ISSUES
: Business and Trade
Chapter 2: Corporate responsibility
29
Supermarkets: is it the end of an empire?
N
ews that the ‘Big Four’ major
British supermarkets are
experiencing massive losses
has become so ubiquitous in recent
months it hardly seems newsworthy
anymore. The most spectacular
fall from glory has been Tesco’s
– the retail behemoth that, at the
height of its market domination,
was present in every postcode in
Britain and pocketed one in every
seven pounds spent in the country.
It recently reported a loss of £6.38
billion, the biggest loss in UK retail
history. It is currently under criminal
investigation by the Serious Fraud
Office for fiddling its accounts
while simultaneously being cross-
examined by the Groceries Code
Adjudicator for bullying its suppliers.
Meanwhile, Sainsbury’s reported
its first loss in nine years to the tune
of £72 million, profits at Morrisons
were down 52% and Asda recorded
its worst performance in 20 years.
While forlorn CEOs scratch
their heads and speak in grave
tones about their companies’
previously unthinkable free fall,
communities and independent
retailers who have long struggled
against the supermarket monopoly
are watching on in satisfaction.
Traditional markets, small shops,
box schemes, farmers’ markets
and food co-ops are thriving and
becoming mainstream alternatives
to the supermarkets, having been
dismissed for years as hopelessly
nostalgic or exclusively for a right-
on and privileged minority. And for
urban customers of modest means
who arrive on foot, stores set up
by immigrants increasingly look
like plausible, budget alternatives
to supermarkets. So much so that
in gritty Toxteth in Liverpool the
L8 Superstore – a sprawling local
emporium renowned for its exciting
market-style display of fresh fruit
and vegetables outside and its
United Nations’ of dried goods
within – was recently named Food
Retailer of the Year in the BBC
Food and Farming awards. As
owner Abdul Ghafoor puts it, “We
have everything here that everyone
local needs” from fruit and veg to
nappies. Tellingly, last bank holiday
weekend local high streets and their
small businesses enjoyed a surge in
visitors, while footfall at sprawling
out-of-town retail parks was down.
Yet it is the German discount
supermarkets Aldi and Lidl, not
the independent shops, that are
credited with dealing the fatal blow
to the Big Four and shaking up
the food economy. The result is a
new breed of shopper – dubbed
“promiscuous” by one Sainsbury’s
exec for being the kind of people
who shop around, buy less at one
go but on a more frequent basis,
and (shock horror!) visit multiple
stores on one outing. But the
delinquency of these promiscuous
shoppers is still modest, relatively
speaking; recent research suggests
the average consumer frequents
just four separate grocers per
month. So, while some consumers
are revolutionising the food
economy by bed hopping between
supermarkets and independents,
for most people supermarkets
remain a regular haunt.
So is the supermarket model here
to stay, or will – and can – British
shoppers eventually jump ship
altogether? The escalating crisis
engulfing the Big Four appears to
suggest that the previous success
of Tesco, Sainsbury’s, Morrisons
and Asda is not due to the emotional
loyalty of its customers, but rather
to their resigned pragmatism.
Simply put, shoppers considered
supermarkets to be convenient
and cheap, and that was what kept
them coming back. You could do a
one-stop mammoth weekly shop in
60
80
100
120
Non-specialised food stores
All retailing excluding fuel
Sep-14
Aug-14
Jul-14
Jun-14
May-14
Apr-14
Mar-14
Feb-14
Jan-14
Dec-13
Nov-13
Oct-13
Sep-13
Aug-13
Jul-13
Jun-13
May-13
Apr-13
Mar-13
Feb-13
Jan-13
Dec-12
Nov-12
Oct-12
Sep-12
Aug-12
Jul-12
Jun-12
May-12
Apr-12
Mar-12
Feb-12
Jan-12
Dec-11
Nov-11
Oct-11
Sep-11
Aug-11
Jul-11
Jun-11
May-11
Apr-11
Mar-11
Feb-11
Jan-11
Dec-10
Nov-10
Oct-10
Sep-10
Aug-10
Jul-10
Jun-10
May-10
Apr-10
Mar-10
Feb-10
Jan-10
Dec-09
Nov-09
Oct-09
Sep-09
Aug-09
Jul-09
Jun-09
May-09
Apr-09
Mar-09
Feb-09
Jan-09
Dec-08
Nov-08
Oct-08
Sep-08
Aug-08
Jul-08
Jun-08
May-08
Apr-08
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
Apr-06
Mar-06
Feb-06
Jan-06
Dec-05
Nov-05
Oct-05
Sep-05
Aug-05
Jul-05
Jun-05
May-05
Apr-05
Mar-05
Feb-05
Jan-05
Amount spent at non-specialist food stores and all retailers, 2004-2014
Source: Office for National Statistics, 23 October 2014
Year
Million (£)
