Supermarkets are sucking the high street dry

So much for the market saturation Archie Norman used constantly to warn of a few years back. He's changed his tune quite a bit since then. This year Asda plans to open eight new superstores. And although Mr Norman has done a fine job in turning Asda round and making it the store you might want to go to out of choice, it is not market penetration alone that allows him to do this. Tesco too will be opening eight new superstores this year and Sainsbury's something similar. Safeway is expanding, and Somerfield will also want to extend its tentacles once floated on the stock market.

Asda says it hopes to avoid planning restrictions by shunning greenfield sites in favour of derelict land. That may help get these monstrosities built but it doesn't make them any more justifiable. The fact is that each new superstore is deliberately designed to take essential trade away from the nearest high street. In that sense Mr Norman is right to talk about saturation.

The grocery trade isn't growing, or not by much, but it is becoming consolidated in the big hypermarkets. In their constant search for new markets and new products they are sucking the high street dry. And in so doing they are building a powerful oligopoly that future generations will curse us for allowing. For the time being, the convenience and economies of scale that hypermarkets allow seem largely to work in the consumer's favour. But with so many powerful local shopping monopolies being created, it will not always be thus. Asda yesterday announced it is buying 10 pharmacies which will be shifted into the nearest Asda. This is all part of Stormin' Norman's campaign to cut the price of over-the-counter medicines.

Though Asda denies it, the campaign will also push many small independent pharmacies to the brink of extinction, robbing the high street of yet another essential service - the fulfilment of prescriptions. You and I might like the convenience of buying our medicines with the weekly shop from the nearest supermarket, but when the little old lady from round the corner pegs out because she can't make the journey, we may not be so sure.

Bit by bit the supermarkets are hoovering up all the services that once apon a time were bought piecemeal on the high street. There are dry cleaners, hairdressers, florists and travel agents, post offices, bank ATM machines and record stores. Why even gas and electricity, Mr Norman promises, will eventually be sold through the supermarket. Nor is the damage confined to smaller in-town retailers. Product suppliers, too, are being squeezed to the point of oblivion.

If the Government really wants to protect the high street it must encourage local authorities to offer better parking, cleaner pavements, and more security. High street stores, so used to competing with each other, will have to club together with more joint promotions, and joint loyalty cards, to make their local parade more attractive. Otherwise we will soon find that we have more supermarkets than we are ever likely to need. And not a lot else.

BT needs to be held in check

Whether or not cable operators are justified in accusing BT of dirty tricks, there is no doubt that the timing of these allegations could hardly have been worse for Britain's still dominant telecoms company. BT is desperately trying to resist demands from the regulator, Don Cruickshank of Oftel, for new powers which would allow him to crack down on any anti-competitive practice in the telecoms market.

So far BT has won some support for its position. The tone of most reasonable comment on the matter has been yes, the regulator is going too far this time; he's asking for absolute powers and there is a real danger of him exercising them in an arbitrary and oppressive fashion.

Now BT is being accused of abusing its access to confidential data by phoning hundreds of ex-directory cable customers and asking them to consider switching back to BT. Even if the allegations are not true, some of the mud will stick. The point that will be made is that you cannot trust a monopoly.

Mr Cruickshank has already eased his demands on tariffs to a level BT admits it can probably live with. The sticking point remains the fair trading powers. We'll go to the Monopolies and Mergers Commission, screams BT. Maybe it will, but it is unlikely to do any good. Fair trading powers of the type demanded by Oftel are pretty much par for the course throughout the rest of Europe and it won't be long before they arrive here.

True, they don't yet apply on the Continent to the state-owned telecoms monopolies, but they will after 1998 when liberalisation is meant to become a reality. There are already enough channels of appeal open to BT against the possibility of arbitrary decision-making by the regulator - the Monopolies and Mergers Commission and the courts being the main ones. On the balance of possibilities, it is much more likely that BT will abuse its position as a monopoly than that Oftel will abuse its position as a regulator. Even if the cable allegations prove ill-founded, they make a good point - monopolies are bad news, they need to be held in check, and the regulator needs adequate powers to do so.

Banks are back in bad habits

There has been a movement afoot to persuade investors that banks are reformed institutions that do not throw money into black holes at the first opportunity, as they have done from time immemorial.

There are certainly a number of positive factors at work. To name but three: bank management is infinitely more professional than 10 or 20 years ago, when it was too often a mixture of over-promoted clerks who knew detail but no strategy and well connected chaps from the establishment who knew nothing at all.

There is also a great deal more technical expertise around, about risk management and all the rest of it, so banks are better at analysing their own businesses. More important than either of these is the real possibility that Britain's low inflation is now here to stay, whichever party is in power, which is a much better environment for safe lending.

In the last Quarterly Bulletin the Bank of England had a go at mortgage lenders who were virtually giving away their money, which is asking for trouble. Yesterday Pen Kent, a Bank director, made clear his exasperation with corporate lenders who are returning to all the bad habits that got them into trouble last time, such as lending at non-existent margins with low security and weak covenants.

With the Bank of England remaining so sceptical, the idea that banks have reached some kind of promised land in which the cycle of greed and repentance is abolished is plainly ridiculous.