For historical development of small shops up till the 1950s, see ‘how did food deserts develop’
For current planning
issues concerning the retail sector, see ‘how did food deserts develop’
CONTENTS OF THIS PAGE
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1)
Origin of out-of-town shopping
1.1) Early American
shopping centres
1.2) USA, economies
of scale and armoury practice
1.3) Edward Bernays
and emotional marketing
1.4) USA; self service
and the retail abandonment of the city centre
2)
Growth of out of town shopping centres in Britain
2.1) UK economically
behind the USA, held back supermarket growth in the UK
2.1.1) UK economic
problems, post World War II, RPM, and coping mechanisms by the supermarkets
2.1.2) Early UK
shopping centres; Arndales, self-service, and Brent Cross
2.2) Early
supermarket developments from the 1960s
2.3) Changing role
of the Co-op
3)
Social, economic, and demographic trends facilitating the growth of out-of-town
shopping.
3.1) 1980s
deindustrialisation
3.2) Car ownership
4)
Growth of supermarkets in Britain
4.1) Growth in
numbers of supermarkets
4.2) Growth in size
of supermarkets
4.3) Supermarket
penetration into smaller formats, smaller towns
4.3.1) Reasons for
the shift to smaller formats by the supermarkets
4.3.2) Garage
forecourt grocery retailing
4.3.3) The possibly
increased threat to smaller independent grocers
4.3.4) Conversely, a
possible threat to the discounters – and discounter progress abroad.
4.3.5) The clawback
of trade argument
4.3.6) Alternative
strategies to smaller formats
4.4) Supermarket product diversification
5) The
UK Competition Commission.
6)
Supermarkets and shopping malls
7) The
2007-(current) Credit Crunch
1. Origin of
out-of-town shopping
1.1. Early American shopping centres
In 1916 in Memphis, Tennessee, USA, the Piggly Wiggly store opened. It was remarkable as being the world’s first self service store[1]. Also in 1916 the world’s first out-of town shopping mall opened at Lake Forest, near Chicago.
In 1922 the Country Club Plaza opened at Kansas City, the second out-of-town shopping mall, and soon after the Highland Shopping Park opened just outside Dallas, Texas. This Texas mall was the first to be centred on a pedestrian mall, rather than large stores arranged round a car park.
Another innovation useful for supermarkets was the introduction of the shopping trolley – enabling customers to carry more to the till, so raising sales.. This was first used at the Humpty Dumpty supermarket in Oklahoma City in June 1937.
In 1956 the
world’s first enclosed shopping mall
opened, the Southdale Shopping Centre in Minneapolis. The developer of
Southdale, Victor Gruen, reasoned that Minneapolis was too hot in summer and
too cold in winter for a whole day’s shopping; so build an enclosed street with
air conditioning, where customers could drive to in their air-conditioned cars,
and shop without any of the non-retail distractions a real town centre might
provide.
1.2. USA, economies of scale and
armoury practice
These developments in retailing were part of a revolution in
the US economy that had begun back in the second half of the 19th
century. The US knit together into an
integrated continental economy, aided by technological developments as the
transcontinental railways. Also growth
was spurred on by mid-West cattle ranching (itself helped by such humble
inventions as barbed wire, without which there was insufficient wood for
fencing the cattle in to make for viable ranching), and an innovation called
armoury practice began to make its effects felt.
The idea of armoury practice was a standardisation of US
army supplies so that, for example, a rifle made in California could fire
bullets made in New York. The benefits
of standardisation for certain industrial components had been recognised in
Europe; by, for example, Whitworth, who attempted a standardisation of UK
screws, but the idea did not catch on so well in Britain where individual
craft/workshop production held sway. Armoury
practice was the origin of Fordist work practices in the great US car
factories; that and the wave of innovations in electrical appliances around the
1880s on, gave a strong US economy. Like
Europe, the US economy suffered in the 1930s Depression, being hauled out of it
by government spending and the war effort of World War Two. After World War Two the US economy was in much
better shape than the European economies, and it was American Marshall Aid and
political influence that led ultimately to the creation of the European
Economic Community and hence the EU of today.
1.3. Edward Bernays and emotional
marketing
The marketing efforts of Edward Bernays, nephew of Sigmund Freud, should also be noted. Bernays, borrowing from his uncle’s theories
on humans being influenced by deep and animalistic emotional desires, said that
goods should be marketed, not as simply fulfilling needs but as satisfying
these deep emotional wants. Bernays’
first marketing success was to market cigarettes to women, who then customarily
did not smoke, as ‘torches of freedom’ – women then were seeking the vote and
more equality with men. By shifting
marketing from a needs-fulfilment to a wants-satisfying orientation, Bernays
greatly increased the range and amount of goods people could be persuaded to
buy. Needs could be satisfied fairly
quickly as technology advanced, but there is never a limit to the emotional
wants people feel. Only now these wants are ‘satisfied’ by the purchase of material
goods.
