BurngreaveFood

=Latest=

More info on the issues around Tesco and competition: balanced, I thought!

This Guardian article notes that an ex-OFT boss is calling for another inquiry into supermarkets, as OFT officials are meeting an all-party parliamentary group that has been looking at the future of the British high street.

Twice this year, the OFT had turned down calls for a new inquiry but last week the competition appeals tribunal told the watchdog to reconsider and make its decision quickly as thousands of convenience stores were going out of business.

This BBC page asks why so many people claim to hate supermarkets - and whether they really are killing off the High Street. There's lots of video from 5 day's worth of programming...

This link is to a Lib Dem call for a new inquiry into the power of supermarkets, supported by Friends of the Earth, the Association of Convenience Stores and the National Federation of Women's Institutes.

http://www.sustainweb.org/chain_index.asp - Sustain are running a campaign on sustainable food chains. Looks very relevant, mefinks.

Sustain have also been running an agri-food network. This looks really important - they're investigating everything from LM3 to supermarkets, in order to explore 'health, environmental and social benefits (or otherwise) of re-localising the food supply.'

Common Cause do lots of stuff. Some of which includes 'focusing on supporting sustainable food production and Access for all to healthy fresh food.'

Community Supported Agriculture or CSA is another option to pursue. The excellent Local Food Works website has details.

=Links=

The Centre for Local Economic Strategies had a conference on food and regeneration. From these I got hold of a few papers, which are fairly pro-supermarket.

This is a paper on 'Food Access - whose responsibility? by the New Policy Institute. It's got some very sobering statistics in!

This is a document from the Home Office Neighbourhood Renewal Team from 2000 - the 'Policy Action Team 13' - dept of health bods. It's called Improving Shopping Access for People living in Deprived Neighbourhoods.

This is a link to a page just for this document - it has a lot of very, very useful stuff, in terms of how to work on an integrated food strategy - and has more weight because it's from the Neighbourhood Renewal Unit.

One question: was the Neighbourhood Retail Taskforce ever set up? Must try and find this out.

=Supermarkets=

"Nick couldn't find me any of the rarest varieties. He sold me an Adam's Pearmain, a Charles Ross, a Sturmer Pippin and a Cornish Aromatic. I would have bought the names even if the trees weren't attached to them. If they survive my clumsy handling and produce fruit, I will regard every apple they produce as a minor act of insurrection."

George Monbiot

Some research quotes
From a series of fairly pro-supermarket research documents in Urban Planning - this one's from Urban Regeneration, Social Inclusion and Large Store Development: The Seacroft Development in Context Neil Wrigley, Cliff Guy and Michelle Lowe) Urban Studies, Vol. 39, No. 11, 2101–2114, 2002

As Huw Williams, former planning manager for Sainsbury’s and now director of the Town Planning Consultancy, stated in a recent interview with the journal Regeneration and Renewal, the concept of small retailer-based solutions to the problems of increasingly derelict district centres in areas of severe urban deprivation is arguably naive and rather overprecious.

"There are notions about large supermarkets coming in and swamping existing centres. But if you go and visit the local district centre, which might be falling apart at the seams, a new store with all the bells and whistles, in qualitative terms, is exactly what is required. My criticism is that those people get a little bit precious about these district centres where really development is the only option (Huw Williams; quoted in Willis, 2001, p. 19).

In the view of Williams, undoubtedly re ecting his recent corporate experience with one of the major retailers, but also an important emerging constituency of ‘proactive planning’, pro-development opinion in the UK.

"When big retailers like Asda or Safeway say that they would like to locate in a run-down area, they shouldn’t be turned away because they don’t conform with our expectations of what shopping should be about … Isn’t the prospect of a multimillion pound investment, with the prospect of local employment and training, as good a way as any to kick-start regeneration?"

(p.2111)

Guardian supermarket page
This has some excellent stories, particularly the comments down the bottom. Some are below.

Corporate Watch material
Corporate Watch has a great profile of Tesco - much of which can be used as a cautionary tale against allowing any supersized corporation in to Burngreave.

Here are some links from that:

1. Tesco's document on why it's not a bad thing for market towns.

From ‘Store Wars’ in the Guardian
'''Paul Brown Wednesday March 17, 2004'''

As the Guardian discovered when it first carried a story about the battle for Sheringham, the row over Tesco's tactics in north Norfolk is echoed across the country, and local objectors feel powerless.

