Supermarkets can seem as mundane as public utilities, as dull as plumbing – until something goes wrong. If the plumbing goes wrong, the ceiling collapses. But when the supermarket goes wrong, you can’t put food on the table.
The naked vulnerability of the way we produce and sell our food is revealed whenever there is a shock to the system – whether that be fuel protests that disrupt deliveries from distribution warehouses, post-Brexit trade barriers increasing the price of food imported from the EU, or supply crises due to war or climate-related crop failure. In an industry defined by centralisation, concentrated ownership and global supply chains, things go wrong, often, and the problem for us – the shopper, the consumer, the citizen – is our lack of any real alternatives.
More than just retail plumbing, supermarkets are a form of giant economic architecture, but one with fundamental design flaws. The “house of food” sits on shaky foundations. It is palpably unsafe for a future full of worsening shocks.
Around a decade ago, the big UK supermarkets enjoyed what was, for them, a golden age. They dominated the market, raking in profit margins far above the international average. For high streets, independent shops, jobs, suppliers, producers and the social glue that holds communities together, it was a different story: one of closures, ghost towns, lost employment and economic thumbscrews being twisted. Regulators found repeated abuses and anti-competitive practices among the supermarkets but only wrung their hands, taking no meaningful action.
I warned about the dangers posed by the power of the supermarkets over a decade ago in my book Tescopoly. At that time, just three supermarkets controlled about 70% of the grocery market. Things have changed since. New companies have entered the UK market, from German discounters Aldi and Lidl to US online giant Amazon, but critical problems remain, not least the vulnerabilities of a still highly concentrated and centralised commercial food chain. Britain’s biggest supermarkets have been accused of profiteering amid the current cost of living crisis. This week, research by the consumer group Which? reveals prices have risen significantly over the past two years. Some products have gone up by more than 30% since 2021.
Four companies, Tesco, Sainsbury’s, Asda and Aldi, now control 66% of the market, with Tesco still by far the most dominant player with over a quarter share (27%).
Such size and power allows any or all of them – whenever they wish – to prioritise profits and pay shareholders and bosses ahead of considering the needs of local communities, the efficiency of the food chain and the economy as a whole. It also makes them hard to regulate.
Supermarkets try to paint themselves as the consumer’s friend, but the figures don’t add up. In the financial year up to 2022, the largest three retailers took £3.2bn in profit. As food inflation kicked in, Tesco and Sainsbury’s made their biggest underlying profits since 2014, and this year are passing on £1.2bn to their shareholders.
The union Unite defines profiteering as “the act of taking advantage of a situation in order to make a profit, usually by charging high prices for things people need”, and in a report earlier this year concluded the supermarkets have “used the cost of living crisis to help push profits back up to levels we haven’t seen for a decade”.
In June, the inflation rate for food and non-alcoholic drinks was 17.4%, and yet no cost of living crisis has affected supermarket bosses. While public sector workers were being told to rein in pay claims, the chief executive of Sainsbury’s took a 36% rise last year, banking £4.9m. Bosses at Tesco and Morrisons also took over £4m each, giving them salaries over 200 times that of their average workers.
As the money rolls in for CEOs and shareholders, the “cost savings” and “efficiencies” that generate it are often the result of other people’s jobs disappearing or being downgraded. Earlier this year, Tesco announced 2,000 planned jobs cuts and Asda 300, with more than 4,000 other Asda workers facing a pay cut; while Sainsbury’s has cut thousands of jobs over the past three years.
The Office for National Statistics found that 25% of checkout jobs had already been lost between 2011 and 2017. And the arrival of Amazon means there are now UK supermarkets with no checkout assistants at all – but sensors instead to track what shoppers remove from shelves, and “just walk out” technology to bill customers and end queues. This shift affects more than jobs. It creates a more impersonal atmosphere and for some older people, in particular, it may deprive them of their only human contact of the day.
One US supermarket chain recently ruled out replacing cashiers because it said, “Helping one another just cannot be replaced,” and “Employing our neighbours not only benefits this company, it also benefits our communities.”
A host of other supermarket tricks make life hard for those least able to afford food. The Competition and Markets Authority recently identified several practices that it thinks are “problematic”, including confusing in-store marketing and missing pricing information.
Many low-income households without a car depend on smaller, local stores, but few of the supermarkets’ lowest-priced essentials are available there. Which? called this “shocking”.
Indeed, far from being the consumers’ friend, Tesco was censured by the CMA in 2020 for breaking the law by blocking rivals from opening shops near its stores to the detriment of shoppers. And even when the big stores want to lower prices for consumers, it comes at a cost – not to the supermarket, but to already squeezed suppliers who are themselves having to meet higher bills.
Just as we need a more resilient, humane system, we’re getting the opposite. The lack of small, independent food growers, producers and retailers leaves us ever more dependent on supermarkets and their self-interest. The pandemic revealed people want better. Future climate and energy shocks will widen the cracks, and leave us more vulnerable.
We need stronger regulators with the power to limit the size and market share of supermarkets in any given area. They need to tackle the unfair advantage their dedicated car parks give them over smaller retailers, that also encourage people to drive two-tonne SUVs to buy a pint of milk. Preferential business rates could recognise the greater benefits that small, independent, local businesses bring.
Our food system must be redesigned to put resilience and meeting people’s needs before profit for the few. As things stand, when we tap at the self-checkout, we tip ourselves closer to the edge.
Andrew Simms is an author, political economist and co-director of the New Weather Institute