1.4. USA; self service and the
retail abandonment of the city centre
Self service was a welcome innovation for US shoppers; they
could pick their own goods, under less sales pressure, and they liked the
bright clean shopping environment. The
main benefits were to the shopkeeper though. Less shop staff were needed; the sales process
was in effect as standardised as any Ford car factory, the customer bringing
standardised goods to a standard procedure at the till. Growing US prosperity meant greater car ownership
and a flight by the wealthy to the suburbs, in part to escape the taxes levied
by city centre councils. Thus began the
‘hollowing out’ of many US cities, as only the poor were left; the city
councils were faced with both a declining tax base and declining local wealth,
and the two fed off each other in a vicious circle of decline. The wealthy shopped at big supermarkets out of
town, and these supermarkets grew on economies of scale and the increasingly
wealthy spending power of their customers.
2. Growth of out
of town shopping centres in Britain
2.1. UK economically behind the USA,
held back supermarket growth in the UK
2.1.1.
UK economic problems, post World War II, RPM, and coping mechanisms by the
supermarkets
The UK economy remained in a parlous state through the early 1950s, as evidenced by the persistence of rationing. The Second World War had taken a major toll on the economy, and Britain’s overseas commitments were now an expensive luxury that had to be given up. Perhaps the Suez Crisis of 1956, as much as the granting of independence to India in 1947, symbolised the end of Britain as an imperialist power with its worldwide Empire. From the point of view of supermarkets, car ownership in Britain remained well below US levels. In 1960 the USA had over 300 cars per 1,000 people, compared to 110 per 1,000 in Britain. Britain also had Resale Price Maintenance, or RPM, which protected small shops by limiting the discount larger stores, with economies of scale, could give on many goods. Tesco found a way round this by giving green Shield Stamps with purchases, which could be redeemed for catalogue goods. However Sir Jack Cohen, founder of the first Tesco store in 1929 in Edgware, north London, lobbied the UK Parliament for repeal of RPM. In 1964 UK Parliament passed the Resale Price Maintenance Act repealing RPM on many goods and by 1979 RPM only applied to books and pharmaceutical goods.
Tesco continued to offer Green Shield Stamps until 1977 when
it replaced them with price reductions.
2.1.2.
Early UK shopping centres; Arndales, self-service, and Brent Cross
The UK is also much smaller and more densely populated than
the USA and had greater planning restrictions on out-of-town development, to
preserve the countryside. Local
authorities tended to support town centre Arndale developments, which were
accessible by the less well off, without cars, rather than encouraging
supermarkets on the edge of town. The
Arndale concept had been pioneered by two Yorkshire developers, Arnold Hagenbach and Sam Chippindale.
These factors explain why retailing innovations reached the
UK so much later than they first appeared in the USA. Self service for example, which appeared in
the USA in 1916, only reached Britain in around 1950. The first self-service
store in the UK was either Sainsbury in St Albans or Tesco in Croydon; each
company website claims theirs as first. The
History Today of November 2002, pp.34-5, claimed that the Co-op introduced self
service to the UK as early as 1942 and that by 1947 there were ten self service
Co-op stores in Britain. The first
out-of-town mall opened in the UK at Wilmslow, Cheshire, in the early 1960s; it
was intended to attract wealthy Manchester businesspersons with their own cars,
preferably two cars, so other household members could freely come and shop too.
Brent Cross, in the suburbs of northern
London, opened in March 1976, offering the then revolutionary idea of shopping
till 8pm, all week. However the general
opinion was that out-of-town centres would go no further in the UK and the
future was in Arndale town centre developments.
2.2. Early supermarket developments
from the 1960s
In 1961 Tesco opened a 1,650 square metre store at Leicester
(less than a sixth the size of a Tesco Metro today), this store then being in
the Guinness Book of Records as ‘the largest store in Europe’ (Daily Express,
29/2/2000, p.11).
After RPM was removed in 1964, several stores of 8,000 to
9,000 sales space appeared in the UK. These
included Tesco at Westbury, Wiltshire, opened 1967 with 9,000 square metres,
and before that the GEM store in Nottingham, opened 1964 with 8,400 square
metres (R L Davies, 1964, p.78). However the GEM store was atypical of today’s
superstores, being on several floors of a disused warehouse in the inner
suburbs of Nottingham.
