Sam Walton, founder of US retail giant Wal-Mart promised a better life for all through low prices, but should we buy it?
At a price of £3.5m, and a length of 1122 pages, you might have expected the long-awaited Competition Commission’s verdict on supermarkets to have solved some of the burning issues on the high street. Like: is right to continue to allow a policy of ‘price-flexing’ when prices are upped in locations where there is no competition from discount stores as practised by Tesco, the Co-op, Netto, Safeway, Sainsbury and Somerfield?
Another unsolved problem is how small local producers and retailers can hope to stay in business when 22 of the total 24 multiple retailers investigated continue to sell items at ‘below cost‘ to undercut the competition. Does it matter that urban areas become deserts of empty shops?
While the report admits that these practices are not in the public interest, it recommends no action, claiming that any remedy could cause greater problems than it would solve. “The harm done to consumers is not sufficient to provoke action,” it says. Harm done to independent high street shops, it seems, does not enter the CC’s agenda.
There is better news, though, for producers who are charged ‘listing fees’ by the supermarkets. Their complaints have been upheld and a code of practice, which will be legally binding, is to be set up within the next three months. It will look at 30 common ‘practices’ by the big five, which it considers are not in the public interest.
So there will be an end to the listing fees like the one reported to the CC when Safeway sent out letters to farmers about their ‘new promotional strategy’ entitled ‘GOOD NEWS FROM SAFEWAY’. It promised to deliver much improved availability for their product. For which they requested a fee of £20,000 per product line. “We look forward,” the letter continued,” to you joining us in this campaign.”