Business Essay: Discuss whether supermarkets are beneficial to the society.

The grocery industry is of huge importance in the UK and it is extensively relied upon on a daily basis by the population (Epolitix 2009). The UK grocery market is worth a staggering £123 billion and is controlled by four major players, namely Tesco (this company alone holds nearly one third of the market), Asda, Sainsbury’s and Morrisons (Finch 2008). Due to the strength and influence of these supermarket chains, it can therefore be argued that they both shape the way we shop and the types of food we consume. This essay aims to show that overall, UK supermarkets can be accused of being detrimental to the society that they operate within.

It can be argued that the extensive power and influence of supermarkets directly and adversely affects consumer choice. For example, there are entire areas in the UK, where certain supermarkets have almost total control over the consumers’ purse. For example, in Swansea, Truro and Inverness, £3 spent in every £4 is spent with Tesco (Renton 2009). This could suggest that this gives these particular retailers an inordinate level of control over what customers in these areas consume. To combat this, the Government’s Competition Commission is actively working to ensure that consumers have more shopping choice and that the ‘big four’ supermarkets do not continue to dominate whole areas. For example, it is implementing plans to help other shops gain a presence (Finch 2008).

Another issue to consider is that of unfair pressure on supermarket suppliers.Researchers such as Finch (2008) argue that The Government’s Competition Commission is also increasingly worried about the power that supermarkets wield over their famers and general suppliers. As a result it intends to set up a dedicated ombudsman with tough new powers to help to prevent what they currently view as exploitation of suppliers. Such practices include exposing suppliers to excessive risk and uncertain costs to their suppliers as well as setting unrealistically low cost prices. It is important to note that, even during the recession, the UK supermarket industry has been making record profits whilst, DEFRA reports, 63% of UK farmers are unable to make sustainable profits (Finch 2008). In other words, supermarkets are making huge profits but are not passing any of this to their suppliers. Commentator such as Renton (2009), point out The Competition Commission feels that supermarket dominance is for the consumer, small retailers, suppliers and the traditional high street, is a very bad thing indeed.

Certain supermarket buying practices could be placing the environment in danger. For example,UK Supermarkets have been accused of irresponsible behaviour as regards the environment. For example, historically their buying practices regarding seafood, has had a negative impact on our ocean’s fish stocks. This is because supermarkets buy in such large quantities that their purchasing behaviour makes such an impact. For example, Sainsbury’s alone accounts for 20% of all fish sold in the UK. The Marine Conservation Society claims that supermarkets tend to sell far too much seafood that has been overfished and practices urgently need to change towards sustainable sourcing, if fish stocks are to be saved (Smithers 2009).

It can also be argued that Supermarkets are actually shaping our eating habits and therefore our health. Commentators argue that individual dietary choice is affected by certain key factors such as taste, cost and convenience (French 2003). Supermarkets are well aware of this and offer consumers a high proportion of tasty foods, price promotions and convenient shopping options such as 24/7 opening hours and home delivery services. The obesity epidemic that has hit the developed world has been linked to excess consumption of fat and sugar and it is these two ingredients that provide dietary energy at very low cost in supermarkets (French 2003; Pollan 2007). Foods rich in fat and sugar are widely available and extensively promoted in supermarkets. For example, take the current price promotions that are available on Tesco online: There are 140 price promotions on biscuits snacks and sweets and a further 161 on pizza related snack foods, plus there are another 469 ready meals. Conversely, there are only a total of 56 promotions available across the entire fresh fruit and vegetable selection (Tesco 2009).

The frequent supermarket promotions on such ‘unhealthy’ products, including price reductions and BOGOFS (buy one get one free), encourage the consumption of these foods which is detrimental to health. For example, if consumers are shopping on a budget (as many are during the current economic crisis), in a supermarket, they can get far more calories worth for their money by buying junk food, rather than healthier fresh food which attracts a premium (Pollan 2007).

There are however certain positives that supermarkets offer to UK society, for example, it can be argued that they do serve as a useful purpose as they offer convenient, highly accessible shopping, often seven days a week and during the night. All the ‘big four’ also offer internet shopping and home delivery (Tesco 2009; Asda 2009; Sainsbury’s 2009; Morrisons 2009). All these measures are arguably helpful for the growing numbers of time poor customers, who need access to food when it is convenient for them. For example, the UK holds the record for the longest working hours in Europe (Burke &Cooper 2008). It is also important to note that Supermarket representatives including The British Retail Consortium, argue that price wars between different supermarkets actually benefit the consumer as they force prices down. However, these arguments are countered by bodies such as The Office of Fair Trading, which claim that customer choice is reduced by the monopoly of supermarkets. Unhelpful practices include below cost selling of products combined with the closure of many independent high street shops (Epolitix 2009).

In conclusion, this essay argues that overall, supermarkets in the UK have a significant negative impact on UK society. This includes encouraging poor eating habits through to damaging the environment via irresponsible seafood buying practices.

 

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