In 1976 there were around 20 out of town shopping centres in
Britain, including factory shops and retail warehouse parks. Even by 1986 there
were fewer than 50 such developments, but there was then rapid expansion to
around 250 in 1991, and to over 500 by 1998 (Guardian, 16/12/02, p.7, ‘Ghost
town Britain looms’).
2.3. Changing role of the Co-op
Even the Co-op was forced to ‘rationalise’ (Save Our Shop,
1987, preface, p.viii), that is to shift its role from being a neighbourhood
store and follow the major supermarket route of large stores, less accessible
to some poorer consumers. That, or be undercut by the large supermarkets. However in the 1990s the Co-op changed
direction again and moved back into the middle ground so conspicuously
abandoned by the major stores. Joining
the newcomers Aldi, Lidl, and Netto, the Co-op moved to become a medium sized
supermarket serving less well off areas.
3. Social,
economic, and demographic trends facilitating the growth of out-of-town
shopping.
3.1. 1980s deindustrialisation
Growth of such out of town retail centres was spurred on by
the deindustrialisation that accompanied the globalisation of the world economy
and Thatcherite economic policies in the UK. As much of Britain’s heavy
industries (e.g. coal, steel, shipping, chemicals and metallurgy) closed,
replaced by overseas production in cheaper countries abroad, large sites became
vacant on the edge of many industrial towns and cities in northern Britain.
These were designated, by the Conservative administration of the 1980s, as
Enterprise Zones, where companies, including retailers, could set up with few
planning requirements and often generous rates, rent, and tax concessions.
Local councils who resisted the development of retailing on these sites, in
order to preserve their town centre retailing, were pressured by Westminster to
fall into line.
3.2 Car ownership
Out of town shopping centres, from large regional centres
like Meadowhall at Sheffield and Bluewater in Kent down to an average four of
five thousand square metre supermarket on the edge of a town, depend crucially
on road transport, in two ways. Firstly, fleets of lorries are needed to
replenish the stocks at such retail centres. With the huge range of goods on
offer, from a multiplicity of dispersed suppliers, there is no way logistically
this could be done by an alternative transport system such as rail. Even if
that were possible, labour costs of transport would be prohibitively high.
Secondly such centres depend on customers arriving in the main by private car.
Centres such as Meadowhall, Sheffield, and the Metrocentre, Gateshead, near
Newcastle on Tyne, do have rail or tram links as well as bus routes. However
car-borne customers are a much better bet. Not only can they carry away much
more shopping, they are likely to be wealthier than customers arriving by
public transport and so to buy more. In fact bus operators are unwilling to run
routes to supermarkets if the supermarket is not on the route to another town
where the bus would be running to anyway. Supermarket free buses, and the
difficulties of carrying several bags of shopping on and off buses (pay-buses
normally travel on radial routes to town centres so many would need two or more
buses to access an out of town supermarket) mean the traffic on a bus route
solely serving an out-of-town centre is rarely worth it. And this is even with
the fact that shopping (and school trips) are the most important source of
traffic to bus operators after commuter traffic, and that as the fleet size is
dictated by the needs of the commuter flow, off-peak journeys are at marginal
cost (driver’s wages and fuel only) to the bus company.
Numbers of private cars in the UK
In 1903 Britain had 8,000 private cars.
In 1911 Britain had 47,000 private cars.
In 1920 Britain had 125,000 private cars.
In 1930 Britain had 1,056,000 private cars.
In 1938 Britain had 1,944,000 private cars.
In 1939 Britain had 2,034,000 private cars.
In 1946 Britain had 1,770,000 private cars.
In 1948 Britain had 1,961,000 private cars.
In 1950 Britain had 2,258,000 private cars, and a
total of 4,409,000 road vehicles.
In 1951 Britain had 2,433,000 cars and vans. With a
population of 50.6 million, this gave 0.048 vehicles per person.
In 1958 Britain had 4,549,000 cars and vans.
In 1960 Britain had 5,648,000 cars, and 9,272,000
road vehicles. 30% of UK households had a car.
In 1961 the UK had 5,979,000 cars, or 6,114,000 cars
and vans, and a population of 53.0 million, giving 0.115 per person.
In 1970 Britain had 11,192,000 cars. 50% of
households had a car.
In 1971 the UK had 12,361,000 cars and vans, and a
population of 55.7 million, giving 0.222 vehicles per person. 52% of UK
households had a car.
In 1980 the UK had 14,772,000 cars, and 15,437,000 cars
and vans, and a population of 56.0 million, giving 0.276 vehicles per person.
