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THE BIG DEBATE: Are big supermarkets putting small shops out of business?
The growth of the major supermarket chains has long been a bone of contention for many independent retailers. However, in recent years, the 'big four' have focused more towards smaller convenience stores, arguably putting further pressure on smaller businesses. This week's Big Debate asks if supermarkets really are putting small shops out of business...
YES
Sandra Dexter, National vice-chairman, Federation of Small Businesses
The Mary Portas review has brought “high streets” very much into the public consciousness and, inevitably, the question: “Are big supermarkets putting small shops out of business?” has to be right at the forefront of that debate.
However, the question isn’t a simple one and the answer isn’t simple, either.
Big supermarkets are very much a fact of life, a great convenience for most shoppers and a dominant force in local retailing.
So, why do shoppers favour supermarkets?
Everything under one roof, plentiful free parking, easy access and cheapness, I believe!
Let’s look at these issues one at a time.
As I write, the news is still reverberating with more and more horror stories breaking daily about horse meat being found in beef products.
Your local independent butcher can tell you exactly where his fresh meat comes from and what’s in the minced meat he sells you.
There are actually around 2,300 varieties of British apples, but can you find one British apple in your local supermarket? From South Africa, from Israel, from South America, yes, but rarely from Britain.
Independent surveys consistently show that, when asked, shoppers prefer British farm foods, although supermarkets seldom give you that choice.
When supermarkets do buy from a local supplier, it is generally sent many miles away to a regional distribution centre, before being sent back to the local store. This is environmental madness in this age of global warming.
“Selling local produce puts twice as much money back into the local economy,” says the New Enterprise Foundation.
Shop with your local independent store – Keep Trade Local is an FSB campaign to promote this – so that the environment and the local economy will both benefit. I believe you’ll also buy tastier, fresher local foods.
We are, unfortunately, a car-borne society. We love our cars and we now expect to be able to drive right up to the store in which we want to shop. Ample car parking is a must and we expect it to be free, as well.
Supermarkets have free car parking in abundance, yet our small shops are finding that their local car parks are being built upon, street parking is being restricted and patrolled by eagle-eyed traffic wardens. The few car parks which remain are becoming very expensive.
Local authorities are deprived of cash and see paid car parking as a way of getting some extra money into their stretched coffers.
But at what price? The death of our high streets, as small shops are strangled because customers can’t park near them and so can’t reach them?
What small shops need is a level playing field.
Another unfairness from which small shops suffer is the way business rates are calculated. A small shop pays considerably more, pro rata to their floor area, than a large superstore does.
Between 1997 and 2002, more than 13,000 specialist retailers closed. We lose another 2,000 independent shops each year.
Supermarkets now take 85 pence out of every pound that’s spent on food in the UK. Small independent retailers have to survive on a measly 6 pence in the pound.
Supermarket operators are by their very nature, greedy and acquisitive – they want it all.
Not content with food, they now sell electrical goods, household items, clothing, records, insurances, you name it. That’s why they destroy high streets and small shops.
When an out-of-town supermarket opened in the market town of Fakenham, Norfolk, there was a 33 per cent increase in retail vacancies in the town and, also, local convenience stores lost 64 per cent of their trade.
Supermarkets always claim to bring new employment to an area and, of course, they do.
Unfortunately, what they bring is predominantly part-time jobs. They destroy many more existing jobs in the small shops and their suppliers which are put out of business.
The National Retailer Planning Forum has studied this phenomena. They examined the employment impacts of 93 superstore openings and found that they resulted in a net loss of jobs in the local area of 25,000 – equivalent to a loss of 268 per store opened.
NO
Richard Dodd from the British Retail Consortium
Who holds the power in retailing? It’s not supermarkets. It’s not regulators or corner shopkeepers. It’s customers.
Supermarkets have grown because, over the last 30 or more years, customers have chosen to use them. Millions of people like the convenience, range, service and prices being offered.
In the 1950s households typically spent a third of their income on food. Now it’s just a tenth – leaving us with more money to spend on things we want and to meet other demands on our budgets. It’s the growth of supermarkets and the resulting efficiencies and economies of scale that have delivered that.
Retailers are huge providers of much-needed jobs, nearly 3 million in total with the big four supermarkets alone now employing over 760,000 people.
BRC figures show that, despite tough economic conditions, retailers are continuing to invest in people, with supermarkets the most likely to be adding new jobs.
That supports the communities in which those people work, live and spend. And supermarket investment is often key to wider economic regeneration.
New supermarket developments tend to be in or near town or city centres. They increase the overall critical mass of retailing appeal of that location, giving customers extra reasons to go there, and benefiting existing traders. Plus, retailers often contribute to things like road improvements, even community centres, when they build new stores.
Seeing retail as some sort of battle between small and big is a mistake.
Attractive and vibrant shopping destinations come from a diverse mix of national names and local independents appropriate to the sort of place it is. Small retailers are unlikely to be able to compete on price alone but they can, and do, compete by catering for particular customer needs and lifestyles, whether on niche products or by providing extra advice and personal services.
In some retail categories, specialist food for example, numbers of independents are actually going up.
A few more relevant facts: last year, retailers of all types paid £17.5 billion in tax. That’s a lot of schools and hospitals.
Supermarkets are British agriculture’s biggest – though not only – customer. Overall, three quarters of the food sold in UK supermarkets is sourced in the UK.
Supermarkets are the driving force behind helping customers opt for healthier food. As well as making fruit and veg more affordable, they’ve re-formulated products to reduce fat, salt and sugar and they’re providing comprehensive nutritional information.
With other retailers, they’re making a big difference to the environment.
Through their own operations and by supporting customers and staff in ways that suit their budgets and lifestyles.
It’s certainly true that some of our high streets need help. That’s why we’ve long been campaigning on issues including business rates, parking, investment and management. But let’s remember, the people benefiting from supermarkets’ growth are the people who’ve made it happen – customers.