Читать книгу Shopped: The Shocking Power of British Supermarkets - Joanna Blythman, Joanna Blythman - Страница 9

Supermarkets already gobble up a greedy 80 per cent of the nation’s grocery spend. Now they want the remaining 20 per cent. The long-term vision of the largest amongst them is that by 2020 or thereabouts, only two or three major players will possess more or less total control of the grocery market. This would make the supermarket sweep to power complete. These players would then have buyer power that allowed them to dictate terms to farmers, food producers and suppliers all over the world. Even the biggest brands, international household names, would be at their beck and call.

If supermarkets get their way, everything we buy, whether it is from a superstore, a smaller city store, a corner shop or a petrol-station forecourt, will be sold by a supermarket chain. There will be small shops, but not as we know them now. They will be run not by independents but by the supermarket chains. To realise this goal, supermarkets have embarked on a new mission. They’re after what’s known as ‘the small basket’, those more frequent shopping trips we make for just a few items. This market is what one industry commentator has called ‘the new competitive challenge’.

Think of it this way. In the process of sewing up the bulk of our shopping spend, supermarkets have managed to alter our perception of food shopping totally. Where people once shopped for food fairly frequently – if not daily, probably every other day – supermarkets have institutionalised the one-stop shopping trip, a weekly expedition to stock up for the next seven days under one roof. For busy working people this system has its attractions. In theory, the one-stop shop allows us to clear the decks, to get ourselves organised in one fell swoop, saving us from having to think about grocery shopping for the rest of a pressurised week. There are, of course, problems with the concept. Fresh items such as fruit and vegetables don’t all naturally last for a week. This doesn’t stop supermarkets selling them to us: they simply instruct suppliers to harvest them ‘green and backward’ so that they don’t rot and look OK on the shelves, even if they taste of zilch when we get them back home. And do you know any fishmongers who reckon that fish can be stored in domestic fridges for several days at a time, as supermarkets would have us believe, and still taste fresh when it’s cooked?

Apart from making it harder to eat really fresh food, though, the one-stop shop in a big superstore is convenient. If you need to do a marathon shop for Christmas, say, or you have run out of a number of boring basics like toilet rolls, it is indisputably useful. But even the most organised consumers forget things – we run out of milk, salt perhaps; we need a lemon instantly, or dishwasher tablets – and we’re getting increasingly disenchanted with having to jump in a car and drive to the nearest superstore to buy them. Five years ago, the average shopping visit or time taken to go round a supermarket was forty-five minutes. Now it only takes thirty-five minutes. Consumers are shopping more frequently for smaller amounts and becoming increasingly reluctant to trail around a vast retail shed to do so. They are deserting superstores for smaller outlets, traditional small shops (butchers, bakers, fishmongers) and convenience stores or ‘C’ stores which are growing in popularity. Though their ranks have severely contracted as the number of supermarkets has grown, those that are left turn a decent penny or two because we have come to rely on them more than ever before. Why leave that residual business to independents, the supermarkets ask. Their conclusion? Time to mop up the whole lot.

Smaller outlets are attractive to supermarkets because they represent a whole new opportunity to get into a market they simply could not tap with larger stores. Added to that fact is supermarkets’ continuing difficulties in getting planning permission for out-of-town stores. At the end of the day, they may well get it, but what chain wants to spend years, and vast reserves of money, arguing with councils and planners when it can simply take over existing stores or sites in well-placed, central locations, with only a fraction of the hassle? What’s more, the one-stop superstore market is becoming saturated. Competition is stiff and the scope for making profit or gaining market share is slimmer.

By contrast the potential for growth in town and city centres is huge because, killed off by – guess what? – those out-of-town supermarket developments with free parking, they have become food deserts. As well as buying up small outlets, they are stealing business from them. As the Guardian’s Brian Logan put it, ‘Not content with all those out of town developments perverting the social geography of Britain, the latest supermarket wheeze is to pop up “locally”, right next door to the few remaining independents and, like bogeymen, scare ’em away.’ Now, ironically, supermarket chains are colonising the vacant sites that they emptied with new medium-format stores with different fascia: Tesco Metro, Safeway’s Citystore, Sainsbury’s Central and smaller, convenience-sized outlets such as Sainsbury’s Local and Tesco Express. The latter is reported to have caused drops in business of 30–40 per cent for other local shops.