There is no suggestion that Tesco or the planners they deal with have been acting illegally. Britain's largest supermarket chain agrees it spends years building up sites in key locations, talking to local officials, and doing deals before planning permission is applied for. Once the site has been secured and agreements made with planning officials, often involving the purchase of council land, planning permission is sought. Although this is no fault of Tesco's this is often the first time the local councillors are consulted, or even know about the proposal, by which time officers are heavily committed.

In Sheringham, Tesco had reached agreements with officers from North Norfolk district council and Norfolk county council to buy up a community centre, fire station, and a block of flats used for social housing in order to secure a prime site for a superstore.

Local councillors, faced with the application by Tesco, feared that many local shops would close as a result. Members of the North Norfolk district council local committee voted in December by eight to three to refuse permission for the superstore, only to be told by officers that they were not entitled to do so.

The councillors were told their decision would be a departure from a local plan - which includes the need for more grocery provision - and so the issue was referred to the full planning committee on January 14, which allowed the application.

Budgens claims the advice from officers was incorrect and illegal. It says the later decision to grant planning permission should be overturned because the original committee made a legally binding decision, and officers had wrongly advised councillors it must be referred to another committee.

The chain, which has a number of stores in north Norfolk, including one in Sheringham, had hoped to build a new supermarket - much smaller than the one proposed by Tesco - in the town, and had already obtained planning permission. This, it says, would have fulfilled the local plan in terms of grocery provision and so a Tesco is unnecessary.

Reg Grimes, chairman of the Sheringham Preservation Society, says: "Several things have happened that seem wrong to us, but we do not have the resources to take on the council. We are pleased Budgens is prepared to do so."

Budgens executive chairman Eoin McGettigan says: "This action will establish whether local councillors have the right to say no to Tesco. Local communities up and down the country are fed up of having their high streets de stroyed by the arrival of big supermarkets and seeing independent retailers having their businesses threatened. If their elected representatives are not able to say no to these developments, then it is hard to see the point of even having local planning committees."

After the original Sheringham decision, groups in a number of towns wrote saying their councils had also traded community facilities, memorial gardens, allotments, social housing and an old soldiers' club in order to facilitate Tesco. Hadleigh in Suffolk and Shaftesbury in Dorset both wrote that the pattern in Sheringham was so similar that the names of their towns could simply be substituted in the story. In Hadleigh, Babergh district council has altered the district plan so that Tesco can build on a flood plain - directly against national policy. The Sheringham proposal also involved a change to the local plan.

North Norfolk council's view throughout, and that of the Office of the Deputy Prime Minister, is that under existing guidance from the government, when potential developments are in the planning stage the applicants should consult with officers to see whether the plan would be acceptable. If developers follow the advice - and this is what Tesco says it does - then it eases the way for planning permission.

Observer food monthly
Sunday January 25, 2004

When Tesco announces its results, the question is not so much whether the company has survived as to what unprecedented heights its profits have soared this time.

These days, £1 in every £8 we spend goes to Tesco. The company sells more DVDs than HMV, more shampoo than Boots, and its £4 jeans outsell Levis, Wrangler and Gap put together. Last month, eight pairs were sold every minute.

These are the figures Tesco wants us to remember, but there are other, less palatable statistics. For every £1 spent on bananas at Tesco, for instance, only 1p goes back to the plantation growers in developing countries - far less than they need to feed their families. An estimated 40p goes to Tesco. Indeed, the company makes a profit of £1m per week purely from the sale of bananas - enough to employ 30,000 plantation workers full-time and pay them a proper wage.

It is estimated that, every time a supermarket is built, 276 jobs are lost. Between 1976 and 1989 (the dark days of unbridled supermarket expansion), 44,000 food shops and grocers went bust; when a large supermarket opens, according to ethical watchdog Corporate Watch, it results in the closure of every village shop within seven miles.

Then there is the issue of air miles and aviation fuel. The lobbying group Sustain estimates that the average Sunday lunch (including chicken from Thailand, beans from Zambia and carrots from Spain) travels 26,234 miles to the table. Indeed, the globalisation of food production - buying it from the cheapest source rather than the closest - has been taken to ridiculous extremes. In a typical year, 126m litres of milk are imported into Britain while 270m are exported.

