eye on more than just flat-packed furniture.
Another option is to allow others to pile on the pressure for change. McKinsey has already advised the Treasury that planning restrictions are one of the reasons why UK retailers are less efficient and therefore more expensive than their Continental rivals.
The early smoke-signals from the Competition Commission suggest that its 12-month inquiry into supermarket prices may arrive at a similar conclusion. If so, the Department of Trade and Industry would presumably attach some weight to the recommendations.
It is hard to believe that Mr Blair would execute a complete U-turn in DETR policy and risk a potentially fatal rift with Mr Prescott. But as old Sam Walton himself might have said, there's more than one way to snare a hare.
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