58% of UK households had a car.
In 1981 the UK had 15,250,000 cars.
In 1985 the UK had 16,453,000 cars, and 21,166,000
road vehicles.
In 1990 68% of UK households had at least one car.
In 1991 the UK had 19,000,000 private cars and vans.
In 2001 the UK had 28,000,000 private cars and vans.
Sources, N Wrigley, 1988, p.10, A Coupland, 1997, p.53, J
Cullingworth, 1988, p.310, R L Davies, 1987, p.33.
However many elderly, poor, and disabled, still have no
access to a private car.
The number of driving licences rose rapidly between 1965 and
1979, especially amongst women. In 1965, 60% of men aged 21-29, 68% of men aged
30-39, and 62% of men aged 40-49 held a driving licence. In 1965, 15% of women
aged 21-29, 18% of women aged 30-39, and 13% of women aged 40-49, held a valid
driving licence.
In 1979 the figures were, 72% of men aged 20-29, 84% of men
aged 30-39, and 80% of men aged 40-49 held a driving licence, as did 41% of
women aged 20-29, 49% of women aged 30-39, and 38% of women aged 40-49.
This growth in the percentage of women with driving licences
is partly caused by greater female participation rates in the workforce, and an
increasing number of two (or more) car families. Increasing worries about the
safety of women on public transport is also a contributory factor. As people of
all ages and both sexes abandoned public transport, this mode of travel did
indeed get less frequent, and less safe to use, setting up a vicious circle of
bus-to-car mode shift. Increasing general wealth levels also promoted car use.
Public transport, especially bus transport, may well be what economists call an
‘inferior good’, one that is abandoned more and more by the wealthy in favour
of a ‘better’ alternative. The trend towards shopping as a leisure activity,
shopping done in the evenings after work or at the weekend, even on a Sunday,
(partly because increasingly both adults in a household are likely to work) and
shopping done in bulk so as to save on the number of trips necessary, also
shifts transport mode towards the car. Public transport frequency falls off
sharply especially in the evenings and at weekends.
4. Growth of
supermarkets in Britain
4.1. Growth in numbers of
supermarkets
For store numbers of individual supermarket companies, see
4.6 supermarket timelines.
Tesco, on its website, claims to have had the first British
‘superstore’ – that is, a very large unit on the outskirts of a town – with its
9,000 square metre store at Westbury, Wiltshire, opened in 1967, although Tesco
itself did not use the term ‘superstore’ until they opened their store at
Crawley, Sussex, in 1968. The GEM store in Nottingham, opened 1966 with 8,400
square metres sales space, is sometimes quoted as Britain’s first superstore;
however this store was in the centre of town and was on several floors of a
converted warehouse, so was not typical of today’s superstores. Other early
large superstores were the Woolco store, 6,500 square metres, opened in 1967 at
Oadby, near Leicester, and the Carrefour store, opened in Caerphilly in 1972.
Total number of supermarkets in Britain, 1960 = 0, 1965 = 1,
1970 = 16, 1975 = 70, 1980 = 280, 1985 = 400, 1990 = 775, 1995 = 1,000, 2000 =
1,200, or between 1,500 and 2,000 including the smaller Tesco Metro and
Sainsbury Local stores. (S BURT, 1997, The Structure of the British Retail
System). See supermarket timelines below for number of stores of individual
supermarket companies.
Britain had 457 supermarkets in 1986 but 1,102 by 1997 (G
Monbiot, ‘Captive State’, 2000, p.169). Many of those built in the 1970s and
80s were in out-of-town locations, where land was cheaper, access by wealthy
car owners was easier, and there was a pool of cheap female labour nearby,
willing to work part-time. There was an apparent slowdown in growth during the
early 1980s because at this time many smaller inner-urban supermarkets were
being closed as the newer out-of-town ones were being opened. By 1983 the
average size of a Tesco store being closed because it was too small to have
adequate economies of scale was greater than the average size of a Tesco store
being opened in 1974.
In 1996 the Conservative Prime Minister, John major,
introduced the PPG (Policy Planning and Guidance) series, intended to redirect
further development of houses, shops, and much else towards urban brownfield
sites rather than have more greenfield sprawl. Supermarkets, which came under
PPG6 (Town Centres and Retail Development), finding it harder to gain
permission for new out-of-town sites, have redirected their expansion towards
local ‘Metros’ (Tesco) and ‘Local’ (Sainsbury) stores. However these tend to be
in areas with high spending potential, such as tourist/office areas (e.g.
Covent garden, London) or near commuter stations. They are not generally in
poor areas, of low access to healthy food.