Where is the logic in that? Because of the way we shop, the average household spends £470 a year on packaging - one-sixth of its total food budget. When the National Farmers Union analysed the contents of a typical Tesco or Asda shopping basket, it found that only 26 per cent of the cost is accounted for by food; the rest is packaging, processing, transport, store overheads, advertising and the mark-up imposed by the supermarkets, which is sometimes as high as 45 per cent. Of the £4.78 we pay for 1kg of pork, just 95p goes back to the farmer; of the 36p spent on a pint of milk, 9p reaches his pocket.

As we browse, virtually brain dead, among the Styrofoam trays of doughy chicken mince and outlandishly large turkey thighs, most of us are vaguely aware of these troubling side effects of supermarket big business. Effortlessly, we overlook them. We might buy Fairtrade coffee when we remember and pick up organic pork chops from the farmers' market - but there we are again on a Friday after work, doing the Tesco run. As a result, 88 per cent of food sales in Britain occur in supermarkets while only 0.12 per cent happens at farmers' markets. And yet, in a Friends of the Earth survey in 2002, it was revealed that, on average, 1kg Cox apples cost 28p more at Tesco than on a market stall and 23p more than at a high-street greengrocer's. Why do we continue to shop this way?

The reason, we argue, is convenience. Under one roof, we can buy everything from lightbulbs to lollo rosso from early morning to late evening: with 100,000 lines in a typical store, we can have whatever we like, when we like. If our aim is to save money, we can buy economy lines; if we want to splash out, we can buy Tesco Finest; or we can do both at the same time. On Tesco.com, I came across a special offer that summed up both the genius of the supermarkets and the confused mindset of the middle-class consumer. 'Tesco Finest Fresh Spatchcock Poussin', it read. 'Buy two for £4, save £1.18.' On today's consumer superhighway, you can care about quality, the provenance of ingredients and the kudos of Continental cuisine and still get abargain at the checkout.

'The big thing right now is creating the shoppable shop,' says Phillips, 'and a lot of work has been done on understanding the psychology of how people choose things, then laying the store out accordingly. It's all about convenience.' In other words, knowing our way around a store and getting in and out in record time endear us to a partic ular retailer far more than price cuts - and nothing is more likely to make us switch loyalty than changing the store's layout.

Another innovation, Scamell-Katz reveals, has been piloted at Sainsbury's Hazel Grove store in Manchester; it is known as multiple formatting. 'What they have done is put a small store at the front of the main supermarket. It's recognising that people are just coming in to buy a few bits and pieces so they don't want to wander around the whole 100,000 square feet. It has its own check-out. Today, it's all about time-efficiency.'

In these work-obsessed times, even a short drive to Asda - the entire rationale behind the explosion of out-of-town superstores in the Seventies and Eighties - is considered too much of a chore by today's speed shoppers (the average shopping time these days is 15 minutes). Consequently, the supermarkets are moving back into the town centre. And they are getting smaller: 1,000 to 2,000 square feet for a small Sainsbury's Local or Tesco Express, compared with 50,000 to 60,000 square feet for a typical Tesco or Asda. 'The supermarkets are saying, "If you haven't the time to drive to my Sainsbury's or Tesco, then I'll bring it to your corner shop",' says Scamell-Katz. 'That's why Tesco has bought 600 convenience stores, to be rebranded as Tesco Express.' Perversely, the supermarkets are peddling us a Shopping Experience exactly like the one we used to know before they began their brazen stomp across the land, raising commercial property prices and destroying local communities.

...

Last year, Waitrose also launched its Locally Produced range - products sourced from within 30 miles of the store where they are sold. However, a 2001 report by Sustain found that such initiatives in most supermarkets, although loudly publicised, amounted to tokenism: of 2,075 products surveyed, only 79 (or 4 per cent) could be described as local. 'Our figure is small as well,' concedes Angela Megson, Waitrose's director of buying. 'In a 25,000 square foot store, you'll have maybe 100 local lines out of a total of 18,000. Altogether, we have about 350 local lines from 140 suppliers. but since we have only about 1,500 suppliers, it's not a bad percentage.'

