Outline the Nature of Supermarket Power on the Highstreet

July 5, 2018 General Studies

Wal-MartIn order to outline the nature of Supermarket Power on the High Street and beyond it is first important to establish what is actually meant by the term Power. Power is a complex term used to denote influence, control or domination (Allen, 2009, p 59). Because supermarkets sell products of many descriptions it is important to explain that ‘shopping’ has become a large part of people’s everyday lives and it has been suggested that we now live in a Consumer Society.

A Consumer Society is a label used to refer to a society which is defined as much by how and what people purchase and use as by what they make or do (Hetherington, 2009, p 13). So what therefore is the nature of supermarket power on the high street and beyond if, we do now indeed live in a consumer society? What makes a supermarket powerful? The obvious answer to this would be in the name “super” which indicates size, not individual store size but how many stores across the country, which means supermarkets such as Tesco, Sainsbury’s and Asda can dominate the market place.

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A supermarkets size matters in this sense because they have both market power and buyer power. Market Power is the power to influence market conditions, including price, independently of competitors, they can do this because they have a larger market share and rivals can do little about it. Buyer Power is the relative bargaining power between firms and their suppliers, larger stores are able to bulk buy and this enables them to demand discounts and more favourable terms which of course smaller businesses are not able to do (Allen, 2009, p66).

However, just because supermarkets have this ability does not mean the people are forced to shop in such stores, no one has been coerced. The question is whether people have been dominated or seduced to shop at the supermarkets. By this I mean if one feels like they have no choice but to shop at the larger supermarkets then this is domination, however if the choice to shop at such shops is purely because one has been enticed by the range of goods then this is seduction.

There is no right or wrong answer here and it is how you view the supermarkets to be asserting their power. An example of someone having their choices taken away from them and forced to shop at the supermarkets is shown from audio material where a female shopper was stated to say ‘I couldn’t find what I wanted in the street so I’m going to Tesco’s. I prefer to shop locally but I shop at Tesco all the time now’ (Evidence in the social sciences’, 2009). Market and Buyer Power can be used by supermarkets o monopolise the food and groceries market, whether this is by seduction or domination is argued either way by pro and anti-supermarket campaigners. Supermarket power can be seen in two different ways: Zero-sum game where a situation in which one party’s gain is balanced by another party’s loss. If you subtract total losses from total gains, they sum to zero and; Postive-sum game where a situation in which the sum of total gains and losses of all parties involved is positive, that is, sum to more than zero (Allen, 2009 p70).

Basically this means that in a zero-sum game instance supermarkets are expanding and growing whilst small independent high street businesses are closing due to the increase of supermarkets as they cannot compete. A positive-sum game would view the increase of supermarkets as giving more choice for consumers and also job opportunities and even local regeneration, everyone gains from more supermarkets.

Supermarkets are now taking over the high street, are they putting more pressure on local independent stores? Supermarkets now have convenience style stores directly on the High Street, i. e Tesco Metro. Independent local stores that may have once been holding their own on the high street are now directly up against the supermarkets. The opening of these convenience style stops by the supermarkets has increased the closure of the independent stores; this is a clear example of a zero-sum game of power.

John Dodd from the Bristish Retail Consortium however stated that where there are supermarket style convenience stores they are acting more like anchors in the high street so they are in fact attracting other retailers and you could therefore argue that they are part of a regeneration strategy, this was however argued by Helena Rimmer from Friends of the Earth who said that the exact opposite is actually happening and in fact led to a decline in small local shops (‘Evidence in the social sciences’, 2009).

This is supported by the Federation of Small Businesses where they point out that, since 2000, some 7000 local grocery stores have been lost, with independents closing at the rate of 2000 a year, whereas, over the same period, Tesco, Sainsbury’s, Asda and Morrisons have doubled the number of stores that they operate (Federation of Small Businesses, 2006, cited in Allen, 2009, p 74). Supermarket power beyond the high street means the effects on migrant workers in the UK and overseas workers.

Industries in the UK employ a large range of migrant workers who work excessive hours for little return. The reason behind this it seems is that supermarkets are imposing their buyer power on suppliers to keep the prices low. We as consumers are then seen to benefit directly from low supermarket prices at the expense of those employed by suppliers keen to give us products all year round. Suppliers are themselves caught in the middle of all this, with their financial margins squeezed by supermarkets to the extent that they cannot afford to pay their workers a decent wage.

You might like to think of this as another claim about domination, where the big multiples, by hiding behind their chain of subcontractors, in this instance give the latter no choice but to pay their workers less as supermarkets drive down prices at the factory and farm gates (Allen, 2009, p 83). Tesco and Asda have been targeted by War on Want, who accused them of boosting profits at the expense of the most vulnerable workers, namely sweatshop garment workers in Bangladesh.

In factories known to be providing Tesco and Asda with low cost clothing working conditions were found to be overcrowded, unhygienic, verbal intimidation, made to do overtime and refused access to trade unions, not to mention to actually work for a poor wage that was not sufficient to provide for them or their families. The relentless pressure on the factory owners to keep costs down or risk losing the clothing contract was said to leave them no room for manoeuvre (Allen, 2009, p 85).

However, pro-supermarkets would argue that a bad job is better than no job and this is what overseas workers might face if the supermarkets did not source products from overseas. The nature of the supermarkets power on the high street is one of domination and seduction. Seduction because there is still choice to not shop in a supermarket and to source items elsewhere, but can also be seen as domination because independent shops are still closing down due to the supermarkets opening more and more stores including directly on to the high street.

At some point if supermarkets are allowed to continue to open stores at the rate they are doing and to provide more and more range of products there will be no other shops to go to and therefore the high street will be dominated by the supermarkets. Beyond the high street farmers and factory owners in the UK and abroad are forced to cut financial margins by the supermarkets demanding lower prices, due to the size of such supermarkets lower prices are agreed for fear of losing the contracts altogether this is the supermarkets buyer power in full force.

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