Typically these stores stock a relatively low proportion of fresh, unprocessed food and a high proportion of fast-turnaround prepared foods. When Safeway’s pioneer Citystore opened in Glasgow in 2003, its shelves were filled with sandwiches, crisps and fizzy drinks, although its windows were filled with nostalgic black-and-white images of a Victorian high street, complete with trams and thriving small shops, the message being, apparently, that small supermarket convenience stores were the twenty-first-century equivalent. These smaller-format stores leach business not only from remaining independents who have stayed in business – often only by the skin of their teeth, because they offered a good service, most notably long hours – but also from other outlets such as snack bars, bakers, even chain restaurants. Increasingly, supermarkets are widening their ambitions to embrace more of what Sainsbury’s calls ‘the Food Continuum’ – a concept based on the observation that supermarkets have brought about a ‘blurring of boundaries’ between cooking from scratch from primary raw ingredients and eating out. They have been instrumental in developing ‘component cooking’ (meals assembled using some prepared items), ready meals and takeaways such as Happy Bags, Hot Chicken and Indian or Chinese Banquets. Having strayed profitably into the ‘snacking on the hoof’ market and developed ‘hand-held’ snacks like sandwiches and sushi, the supermarkets’ commercial logic leads them to more potential sales, currently made in takeaway or restaurant outlets: hot pizzas ‘to go’ or hot sandwiches. The further supermarkets move away from stocking raw materials for traditional scratch cooking, and the more they move towards more restaurant-like instant meals, which present various opportunities to ‘add value’ to the basic raw ingredients by means of food processing and packaging, the better their bottom line will be.

Corner-store formats also allow supermarket chains to charge different prices for groceries. Consumers tend to assume that chains charge the same for any given line in all their stores. Asda, Morrisons, Marks & Spencer, Waitrose, Iceland, Booths, Aldi and Lidl say they operate a strict national pricing policy. But other chains don’t. This practice is called ‘price flexing’, which means that a chain sets a different retail price for a product in different geographical areas to compete with the local opposition. Price flexing cuts two ways. You can end up paying more for tea bags on the high street than you do in that edge-of-town superstore run by the same chain because there is no strong competition from rivals. Or you might be able to pick up tea bags for less on the high street because the market is particularly price sensitive there and so a supermarket chain is offering lower prices on certain lines. Somerfield, for example, told The Grocer that it runs extra promotions ‘where there is strong local competition’. The Co-op said that although it runs national pricing on key lines, ‘other prices vary by format or store size’.

When the Observer investigated the prices being charged in seven London stores in 2003, it concluded that customers were paying between 4 per cent and 7 per cent more for the privilege of shopping in supermarket ‘convenience’ stores compared with what they would pay for exactly the same products in larger-format stores in the same area. A report by the government’s Competition Commission in 2000 concluded that when carried out by big chains such as Safeway, Sainsbury’s and Tesco, this practice ‘operates against the public interest’. Both Tesco and Sainsbury’s challenged the methodology of the Commission’s analysis, and all chains operating price flexing said that the practice reflected the higher operating costs of more centrally located stores.

You might think that the regulatory authorities would be concerned about supermarkets’ tightening noose on the grocery market, but you’d be wrong. When the Competition Commission investigated them, our supermarket chains got lucky. It decided that supermarkets did not have a worrying monopoly on our grocery shopping. It divided the grocery market in two: ‘one-stop’ at supermarkets and ‘top-up’ at convenience stores. Our supermarkets had successfully fed the government and the Commission the line that these were two distinct markets without any particular bearing on one another. Any citizen with common sense could see that there is a fairly direct relationship between the decline in independent stores in the town centre and the ascendancy of out-of-centre superstores. But the Commission employed a rather narrow definition of the term ‘competition’. In its book, competition in the grocery sector meant competition between rival supermarket chains. Choice for consumer did not mean a choice of both small shops and a supermarket to shop in but a choice of supermarkets run by different chains. The logic was absurd. It implied that if you lived in a small town with a reasonable collection of small shops level pegging with one relatively small supermarket run by chain A, you were positively deprived of choice. The Commission seemed to believe that new competitor supermarkets run by chains B, C and D would give you greater choice. It ignored the fact that another supermarket would accelerate the rate of closures amongst independent shops that were just holding their own.

Given this regulatory climate, it is not surprising that the big multiples’ efforts to build their portfolio in the ‘small basket’ sector are escalating. As Richard Hyman of the market research company Verdict told The Times, ‘this was always a market that the big boys were going to get into big time’. In October 2002, the Co-op started off the big buying with its acquisition of the grocery chain Alldays. Three days later, it was no surprise to discover that Tesco had got the go-ahead from the Office of Fair Trading (OFT) to buy up the T&S chain of convenience stores, using this two-market yardstick. Tesco gained out of the deal the 450 new Express stores it created from the T&S stores, adding a cool 1 per cent to its market share, without raising a regulatory whimper. The OFT decided that the T&S acquisition gave Tesco only 5 per cent of the convenience market so that was OK. But as one industry analyst told the Daily Telegraph, with the T&S deal, ‘Tesco had done a land grab which would probably have taken them eight years to do piecemeal and probably 15 years in terms of all the planning wrangles there would have been.’ By the end of 2003, Tesco was opening Express stores at a rate of one a week.

There’s no doubt that the Competition Commission’s artificial division of the grocery market has turned out to be highly advantageous for the large supermarket chains. As Bill Grimsey, the chief executive officer of the retail and wholesale Big Food Group, put it: ‘It allows the already dominant multiples to bring their strength back into the high streets and local neighbourhoods, eventually working against the interests of shoppers, suppliers and the livelihoods of the smaller independents … They will also, in the long term, limit consumer choice and potentially lead to higher prices as competition eventually diminishes. Suppliers and consumers will be faced by a world dominated by two or three companies.’ A troubling prospect, isn’t it?