Is it tokenism, or just one small piece of evidence that the cut-price, cut-throat world of supermarkets is trying to appeal to a more ethical consumer? After all, appearing to be more principled is a way of increasing market share. Aware of this, many supermarkets - including Tesco - comply with the Ethical Trading Initiative, which protects the rights of workers supplying the UK market. Who pays for the cost of compliance? The small producer, not the retail giant. According to a letter leaked to The Grocer magazine in May last year, Tesco demands £69.50 per quarter from each of its suppliers. We may be on the brink of an enlightened age; but it is David, not Goliath, who is vanquished.

Inquiry called for by pressure group
Julia Finch Friday November 26, 2004

A group representing convenience stores, shoppers, farmers and environmental lobbyists have requested a full scale Office of Fair Trading investigation into the domination of the grocery market by the big four supermarkets, writes Julia Finch.

The application has been made under the Enterprise Act, which entitles interested parties to raise con cerns about particular markets and request a market study.

It has been tabled by a diverse group made up of The Association of Convenience Stores (ACS), Friends of the Earth, the National Federation of Women's Institutes and FARM, a campaign group representing independent and family farmers.

The last review of the su permarket sector - a full scale Competition Commission inquiry, which took two years to conduct - was completed four years ago.

The group behind the new request says a fresh inquiry is needed as a result of the merger of Wm Morrison and Safeway, the wave of convenience store acquisitions by Tesco and Sainsbury's and the increasing dominance of market leader Tesco.

It claims that market consolidation is having a damaging impact on the local economy of communities across Britain and reducing consumer choice.

The Myth of Choice
Felicity Lawrence Tuesday June 15, 2004

Four giant supermarket chains now exert unprecedented control over what we eat and where we buy it. But, plied with their half-price Euro 2004 beers, we seem to be comatose over what this creeping takeover is going to mean for our communities and our lives.

Tesco, Asda, Sainsbury's and the newly merged Safeway/Morrisons group command over three-quarters of British grocery sales. This extraordinary concentration in power in one of Britain's most important corporate sectors is not yet complete, however. Tesco has become dominant, almost unstoppable, with the latest figures giving it a share of over 27% (a 25% share of any market is normally considered enough to trigger a monopolies inquiry). Sainsbury's is struggling. Most in the industry assume further consolidation inevitable.

"The slide rule is being run over two to three companies even now," Professor John Bridgeman, former director general of the Office of Fair Trading, said at a Lancaster University seminar last week. The warning from Bill Grimsey, chief executive of the Big Food Group, which owns Iceland shops, was even more stark. We are at a point where what we do now about supermarkets will set the terms of our social legacy for the future. We can either act to curb monopolisation or allow choice to be dramatically reduced. If we fail to act, the affluent could, in Grimsey's words, find themselves with a choice of "Tesco, Tesco or Tesco", while the disadvantaged are left denied affordable access to good fresh food.

If these sound like the words of a rival on the run, the fates of Bicester, Brackley and Buckingham are worth considering. Tesco is the only superstore operator in each of these three neighbouring towns. The recent acquisition of the One Stop chain of convenience stores by Tesco - incredibly, unopposed by the competition authorities - has given it four stores and a dominant position in Bicester town centre as well, plus stores in the centre of Brackley and Buckingham. Residents have to travel significant distances by car to reach alternative superstores.

This helps explain an apparent paradox in new research by Lancaster's School of Management, presented at last week's seminar. Although in theory we have more choice, most of us in fact feel more constrained than ever as we struggle to fit buying our food around our busy household routines.

Today's big supermarkets typically offer 40,000-50,000 different products. In a brutal battle for position, they are also cutting prices. So why aren't we happier with them? The reality is that most people's choice boils down to driving to the nearest supermarket. We have no way of comparing prices in different stores over the range of what we buy or really knowing which company is cheapest for us. Since most things are unmarked except on the shelf, we usually can't remember what they cost. Nor do we have time to master the layout of anywhere unfamiliar. Any idea of being able to choose between shops is abandoned the minute we have parked the car. So in reality, unprecendented choice comes down to agonising between 20 different boxes of overprocessed cereal or six different thicknesses of loo paper.