In 2002 Tesco bought the ‘One Stop’ chain and in 2003 opened
the first one of these premises it so-acquired as a new Express store. Tesco
will also reopen three former Co-op stores it bought in Bristol as new Express
stores later in 2003 (Convenience Store, 18/7/2003, p.4). Overall Tesco plans to convert 450 of the One
Stop stores into Express stores, and keep the remaining 400 under their
original fascia, refurbished, and stocking more chilled food.
4.2. Growth in size of supermarkets
In 1958 very few UK stores were over 200 square metres sales
space, but by 1971, 5,000 UK stores were larger than this.
In 1963 W G McClelland considered that 1,000 square metres
was probably the maximum desirable size for a UK supermarket, given problems of
shoplifting and management. He noted that the USA had supermarkets of 10,000
square metres, but considered this size inconceivable here in the UK.
If globalisation is about economies of scale, the achievement
of lower prices through bulk of production/sales can be done directly by
increasing the size of the shop premises. Between 1974 and 1983 the average
size of a new UK grocery shop that was part of a chain rose from 1,120 square
meters (sales area) to 1,960 square metres. Over this period the average size
of a store being closed rose from 150 square meters to 450 square metres.
Smaller stores might be closed because they were on cramped inner-city sites,
where deliveries were difficult due to traffic congestion, crime was high, and
the wealthier local customers had left for greener suburbs and villages; it was
also likely that these small stores simply lacked the economies of scale of
their outer-urban brethren. These
openings and closures produced a rise in the average store size, operated by a
multiple grocer, from 260 square metres sales area in 1974 to 860 square metres
in 1983. In other words the average size
of a chain grocery store being closed in 1983 was nearly double the average
size of an operating store in 1974. Older abandoned small inner city chain
grocery stores might be used for staff training for a while; likely they would
be abandoned and then taken up by cheap ‘everything a pound’ type outlets, most
of which sell mainly non food and certainly very little fresh fruit and
vegetables.
The average size of a Tesco store in the UK rose from 600
square metres in 1960, to 1,000 square metres in 1979, 1,800 square metres in
1983, and 2,200 square metres in 1988 (Alan West, 1988, p.35, Carl Gardner et
al, 1989, p.177). The closure of many inner city Tesco stores meant that,
between 1974 and 1983, even as Tesco’s total sales space rose from 460,000 to
680,000 square metres, its number of UK stores fell from 771 to 369. This
hunger for bigger stores gave a powerful impetus to move the supermarkets to
the edge of town where land was cheaper and there was the space for large car
parks. In addition, food deliveries by road were easier here, the edge of town
location gave easier access to the market of upmarket consumers who had moved
out of town to dormitory villages, and the suburban location meant access to a
pool of cheap, feminised, part time labour.
The average size of a store opened by Sainsbury between 1980
and 1985 was 3,500 square metres.
Sainsbury opened the first of its Savacentres at Washington,
near Newcastle on Tyne. In 1985 the average size of a Savacentre was 7,000
square metres, but by 1996 this average had risen to 8,500 square metres. The
average size of the last 6 Savacentres opened in the 1990s was 9,600 square
metres.
4.3. Supermarket penetration into
smaller formats, smaller towns.
4.3.1.
Reasons for the shift to smaller formats by the supermarkets
In the UK, most of the best sites for large supermarkets
have now been taken, and the PPG legislation introduced by John Major’s
Conservative government in 1996 has largely put a halt to further building of
large out-of-town superstores. Only where planning permission had already been
granted by 1996, but not yet used, can new o-o-t stores be built, as for
example, the new Tesco Extra large store just west of Scunthorpe, opened 2001.
To gain more market share, and so more economies of scale,
the supermarkets have been looking at smaller stores. They have done this in
two ways. Firstly, smaller stores within large urban areas, and secondly,
setting up branches in smaller market towns, of population as little as a few
thousand. Brigg, in North Lincolnshire, has no less than three supermarkets,
all next to each other, the latest a new 480 square metre Tesco opened in 1999.
Unsurprisingly, there have been several shop closures in the villages
surrounding Brigg between 1999 and 2002 (see maps on this website). Thirty
kilometres west, the small town of Crowle was also to have a new supermarket,
in 2000, but this has not yet (2003) materialised. Monmouth, with a population
of just 7,000, is being targeted for a branch by Waitrose (Guardian, 1/4/1996).
In the USA, Wal Mart has discovered that a town with as few as 4,500 people can
support a large “out-of-town store – so long as most of the competition is
eliminated” (George Monbiot, ‘Captive State’, 2000, p.200).
4.3.2.
