Buying Up Britain - supermarket operations - Industry Overview

Ecologist, The, Nov, 2000 by George Monbiot

The big supermarket chains claim that they have achieved their pre-eminence in Britain by providing people with what they want. Here, George Monbiot shows that the key to much of their success lies not within the market but outside it.

British supermarkets enjoy more political influence than almost any other corporate sector in Britain. Their huge financial muscle helps them to bend both local and national government to their will. This political power appears to have enabled them to trade on terms which would surely not be tolerated in any other area of British commercial life. They offer convenience and choice in their stores only by destroying convenience and choice everywhere else.

During the 1990s, according to the consultancy Verdict, the number of specialist shops fell by 22 per cent in Britain. [1] The smallest ones were hit hardest: between 1990 and 1996, shops with annual sales of less than [pound]100,000 declined by 36 per cent, [2] Between 1986 and 1997, by contrast, superstore numbers rose from 457 to 1,102. [3] While most towns have suffered substantial losses of shops, the impact has been even greater in the countryside: at the end of 1997 the Rural Development Commission revealed that 42 per cent of rural parishes no longer possessed a shop.

This is plainly not due to an overall reduction in trade: between 1992 and 1997 retail food sales in Britain increased by [pound]18.6 billion, or 30 per cent. [4] But while small shops lost 8.5 per cent of their trade between 1990 and 1996, large retailers gained 18 per cent. [5] The two trends -- of the decline in small independent shops and the expansion of the superstore chains -- appear to be linked.

In 1998, the government published the most comprehensive assessment of the impact of superstores ever undertaken. Its findings were unequivocal. Food shops in market towns lost between 13 and 50 per cent of their trade when a supermarket opened at the edge of the town centre or out of town. The result is 'the closure of some town centre food retailers; increases in vacancy levels; and a general decline in the quality of the environment of the centre... Even where town centre food retailers suffer an impact, but do not subsequently close, there may still be a concern that this will lead to a general decline in activity elsewhere in the centre, and adversely affect the vitality and viability of the centre.' [6]

GET A JOB

The superstores' impact on jobs is just as disastrous. In 1997, Safeway announced that it would create 8,000 new jobs over the following two years. In 1998, Tesco boasted that it would boost British employment by 10,000. In 2000 it claimed it would create a further 4,000 jobs by opening grocery stores in Esso filling stations and another 7,000 through online sales. In 1999, Sainsbury's maintained that the hundreds of new 'Sainsbury's Local' stores it planned to open would generate 10,000 jobs. In 2000 Asda promised it would create 27,000 jobs within five years. But these claims are wrong.

The refutation of them comes from the most embarrassing source: one of the superstores' own research organisations, the National Retail Planning Forum. It is financed, among others, by Sainsbury, Tesco, Marks and Spencer, Boots and John Lewis (which owns Waitrose). Its report undermines every claim the Forum's own funders have made. [7]

The Forum studied the changes that had taken place in the areas surrounding 93 new superstores. Its analysis, published in 1998, found that there is 'strong evidence that new out-of-centre superstores have a negative net impact on retail employment up to 15km away'. Total employment in food selling within that radius, it reported, decreased by 5.2 per cent. As 'retail employment actually increased by 0.1 per cent in GB outside the 15km catchment areas', then 'this decline could only be due to the new superstores in the sample'. 'In other words,' the report continued, 'if the superstores had not opened, employment would have risen. All of the reduction in employment that occurred in the catchment areas is attributable to superstore openings.' The 93 stores the researchers studied were responsible for the net loss of 25,685 employees: every time a large supermarket opened, in other words, 276 people lost their jobs. [8]

This shouldn't be surprising. The superstores routinely boast about their 'efficiency': economies of scale and clever stock control and delivery systems allow them to shift a great deal of merchandise with very few staff. The New Economics Foundation has calculated that every [pound]50,000 spent in small local shops creates one job, whereas [pound]250,000 needs be spent in superstores for the same result. [9] The supermarkets' expansion relies not only upon increasing the total volume of trade but also upon seizing trade from the economically less efficient -- and socially more efficient -- employers in the independent sector.

FREE PARKING

The free parking the superstores offer their customers is subsidised by everyone in Britain. National Traffic Surveys show that the distance travelled to go shopping increased by 14 per cent between 1989/91 and 1994/96, as the retail chains brought down the cost of driving by offering free, convenient parking. [10] This impact is not confined to out-of-town superstores: a survey of shopping journeys in inner London shows that just eight per cent of people visiting high street shops arrived by car, compared to 60 per cent of those shopping at a Sainsbury superstore in a similar area. [11] The result is more congestion, pollution and danger on the roads, which is often felt disproportionately by the people who cannot afford cars themselves.