The self-service store is a recent addition to our high streets, made possible through the advances in food processing and packaging of the 1950s. No longer tied to the bacon slicer and the cheese wire, grocers concentrated on stocking the shelves and taking the money. Just one problem: Retail Price Maintenance (RPM). Prices were legally fixed so that Heinz could, for example, print the price of 11d on a tin of beans and insist on it. It was Tesco Stores, under the leadership of 'Stack it high, sell it cheap' founder Jack Cohen, who challenged the law in 1964 by selling foods at lower prices. An embarrassed Government found it difficult to intervene to keep the cost of food high and RPM was abandoned. The new 'supermarkets' were free to negotiate lower prices from suppliers and so shift the balance of power from the producer to the retailer. The consumer - the retailer's primary route to profit - liked it. The pressure on suppliers for cheapness led to corner-cutting, particularly in meat production, where what the buyer didn't see they didn't know - until salmonella, E.coli and BSE appeared and the true cost of bargain prices was highlighted.
By the 1970s just five supermarkets controlled more than half the total food sales in Britain. It was said that 15 men decided what the other 55 million people in Britain ate. It wasn't quite that simple - but those 15 men did have immense power and dictated what appeared on the shelves: the brand leader, the number 2 and the supermarket own-label version. Any brand that didn't make the grade either disappeared or reinvented itself as a 'delicatessen' brand to carve out a niche in specialist food shops. Small independent grocers went out of business in droves. As supermarkets expanded to provide hardware, clothing, housewares, chemist products, newspapers and magazines their impact affected retailers in all sectors. The out-of-town superstores changed petrol retailing took off as fickle motorists travelled further to stock up on food and fuel at the same location. The desire for year-round availability led to rising food imports, which often replaced domestic production, with costs to the domestic economy as well as increased fossil fuel usage.
The supermarkets' influence is also a psychological one. Walk in and the first thing you see is fresh produce. This sets the consumer's impression of the whole store. After fruit and veg the other perishable foods that shoppers regularly buy are bread and milk. These are usually found at the opposite end of the store, requiring shoppers to cross the entire store. 'Impulse purchases' are encouraged by placing selected items at the end of aisles. Deep price discounts on 'Known Value Items' (KVI) such as milk, sliced bread and baked beans cash in on research showing that consumers only know what the few most popular food items actually cost. By making sure these always look cheap, supermarkets create the overall impression of low prices without giving too much away.
Organic and high quality food
By the late 1990s supermarkets had developed 'loyalty cards' which provided details on consumer preferences. One of the first discoveries was that consumers who bought just one organic item were likely to spend twice as much as other shoppers per store visit. These are the consumers that supermarkets want - those who are concerned with quality rather than price. No sooner had they identified these customers, than the supermarkets noticed they were visiting the stores less often. Organic 'box schemes' - giving customers a weekly home delivery of seasonal vegetables - were blamed. In response, in June of 1998, Waitrose relaunched its organic offering, with 300 different organic lines. Sainsbury's followed in July and Tesco weighed in a few months later. The leading stores of Southeast England were taking organic food seriously and demand surged, by as much as 35 per cent growth per annum, to the delight of organic farmers and processors. By 2002 both Waitrose and Sainsbury's could claim 2,000 organic lines, moving these items onto the mainstream shelves to compete with the 'big boys'. Some natural food stores benefited from increased awareness of organics., but the village shop and other small independent retailers couldn't compete and many disappeared, weakening the fabric of rural communities. The knock-on effect in the community of a new supermarket opening is a net loss of 260 jobs.
Supermarkets quickly woke up to the new trend for valuing high-quality food above cheapness. With the food scares of BSE, salmonella, E.Coli, listeria and Foot and Mouth there is a continuing flight to quality and the supermarkets are leading the charge, eager to escape the trap of ever reducing prices and profit margins. Their latest challenge, as demanded by customers, is to increase the amount of locally produced foods. Sainsbury's have assigned employees to develop regional sourcing. After eliminating diversity in the 1960s, supermarkets now actively develop local and regional producers, many of them organic, in an attempt to keep up with evolving tastes.
The balance of power has shifted: no longer do 15 male supermarket buyers decide what we eat. Every purchase at the till is a vote recorded for a particular product, and if supermarkets ignore their customers they will shop elsewhere. The big supermarkets still have a long way to go to prove their commitment to local and organic produce. At the moment 70 per cent of total UK organic supermarket supplies are imported, offering little benefit to the UK-supplier. But they are making progress (see chart below). Let us hope they also learn to support suppliers rather than squeeze them, and that small-scale producers will be able to flourish.
Since the 1960s the proportion of income spent on food has dropped from 25% to 10%, while real incomes have gone up. All the data suggests that supermarkets must provide the customer with organic, high quality, locally sourced food if they are to regain a larger share of people's spending.
Waitrose: 15% organic imports
Aims to source 100% from UK when in season
M&S: 40% organic imports
Imports in some areas as low as 3%
Sainsbury: 60% organic imports
Target to reduce imports to 45% by 2004
Co-op: 66% organic imports
Safeway: 75% organic imports
All standard organic potatoes now from UK
Tesco: 80% organic imports
(Sustain July 2002)}