Garage forecourt grocery retailing
Garage forecourts are an obvious place to sell convenience
groceries to time-pressed motorists. However in the 1990s the quality and range
of groceries available in these venues was limited. The steep rise in UK petrol
prices to over 80p a litre in 2000, caused by a combination of the UK
government’s ‘escalator tax’ on petrol and rising crude prices due to the
Palestinian Intifada’ in Israel and concerns over the international situation
in Iraq changed this. Despite high pump prices, petrol retailers’ margins on
petrol were in fact reduced, and grocery retailing was a handy way for garages
to stay profitable. After petrol prices
subsided somewhat by 2002, to nearer 70p a litre, some garages cut back on
groceries, using the space for motorist-related items such as car spare parts
and road atlases. There was a proliferation of road atlases around 2002, as
several publishers issued a range of ‘county atlases’; for the first time
‘A-Zs’ of entire counties, even predominantly rural ones, were available. These
were bulky and demanded much shelf space.
However from around 2000, trusted grocery brands like Spar
have been moving onto garage forecourts (Independent Retail News, 5/9/03,
pp.32-33). Often both petrol and grocery sales rise when the consumer can be
sure of getting a trusted brand name, either in the goods themselves or in the
shop they are purchasing from. Spar has expanded its garage sites from 228 in
2002 to 310 in 2003, and plans to achieve 500 by the end of 2004. However this demands an adequate level of
space for a good grocery offer; whereas in the 1908s a garage grocery shop
might have had 50 to 60 square metres sales space, 100 square metres is
required in 2003. This militates against small isolated rural garages, which
continue to close in Britain.
4.3.3.
The possibly increased threat to smaller independent grocers
These smaller format stores may be a greater risk to small
local independent grocery shops than the big supermarkets on the edge of town
are. A similar level of risk to independents may come from the discounters,
Aldi, Lidl, and Netto, along with the Co-op. The independents had an advantage
of accessibility over a distant o-o-t supermarket, but this is advantage is
severely eroded if a small-format store with all the price-cutting power of a
major supermarket locates in the neighbourhood 500 or 1,000 metres away. Computer
technology has enabled even smaller branches to enjoy the economies of scale of
larger supermarkets (P Langston, G Clarke, D Clarke, 1997, p.101). Some local consumers will benefit, but not
all. Many elderly and disabled will not
be able to access these local format supermarkets, because their walking
distance is limited to a few hundred metres, especially carrying shopping, and
they have no cars. They may well find their access to groceries decreases if a
network of independents every 50 to 100 metres is replaced by locals 1
kilometre apart.
4.3.4.
Conversely, a possible threat to the discounters – and discounter progress
abroad
After Wal Mart took over Asda in 1999, Asda stores commenced
an aggressive price cutting campaign, and Tesco also marketed its lower prices.
This posed a threat to the discounters, Aldi, Lidl, and Netto.
In the Leeds, West Yorkshire, area, there appears to have been a retreat from
some supermarket premises by some discounters around 2002 and 2003. The
predominantly frozen food store Iceland announced a drop in sales of
1.6% during the first 6 weeks of the 2004/5 financial year, after a o.7%
increase in sales over the previous 12 months (Daily Telegraph, 28/5/04, p.28).
This was blamed on the downwards pressure on grocery prices following the
takeover by Morrison of Safeway. Iceland is converting (2003,4) many of its
stores to a new format selling fresh food, hot bread, magazines, and tobacco,
as well as frozen food; in other words it is moving more towards the
convenience-store format, much as the Co-op has done.
The takeover of Safeway by Morrison, which was finalised in
March 2004, has also resulted in further fuelling of the price war between the
major supermarket chains. Safeway prices had been relatively high, near those of
Sainsbury (whose policy is to attract more upmarket customers and make more
margin out of them). Safeway used a strategy of higher prices along with
one-off discounts (Hi-Lo pricing) but this has been replaced by Morrison’s
strategy of Every Day Low Prices (EDLP) (Daily Mail, 10/3/04, p.34).
However ‘The Grocer’, 1/11/03, p.6, states that the EDLP
tactic of Asda and Tesco may have made consumers more aware of price and so
more willing to use discount stores despite their narrower range and perhaps
poorer shopping environment. The number of discount stores in the UK rose from
1,312 in 2000 to 1,475 in 2002, according to the Institute of Grocery
Distribution (IGD), mainly due to the ‘aggressive expansion of Lidl’. Current
planning restrictions on out-of-town supermarkets are said to be favouring
Netto, which is shifting its focus to town centres.
