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Containing Supermarkets

| Judith Whateley

Supermarkets claim that they provide choice to consumers, but in
reality they often erode real choice for people. By dominating food
retailing they take away the choice to shop in traditional shops such
as greengrocers and butchers. One study of a market town found that
town-centre retailers experienced a 64% decline in market share
following the opening of an out-of-town supermarket.

Tesco now controls 30% of the grocery
market in the UK. In April 2006, the supermarket chain announced £2.2 billion
in profits. Indeed, 1 in 8 retail pounds spent in the UK, is now spent in
Tesco. Growing evidence indicates that Tesco’s success is partly based on
trading practices that are having serious consequences for suppliers, farmers,
overseas workers, local shops and the environment.

Over the last year, Tesco has increased its
visibility both on the UK High Street and in the media. Tesco is well on its
way to having 2000 stores in the UK, plus an increasing number in Eastern
Europe, South East Asia, Japan and China. Most of the other UK supermarket
chains have store numbers in the mid-hundreds.

However, over the last couple of years,
Tesco has been repeatedly identified by suppliers, farmers, local councillors
and local campaigners as having the worst corporate practice of any of the
supermarkets.  Many organisations have highlighted
how Tesco’s market share gives them immense power over suppliers and other
retailers.

Despite Tesco’s robust denial of the
criticisms levelled against it, the public perception of the supermarket is
changing. Consumers, in general, are becoming more aware of the economic impact
of Tesco on their high streets, and are revolted by stories of the exploitation
of suppliers, especially of farm workers in the UK and overseas.

Supermarkets claim that they provide choice
to consumers, but in reality they often erode real choice for people. By
dominating food retailing they take away the choice to shop in traditional
shops such as greengrocers and butchers. One study of a market town found that
town-centre retailers experienced a 64% decline in market share following the
opening of an out-of-town supermarket.

New research by the New
Economics Foundation
shows street markets offer better choice on
fresh fruit and vegetables than supermarkets at half the price, generate
substantial benefits for the local economy and create twice as many jobs per
square metre of retail than supermarkets.

 

What can be done to curb supermarket power?

Many organizations are calling for tougher
laws to curb supermarket power. A new investigation into the UK grocery
retailing sector has just been launched and it is hoped that its
recommendations will include a tougher supermarket code of practice (first
introduced in 2002 after the EU Competition Commission found large supermarkets
operating against public interest, reducing the choice and quality of goods), a
new independent supermarket regulator and other measures to curb market share
and power.

But it is not just campaigning
organizations that are calling for policy changes. A recent ICM poll on behalf
of War on Want found that 83 per cent, of consumers polled, wanted to see new
laws to redress the balance of power between stores such as Tesco, Asda and J
Sainsbury and their employees, as well as their suppliers.

The poll also found that 56 per cent believe
the supermarkets’ focus on low prices is leading to the exploitation of
suppliers and staff, both in the UK and overseas. Just 40 per cent of the
sample agreed that low prices – the cornerstone of most supermarkets’ marketing
strategies – were inherently good for society.

In the UK we believe that together we can
convince the government to introduce policies to restrain supermarkets and
support local shops. But this will take time – and in the meanwhile we are
encouraging consumers to start changing their shopping habits, as local shops
need customers to stay in business. Local shops keep a higher proportion of
money within the local community and are often ahead of the supermarkets in
selling genuinely local food. Other ideas for encouraging consumers to ‘shop
locally’ include:

  • Produce a guide to local shops
  • Join up with local traders to run a Shop
    Local promotion to show why local shops are special e.g. a Shop Local Week with
    shops holding tastings
  • Team up with your local paper to run a
    campaign encouraging people to use their local shops – you could run a local
    shop competition to get things started asking people to nominate their
    favourite local shop
  • Talk to local traders and the Chamber of
    Commerce about producing a local shop Loyalty Card where shoppers get a reward
    for returning to their local shops

 

This article first appeared in the Conscious
Consumer magazine, issue 10.

The
author, Judith Whateley, works for Grassroots Action on Food and Farming,
a UK NGO focusing on corporate power and control in the food system. GAFF helps
co-ordinate the Breaking the Armlock Alliance and Tescopoly
Alliance
, which are both demanding new, tougher rules to curb
supermarket power and help protect farmers, workers, consumers and the
environment. GAFF also helps facilitate the Agribusiness Accountability Initiative  in Europe.

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