Supermarkets kill free markets as well as our communities
Across the country local shops have been wiped out by supermarkets. This is an issue for the right as much as the left
Peter Wilby
A few weeks ago our last local butcher closed. When we moved to this suburban Essex town 40 years ago, it had six specialist shops selling fresh meat. The last independent greengrocer disappeared nearly two decades ago. Happily, we still have an independent baker close by, and even a fishmonger a brisk 25-minute walk away. But for how long?
Across the country the small retailer is being wiped out. In the whole of Britain there are fewer than 1,000 specialist fishmongers, 7,000 butchers and 4,000 greengrocers, and barely 3,000 independent bakeries. In all these categories, the number of specialists has fallen by 90% since the 1950s, and at least 40% in the last decade alone. They have been driven out by supermarkets, which now sell 97% of our food, with four chains accounting for 76%. Next to the motor car, nothing else has so radically changed the look and texture of our environment over the last half-century – creating what the New Economics Foundation calls "clone-town Britain" where every high street has the same shops.
Until now politicians have had almost nothing to say about it. However, last Sunday the Labour leader, Ed Miliband, was asked about the "Tesco-isation" of high streets – a subject prompted by two riots in Bristol over a Tesco store – and said: "I think that is an issue, yes, and it is something that we're looking at."
Hardly a rallying cry, but an encouraging change from the standard political response, endorsed by the Competition Commission in 2008, that consumers like the low prices, range of goods and quality offered by supermarkets. An advance too from Labour's position in Scotland: in February it helped defeat the SNP minority government's proposal to impose a "supermarket tax" on retail premises worth £750,000 or more.
Even the "good for consumers" defence of the big stores requires scrutiny. Supermarkets may offer mangoes and kiwi fruit as a blessed relief to generations who recall the surly greengrocer grunting "no demand for it" when asked for anything out of the ordinary. But the option to buy locally grown produce is increasingly closed off; many varieties of English fruit disappeared long ago. Supermarkets stock food not for its taste, but for its longevity and appearance. Conventional economists count numbers, assuming that a huge increase in toilet roll colours represents an unqualified gain to the consumer. They neglect more subtle dimensions of choice.
The central issue, however, is whether "what the consumer wants" should close down the argument. What people want as consumers may not be what they want as householders, community members, producers, employees or entrepreneurs. The loss of small shops drains a locality's economic and social capital. Money spent in independent retail outlets tends to stay in the community, providing work for local lawyers and accountants, plumbers and decorators, window cleaners and builders. US research finds that every $100 spent at a local store generates 60% more local economic activity than $100 spent in a chain store down the road.
It also finds that, after the arrival of a big supermarket, participation in local charities, churches, campaign groups and even voting declines sharply. As Jane Jacobs argued in The Death and Life of Great American Cities (1960), communities are created by myriad small daily encounters: getting cooking tips from the greengrocer, hearing about a job from the butcher, recommending a good plumber at the bakery, exchanging opinions in the pub.
"The sum of such casual, public contact at the local level," wrote Jacobs, "…is a feeling for the public identity of people, a web of public respect and trust." Supermarkets minimise human contact in the interests of efficiency and convenience, most recently by introducing self-service lanes for payment. As one critic put it, they "cut the threads that hold an engaged community together".
Such issues should concern the right as much as the left: indeed, the most hard-hitting recent report on supermarkets came from ResPublica, the "red Tory" thinktank, and points out that only 12% of Britons hold business assets – and that, when monopoly goes unchecked and a sector of the economy is in effect closed to new entrants (as the grocery sector largely is), we start to "practise capitalism without capitalists". Becoming a small retailer once allowed an ordinary working man or woman, and particularly an Asian migrant, to aspire – often after redundancy – to independence, self-reliance and upward social mobility.
Moreover, supermarkets have become not only a monopoly, giving consumers a diminishing choice of food outlets, but also a monopsony, giving suppliers little choice of buyers for their produce. They have used this power ruthlessly, forcing down prices and increasingly dictating to suppliers what they produce, where they produce it and how they package it. The casualty rate for small producers, unable to survive on the supermarkets' terms, is almost as great as for small shops.
The effect on wages and working conditions in the food industry is well known, but the effect on what is supposed to be a free market is less often considered. Eastern European regimes, dictating from remote, central offices who could grow how much of what, were once regarded with horror. Even western governments were denounced when they adopted industrial policies to choose "winners" and "losers". Tesco does that every day, and its suppliers have as little recourse to legal or political redress as a Soviet peasant.
The supermarkets are classic examples of what has been called the tyranny of small choices. Any rational individual will buy most of his or her food and household goods from a big store because prices are lower, choice greater, quality more consistent, and service speedier. I may have the time and money to tour smaller shops. My neighbour, while recognising he may get something better from a specialist retailer, may judge that it will not be so reliably better (for my parents' generation, supermarkets were liberators from the risks of mouldy cheddar and maggoty apples) as to justify the extra cost and time. Neither of us will take much account of community cohesion or local employment, still less of the dangers of monopoly and monopsony.