However in countries like The Netherlands, conversion to the
Euro in 2001 resulted in some stores raising their prices, which gave a boost
to the discounters there. Even wealthier shoppers turned more to the
discounters for groceries. But in The Netherlands, there are not nearly as many
large supermarkets per 1,000 people as in the UK.
In the Republic of Ireland too, the discounters Lidl and
Aldi have expanded rapidly since they arrived there in 2002, and by the end of
2003 had a 5% share of the grocery market (information here from TONY PARKER,
University College Dublin). Rather than setting up premises in poorer areas of
larger towns as in Britain, the discounters in Ireland have gone for the
smaller towns. Dublin, therefore, has fewer of them, but here they are used by
the middle classes too, for example to buy wine from Aldi or washing powder
from Lidl.
4.3.5. The clawback of trade
argument
The supermarkets use the clawback of trade argument
to say they benefit small-town shops this way. They argue that putting a
supermarket in a small town persuades the shoppers living there to also shop
there rather than travel to a larger town. This argument was used to justify
the opening of a supermarket in Exmouth, Devon, because it would keep shoppers
in Exmouth rather than them travelling to Exeter. In Garstang, Lancashire, a
Booths supermarket and a Safeway supermarket did improve the trade of
Garstang’s smaller shops because the supermarkets provided free parking.
However in Knutsford, Cheshire, the Booth’s supermarket apparently reduced the
trade of Knutsford’s small shops, despite also providing free parking, because
there was a main road separating the supermarket car park from the old town
centre.
Clawback of trade may work if the pedestrian flows to
the supermarket entrance pass smaller shops. Small shops in the Bramley Centre,
west Leeds, co-exist with a large Morrison, and the small butcher can sell
specialty meats not stocked by the supermarket. However in Brigg surveys
indicated that shoppers in the town centre were not using the Tesco a hundred
metres or so away, and vice versa. This was despite the Tesco having a large
free car park, and allowing non-Tesco shoppers to use this; otherwise Brigg
visitors would have to use a pay and display car park. This may be because
flows to the Brigg Tesco came off the by-pass, and the route to the town centre
was further on past the backs of the shops. Had the town centre been between
the free car park and the Tesco, some shopping synergy would probably have
resulted.
4.3.6.
Alternative strategies to smaller formats
Alternatively the supermarkets can try and define
suburban shopping centres as towns in their own right, and thereby claim
that adding a superstore here is not in fact ‘out-of-town’. Such a definition
reduces the concept of ‘town’ to a purely consumptional one, ignoring culture,
history, and much else. For some residential areas this may not be far from the
truth. Some supermarkets have been built with their own residential areas
attached, a sort of echo of the nineteenth century company town, but one based
on consumption, not production. Another tactic may be to acquire existing
stores now selling totally non-food goods, or even to acquire entire shopping
malls, and pull them down to build a new supermarket. The land use is already
retail, easing planning permission.
Some supermarkets plan to add an extra storey, as
they have ample ceiling space to do this, doubling their sales area. Planning
permission should not be required here as there is no visible change to the
building from outside, yet the supermarket sales space in competition with a
nearby town centre would be doubled (Guardian 5/5/02, p.12). In 2004, Asda has
plans to add an extra floor to 40 of its superstores. With kanban
(just-in-time) delivery practices increasingly used by supermarkets, storage
space is less needed, and some of this can also be turned into sales space,
again without the need for planning permission. Some planning applications for
new stores include large storage areas even though with kanban there is no
obvious need for it. Local shopkeepers fear this is a way of getting a smaller
store accepted that in the future can readily be converted to al larger one.
The extra space will be used to sell non-food goods, ranging
from shoes and clothes to medicines and electronic goods, directly competing
with the sort of shops in UK town centres.
Traffic levels and congestion around stores could rise,
unless new road capacity is added to correspond with the extra demand
generated.
4.4. Supermarket product
diversification
The supermarkets have diversified into many non-food
products, since they first began selling petrol cheaply to attract wealthy
car-borne customers. Between 1989 and 1992 the supermarkets’ total share of the
UK petrol market rose from 6% to 15%.
