Everything to lose with these chains

POLEMIC; Tim Lang ponders our growing dependence on supermarkets

Tim Lang
Wednesday 12 April 1995 23:02 BST

Shareholders may have cheered, but the rest of us should be cautious about the hefty profits - £595m - Tesco announced this week. The Tesco figures symbolise what is good (for some) and bad about the British economy - fast concentrating markets mean large companies have too much power, and consumers feeling the squeezehave less choice about where they shop.

Tesco's results put paidto those proponents of Thatcherite market orthodoxy who pronounced that competition from new low-cost, small-range chains such as Aldi and Netto, and US-style warehouse clubs, would be tough for the giants but just what the recession-bound consumer would want. That analysis lies in tatters. Warehouse clubs have failed to take off, and the low-cost chains have not dented the expansion of the biggest British stores.

Britain now has an oligopoly in whichSainsbury, Tesco, Argyll (Safeway), Asda and Gateway or KwikSave (depending on whose figures you accept) account for around 60 per cent of sales. Since 1950 the share of multiples has gone inexorably up, independent small grocers have decreased, and Co- ops show a slight decline.This may be good for the survivors, but it creates neither secure employment nor a sound food economy in which the needs of all are met. Britain now has a food underclass. There are shopping deserts with lots of consumers but precious little provision.

In British law, a monopoly is deemed to be 25 per cent of a market. No one, not even Tesco, which this week claimed to knock Sainsbury off the leadership, has 25 per cent. So what is the problem? There is a sleight of hand here. To Tesco's board, the market is a plastic notion. Having bought a large chain in France and another in Hungary in recent years, it increasingly looks to the European consumer. Sainsbury is quietly mopping up stores on the east coast of the US. Safeway has gone another route, setting up a pan-European purchasing alliance with other large chains. For them, the market is international. But what about the consumer ?

You or I tend to shop within five miles of our homes. That distance has actually risen rapidly in recent years. According to Ministry of Transport figures, the total distance travelled to shop rose by 66 per cent between 1975 and 1991. Henley Centre figures show that 73 per cent of households now use a car for their main grocery shopping. No wonder the time we spend on food shopping has risen in the past 30 years. In other words, we go to work to earn money to buy a car which we use to shop for daily needs. And we are encouraged to be thrilled at the "bargain" of 10p off a pint of milk! This is absurd. And, as last month's redundancies at Northern Foods showed, it also puts people out of work.

For all their trumpeting of slashing prices, supermarkets are very good at raising them, too. The Consumers' Association's routine monitor of prices found a small overall rise in its basket of goods from 1993 to 1994 at a time when there was supposed to be a price squeeze.

One reason for higher prices is the growing proportion of pre-processed foods sold in supermarkets at a premium - we now eat a diet of more than 80 per cent pre-processed foods.

Markets should be defined locally; if bus companies are judged for local competition, why not supermarkets? Last year Tesco bought Scotland's largest chain, Wm Low, surely taking it over the 25 per cent threshold. At a borough or travel-to-shop level, most observers suspect that monopolies already exist. With the Commons Trade and Industry Select Committee about to press for an overhaul of the Office of Fair Trading and the Monopolies and Mergers Commission, where better for them to start than supermarkets?

The writer is professor of food policy at Thames Valley University and co-author, with Hugh Raven, of `Off our Trolley? Food retailing and the hypermarket economy', IPPR, 1995, £5.45.

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