This is where we should look to politicians for a larger view. They need not confront supermarkets directly, which clearly terrifies them. But they can partially re-create, and preserve what is left of, the independent retail sector through, for example, tax concessions; a community right to take over or find buyers for threatened businesses; and enhanced powers for local councils to protect retail competitiveness. This is an issue – straddling political and ideological boundaries and putting flesh on the abstractions of communities, big societies and social mobility – that Miliband and the Labour leadership, encouraged by the stirrings in Bristol, should seize.
Until now politicians have had almost nothing to say about it. However, last Sunday the Labour leader, Ed Miliband, was asked about the "Tesco-isation" of high streets – a subject prompted by two riots in Bristol over a Tesco store – and said: "I think that is an issue, yes, and it is something that we're looking at."
Hardly a rallying cry, but an encouraging change from the standard political response, endorsed by the Competition Commission in 2008, that consumers like the low prices, range of goods and quality offered by supermarkets. An advance too from Labour's position in Scotland: in February it helped defeat the SNP minority government's proposal to impose a "supermarket tax" on retail premises worth £750,000 or more.
Even the "good for consumers" defence of the big stores requires scrutiny. Supermarkets may offer mangoes and kiwi fruit as a blessed relief to generations who recall the surly greengrocer grunting "no demand for it" when asked for anything out of the ordinary. But the option to buy locally grown produce is increasingly closed off; many varieties of English fruit disappeared long ago. Supermarkets stock food not for its taste, but for its longevity and appearance. Conventional economists count numbers, assuming that a huge increase in toilet roll colours represents an unqualified gain to the consumer. They neglect more subtle dimensions of choice.
The central issue, however, is whether "what the consumer wants" should close down the argument. What people want as consumers may not be what they want as householders, community members, producers, employees or entrepreneurs. The loss of small shops drains a locality's economic and social capital. Money spent in independent retail outlets tends to stay in the community, providing work for local lawyers and accountants, plumbers and decorators, window cleaners and builders. US research finds that every $100 spent at a local store generates 60% more local economic activity than $100 spent in a chain store down the road.
It also finds that, after the arrival of a big supermarket, participation in local charities, churches, campaign groups and even voting declines sharply. As Jane Jacobs argued in The Death and Life of Great American Cities (1960), communities are created by myriad small daily encounters: getting cooking tips from the greengrocer, hearing about a job from the butcher, recommending a good plumber at the bakery, exchanging opinions in the pub.
"The sum of such casual, public contact at the local level," wrote Jacobs, "…is a feeling for the public identity of people, a web of public respect and trust." Supermarkets minimise human contact in the interests of efficiency and convenience, most recently by introducing self-service lanes for payment. As one critic put it, they "cut the threads that hold an engaged community together".
Such issues should concern the right as much as the left: indeed, the most hard-hitting recent report on supermarkets came from ResPublica, the "red Tory" thinktank, and points out that only 12% of Britons hold business assets – and that, when monopoly goes unchecked and a sector of the economy is in effect closed to new entrants (as the grocery sector largely is), we start to "practise capitalism without capitalists". Becoming a small retailer once allowed an ordinary working man or woman, and particularly an Asian migrant, to aspire – often after redundancy – to independence, self-reliance and upward social mobility.
Moreover, supermarkets have become not only a monopoly, giving consumers a diminishing choice of food outlets, but also a monopsony, giving suppliers little choice of buyers for their produce. They have used this power ruthlessly, forcing down prices and increasingly dictating to suppliers what they produce, where they produce it and how they package it. The casualty rate for small producers, unable to survive on the supermarkets' terms, is almost as great as for small shops.
The effect on wages and working conditions in the food industry is well known, but the effect on what is supposed to be a free market is less often considered. Eastern European regimes, dictating from remote, central offices who could grow how much of what, were once regarded with horror. Even western governments were denounced when they adopted industrial policies to choose "winners" and "losers". Tesco does that every day, and its suppliers have as little recourse to legal or political redress as a Soviet peasant.
The supermarkets are classic examples of what has been called the tyranny of small choices. Any rational individual will buy most of his or her food and household goods from a big store because prices are lower, choice greater, quality more consistent, and service speedier. I may have the time and money to tour smaller shops. My neighbour, while recognising he may get something better from a specialist retailer, may judge that it will not be so reliably better (for my parents' generation, supermarkets were liberators from the risks of mouldy cheddar and maggoty apples) as to justify the extra cost and time. Neither of us will take much account of community cohesion or local employment, still less of the dangers of monopoly and monopsony.
This is where we should look to politicians for a larger view. They need not confront supermarkets directly, which clearly terrifies them. But they can partially re-create, and preserve what is left of, the independent retail sector through, for example, tax concessions; a community right to take over or find buyers for threatened businesses; and enhanced powers for local councils to protect retail competitiveness. This is an issue – straddling political and ideological boundaries and putting flesh on the abstractions of communities, big societies and social mobility – that Miliband and the Labour leadership, encouraged by the stirrings in Bristol, should seize.
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