Clothes and jewellery are sold, for example by
Asda’s George range. White goods and electronic goods are widely
stocked. In 2000 Tesco had 8% of the market for CDs. Financial products
such as credit cards, mortgages, bank accounts, and insurance are
a major part of the supermarkets’ business. Cars may soon be sold by
Tesco. Tesco is looking at providing legal advice centres, under UK
government plans to deregulate legal services (Guardian 25/7/2003, p.7). Tesco
is also developing housing above its supermarket sites, such as at
Streatham, south London (The Grocer, 19 June 2003, pp.41-2). Tesco has similar
plans for Hammersmith and Earls Court. In Torquay, Tesco has smaller scale
plans for 22 flats above its Metro store. Sainsbury has similar mixed
residential and retail schemes planned for Pimlico, Forest Hill in east London,
Richmond in south west London, and Fallowfield in Manchester. Asda plans to
build a 9,400 square metre supermarket and 64 ‘social housing’ flats in Poole,
Dorset; the latter will expedite planning permission for the superstore. In
2003 the UK was in the midst of a housing boom, with the base rate at a 50-year
low of 3.5%, although in November 2003 the bank of England raised it to 3.75%.
Especially in London and the south east, high house prices were excluding many
essential workers such as nurses and teachers.
Many supermarkets also provide bus transport, the
free buses to their premises from villages and suburbs.
Supermarkets have also tended to move upmarket, a
change from, for example, Tesco’s 1970s slogan of ‘pile it high and sell it
cheap’. (This was also the title of the autobiography of the company’s founder).
Sainsbury is probably the furthest along this route, and aims to sell less by
volume but make more profit on this amount, by selling to wealthier people.
Farmers’ Markets have been one way that local food
producers can sell direct to the consumer. Consumers can get food at a good
price but the farmer also gets to keep more of the revenue. Many locations
gained a Farmers’ Market during the 1990s and early 2000s, and venues varied
from small market towns such as Brigg, North Lincolnshire, to cities like Leeds,
West Yorkshire. In 2003, Sainsbury, hard pressed by loss of market share
and a slip to third place behind Asda/Wal-Mart, attempted to fight back by
opening stores in Pimlico and Chelsea (affluent areas of inner west London)
that are modelled on traditional foods and service. The stores have an
old-fashioned glass counter, U-shaped for maximum interaction between the
public and store staff, and sell “traditional delicatessen, cheese, meat, fish,
and bakery goods, along with fresh takeaway food” (Daily Mail, 8/10/203). The
article continues, “Pimlico has a farmers’ market on Saturdays, but many small
food stores claim to have lost trade since Sainsbury opened last month”.
Supermarkets are aware that parents find taking their children around them stressful, not least because of ‘pester power’, the pestering by children for parents to buy toys, sweets, and other child-oriented items often placed strategically at child height and in a location such as the checkout area where bored children will be kept waiting. However such tactics may backfire and create negative publicity for the supermarket, particularly if tooth-damaging sugary snacks are marketed this way. Parents with the money and expertise may buy goods on-line specifically to avoid the perils of pester power. However Tesco has plans for a supermarket trolley specifically designed to keep bored children happy on the long shopping trek around the aisles (Guardian, 4/8/04, p.7). The trolley will have CD and DVD players and games to keep the children amused. Tesco admitted that shopping with children can be a problem, especially during the Summer holidays, but also said supermarkets can be great places for children to learn new things.
5. The UK Competition Commission
For planning issues, see ‘how did food deserts develop’
In 2008 the UK’s Competition Commission announced a new test
which the main supermarket chains would have to pass in order to gain
permission for new supermarkets in Britain.
The test was designed to promote competition between the major chains
and prevent the emergence of towns dominated by just one large food retailer.
Permission for a new supermarket by any large food retailer would be refused if there was another outlet run by the same company within a ten minute drive, or if the new store would increase the local market share of the applicant to over 60%.
6. Supermarkets
and shopping malls
Shopping malls usually have an ‘anchor store’ – a large retailer at one end of the Mall to act as an attractor for shoppers generally and to persuade shoppers to walk through the length of the mall. Tesco’s success in selling not just food but a wide range of non-food goods at very competitive prices may mean that mall developers are, however, reluctant to choose Tesco as the anchor sore for a new mall. “Your other tenants are just as important as your anchor and you could find that Tesco cannibalises them”, Sheila King, director of retail leasing at Hammerson is quoted as saying (Estate Gazette, 1/3/2008, p.44). In the US, where Wal-Mart was the anchor, other shops found it hard to survive in the mall.
7. The
2007-(current) Credit Crunch
As UK consumers feel their disposable incomes squeezed by rising fuel, energy, food, prices, they have shifted grocery spending towards the discount chains Aldi, Lidl, and Netto. These stores are now the fastest growing chains in Britain, whilst Tesco’s market share growth has halted.
[1]
According to a letter in The Economist (2/10/04, p.16, John Manning),
the Bon Marche department store in Paris instituted self service from 1869. It
displayed its wares for customers to inspect, rather than a counter assistant
bringing them from behind the counter, and it introduced price tags, so
eliminating haggling between customer and assistant.