Buying Up Britain - supermarket operations - Industry Overview

Ecologist, The, Nov, 2000 by George Monbiot

STRENGTH IN NUMBERS

While they destroy smaller traders by uncompetitive means, the superstores' relations with each other are not quite as red in tooth and claw as their advertising suggests. In 1996, Tesco, Sainsbury, Asda, Safeway, Waltrose and Marks and Spencer as well as 12 of Britain's biggest food manufacturers came together to draw up a pact. They would co-operate on promotions, product launches and distribution. [19] This is not the first time that Britain's biggest retailers have worked together at the expense of their rivals. In 1993, Costco, an American 'discount club' offering goods to its members at prices considerably lower than the superstores charge, sought to open a number of giant stores in Britain. Sainsbury, Tesco and Safeway jointly hired a public relations agency and a planning consultancy in the hope of generating political pressure to prevent the stores from being built. They also took Costco to court, arguing that planning restrictions should be tightened in order to prevent its warehouses from receiving permission. They warned that planning permission for the discount stores would blight the landscape with 'unattractive trading sheds and huge car parks', while 'high streets would suffer'. [20] The chains which had lobbied for years to make planning permission for out-of-town outlets easier to obtain had united to prevent it from being granted, on the grounds that it would cause precisely the kinds of damage for which they themselves are most responsible.

Yet Tesco, according to its Glubcard magazine, is a robust defender of the local economy. 'You may be worried,' its readers were told, 'that buying meat, fish, dairy, fruit and veg from a supermarket means local suppliers lose out. You needn't be. At Tesco we support local farmers wherever possible.' [21]

It is not easy to see how Tesco can make this claim. A study of 81 small shops threatened by the opening of a new Tesco outside Saxmundham in Suffolk found that they stocked products from some 200 local producers: farmers, smallholders, wine, cheese and jam makers, beekeepers and bakers. [22] The small shops, in other words, were a cornerstone of both the local retail economy and the local wholesale economy.

Tesco, by contrast, in common with the other superstore chains, buys most of its produce from a small number of very large suppliers. According to market analysts, the big chains are attempting to reduce the number of their horticultural suppliers to no more than three for each product: every company will buy from just three cauliflower producers, for example, or three apple growers, and their produce will be distributed all over the country. [23]

The growers have to carry all of the costs of packaging and labelling the food they supply, according to the precise instructions they receive from the stores, which may change their specifications at a moment's notice. If the farmers slip up, they can expect to be severely punished.

A letter from Asda to a growers' co-operative at the end of 1998 complained that products arriving at its depot carried the previous week's prices. 'I ask that you focus your efforts on the processes that are in place,' it insisted, 'and must warn you that any further breach will result in the flat rate charge of [pound]10,000 per product error, and potentially loss of business.' [24]