Please follow this link to the What's Wrong with Supermarkets booklet which aims to help campaigners get to grips with the reality of supermarket domination and argues why we must start looking for alternatives. www.corporatewatch.org/?lid=2596

Supermarkets began with the radical Co-operative Movement in the 19th century. This was a movement of independent local retailers that bought in bulk thus guaranteeing a market for local farmers, and then sold cheaply to its members. During and after World War Two, the government-supported mechanisation of agriculture led to larger fields and farms, and thus enabled larger retail outlets to prosper. The abolition of Retail Price Maintenance (RPM) in 1964, the system whereby goods had to be sold at a price dictated by the manufacturer, assisted the emergence of price competition and the supermarket multiples that we know today.

During the last three decades, the United Kingdom has been transformed from being what Napoleon described as a "nation of shop-keepers", with innumerable small businesses, towards a supermarket culture dominated by a handful of large retailers. In 2000, food sales through supermarkets and superstores reached £76.78bn - a growth of 4.5% over 1999. Keynote reports estimates that in value terms the retail sale of food through supermarkets will increase by 16% between 2001 and 2005 [1]. Currently the five largest supermarkets account for roughly 80% of grocery sales [2]. This concentration of retail power is far greater than in the rest of the EU or in the US markets. The profit margins of the big five are correspondingly higher, averaging about 6% in the UK, compared with about 2.5% in Europe and the US. Wal-Mart finally entered the UK through its acquisition of ASDA in 1999, which has forced the other supermarkets to look closely at other retail sectors in order to head off the expected aggressive competition from Wal-Mart whose strategy has been based on low prices and embracing a whole range of products besides food. This trend of consolidation looks set to continue even further. In late 2000 analysts suggested that there was not really room in the sector for the largest four retailers. Verdict Research predicted that "Within the next five years, the five major UK grocery players are likely to be down to three, possibly two".[3]

The market is composed largely of the major multiple supermarket chains in the UK, virtually all of which are household names. The top five are currently Tesco, Sainsbury's, Safeway, Asda and Somerfield. In addition there are the more expensive supermarkets focusing more on the ‘quality’ niche market, such as Waitrose and Marks and Spencer. The second tier of retailers are smaller or regional operations such as Budgens, Iceland the Co-op or WM Morrison. At the low end of the market are the discounters such as Aldi, Netto and Lidl.

Since 1995, the strategies of the major chains have included intense price competition, loyalty schemes, and a rapid increase in non-food products and services. To boost profits and brand loyalty, many have taken on additional roles as pharmacies, entertainment centres, newsagents, clothes stores and petrol retailers. Retail analysts Verdict reveal that a massive £14.5bn was spent on non-food items in supermarkets in 2000 and that it is seen as a great potential area for growth, especially for Asda and Tesco [4]. The effect on specialist retailers will be dramatic, especially due to the growing consumer propensity for the ‘one-stop’ shop. Furthermore, economies of scale mean that the supermarkets can out-price most other retailers. Pharmacies and Post Offices are beginning to appear in superstores, further shrinking the role of the high street.

Supermarkets are also entering new areas such as insurance, banking, internet provision and internet shopping. Internet grocery shopping could totally transform food retail, but it is debatable whether it will be successful. In September 2001, tesco.com announced it was on the verge of profitability[5], but many consumers are still unhappy with internet shopping. As a challenge to home shopping most of the major retailers are striving to improve the 'instore' experience and promoting shopping as an enjoyable leisure activity. A few months ago, Asda hired trained actors to work as store greeters[6], in a bizarre full circle which has seen shopping move away from the genuinely personal service of many small stores, through the impersonal experience of superstores, and back to a cheesy fake version of personal service again.