More troubling is the picture the Lancaster research paints of the impact of supermarket power on vulnerable households. These include families on low incomes, but also single-parent households and the elderly across all income groups. Those who depend on buses or lifts struggle to reach the superstores as competitive pressure closes down local shops. They feel excluded from many bargains which depend on being able to buy goods in bulk. They resent the fact that those who are richer or more mobile get the better deals. For the elderly, the sheer physical distances involved in walking through huge hyperstores is too daunting. Those who feel excluded in these ways are not a fixed group: we move in and out of exclusion as our personal circumstances change. Cheaper food, which seems an indisputable good, is not so great if the poor end up paying more because of it.

There is now a coalition of interests which want to see curbs on supermarket power, from the National Federation of Women's Institutes, through farmers, independent shops, and environmental groups to trade unionists. Their concern goes beyond social exclusion. Concentration has allowed the big four to abuse their buying power and squeeze suppliers and competitors. Price cuts are not funded by cuts in profits - Tesco turnover increased by 60% in the five years to February 2003, and group operating profit by 75%. Its margins increased over the period. Those who bear the brunt of the cuts are at the bottom of the chain. British farmers have been driven out of business or pushed to the margins of survival as supermarkets source whatever is cheapest and fly it in from around the globe. But this is not what most shoppers would choose - when asked, they say they prefer British farm food.

The supermarket system of centralised distribution that has turned our motorways into warehouses has also spawned a new industry: packing. As suppliers and farmers have been squeezed, the pain has often been passed down the line, to migrant workers paid less than the minimum wage and treated like slaves. No one knows how many are working in the food sector in this country today. A conservative estimate puts the number at over 100,000. Most migrants move in and out of the food, agriculture and constructions sectors. One well-placed source, with no anti-migration axe to grind, puts the total across the sectors at nearer 2 million. Given that many of them work double shifts, seven days a week, small wonder our productivity figures look good. And this is one reason why the government has been so limp about supermarket power. Increased productivity and deflation in food prices helps hold down inflation, while corporate profits soar, the incentive to interfere is not great.

The competition authorities - now technically independent of government - have done little better. They no longer apply a broad public interest test, but (driven by European competition law) judge what is competitive on the narrowest of definitions: price. When the competition commission conducted an inquiry into supermarkets in 2000, it decided that large one-stop grocery stores formed a separate market from convenience shops and should therefore not be seen as being in competition with them. It was, as Professor Bridgeman acknowledges, a "huge flaw" and failed to anticipate the way the big four would take over smaller chains.

The 2000 inquiry did at least call for a statutory code of practice to stop abuse of suppliers. In 2004, we are still waiting for the Office of Fair Trading to review the watered-down voluntary code eventually introduced. It has by common consent done nothing to help.

If we are to prevent irreversible damage to our towns and communities we need a change of direction now. The definition of the market should be changed so that the big four can no longer take over small chains. A statutory code of practice that stops supermarkets bullying suppliers and abusing their power is needed urgently. Government should also recognise that the public interest in competition matters goes far beyond prices. It must include include consideration of environmental and social good. With supermarket executives from the big four - and Tesco in particular - able to whisper directly into the ears of Downing Street (two of its directors came straight from Whitehall), shoppers might want to send their own message, by voting with their feet and buying elsewhere.

· Felicity Lawrence's book, Not On the Label, has just been published by Penguin

ACS chief executive David Rae said: "The big four supermarkets achieve buying terms that force our members to drive down their own margins in order to compete. The superstores have undertaken predatory, below cost selling which drives out smaller competitors."

Among the issues included in the submission is the suggestion that Tesco and Sainsbury's programmes of buying up convenience stores has pushed up the value of independent retailers so far that it is now almost impossible for smaller chains to acquire new stores. The average price of a convenience store, it says, is now £490,000.

The submission also alleges that the supermarkets' code of practice, which was intended to prevent the big grocers exploiting suppliers, is ineffective.

The group is asking the OFT to look into below-cost selling, which the 2000 Competition Commission report acknowledged was damaging to smaller outlets, which could be driven out of business.

The commission voiced concerns that fewer neighbourhood stores could service shoppers unable to visit out-of-town stores. "Yet no action has been taken on this issue in the last four years", they claim.