Cheap food - at a huge price

Why do the British shop in supermarkets? Easy. Price, convenience, quality and choice; the mantra of the market economy. But is perception matched by reality?

On price, the food retailers know more about us than we know ourselves. It has probably never occurred to you, for example, that you know the prices of about 20 goods. A pound of sugar, pint of milk, loaf of bread, even - Christmas being just over - a pound of turkey: you know what you should pay and will seek out the cheapest source.

What you didn't know is that these are "Known Value items" or KVIs - supermarket jargon for the lines on which customers compare prices.

The flip-side to this is that other goods are not KVIs. You may know the price of a tin of beans, but are you sure about a pot of mustard? Milk at 20p a pint sounds like such a bargain that you hardly notice the price of the drinking chocolate Supermarkets are very cheap for some goods, but what you save on the loss-leading swings you gain on the marked-up roundabouts. Take fruit and vegetables. Last summer we compared prices between supermarkets and street markets of the old-fashioned endangered variety. Like for like, the markets won on almost every count.

Of course, you can buy your turkey in one place and the cranberry sauce in another. But the supermarkets know that in practice you won't - after all, you've probably driven several miles through heavy traffic to get to the store and you're not about to do so again to save a few pounds on the weekly bill.

If they're not such paragons on price, at least supermarkets are safe, convenient and accessible by car. Or are they? If, like a third of the population, you don't have the use of a car, they are not. But even getting to the store by car may be far from convenient. Over the past 20 years the number of shopping trips has increased by a third and driver shopping mileage has more than doubled. Given Britain's congestion, more journeys of increasing length doesn't sound very convenient. Nor is i t: in the Sixties, according to Professor Jonathan Gershunt of Essex University, consumers spent on average 41 minutes per day shopping (both for food and other goods) and in related travel. In the Eighties this had risen to 70 minutes, with studies show ing that food shopping accounts for more than three-quarters of total shopping time.

According to Professor Gershunt, "the increase in shopping time reflects the growth of `self servicing' and the growth in the size of supermarkets ... the larger the supermarket the more walking for the shopper and the greater the average distance from theshopper's home ... The retail industry in effect externalises a large part of its costs."

On quality and choice, supermarket products may be varied and consistent - but is what you see what you really get, and are you paying the real costs? Supermarkets' huge buying power and demand for absolute consistency means that fruit and vegetable production are now industrialised processes. Multiples have 60 per cent of the market and suppliers who cannot deliver 52 weeks a year need not apply. Your Brussels sprout may be perfectly formed, but at what cost to the countryside? Biodiversity on the shelf is increasingly at the cost of biodiversity in the field.

While it has long been recognised that the perceived benefits of supermarkets are not spread evenly between social groups (the chief executive of the supermarkets' own research organisation acknowledges that old and poor people will have serious problemsover where to buy food because of the growth of superstores and the lack of town centre stores), our research leads us to believe that even for the better-off and mobile, the advantages of supermarkets are beginning to be outweighed by the drawbacks Thedecline of the town centre is well documented and attributable, at least in part, to the development of out-of-town shopping centres. The big retailers' claims to efficiency in transport are bogus. Much freight transport is unnecessary - produce coul d be sold locally. More than a third of the increase in freight transport since the late Seventies has been for food, drink and tobacco - which together account for less than one-tenth of the economy. Next time you use a motorway, count the supermarket t rucks. No wonder the big retailers are such lavish supporters of the British Road Federation.

It's the same story with packaging. According to the Government, "the stocking policies of supermarkets ... largely contributed to non-returnable [packaging] attaining [its] present share of the market", while MEPs reported that an EU directive to reduce

packaging was "the most lobbied issue in the (EU) Parliament's history". The supermarkets are used to getting their way; the directive was duly eviscerated.

While many drawbacks of the supermarket economy are beginning to be recognised and debated, one crucial area of public policy is moving in entirely the wrong direction. UK competition policy is weak, and with the premature departure of the director general of fair trading, getting weaker.

Predatory pricing, such as last month's Christmas turkeys that were priced at less than half what they cost the retailer, is approved because it "benefits the customer" - and the interests of the fresh turkey producer and traditional butcher are cast aside. In many countries this would not be possible.

Similarly with market share. The Office of Fair Trading says the retailers have no case to answer, since none of them has anywhere near the critical 25 per cent of the national grocery market. But shopping is a local, not national, activity. Most shopping journeys, though getting longer, are still less than five miles. In some local areas the big three retailers have up to half the sales space and approaching two-thirds of the market. It is little consolation to the Midlands shopper facing such concentr ation to know that there's more competition in Scotland.

Britain's retailing policies need a radical shake-up. We need more smaller shops, buying locally, and revitalised street and covered markets. We need still tougher rules on out-of-town development, and freight companies should pay the real costs of theiroperations. Above all, we need competition authorities that will tackle the leviathans.

`Off our Trolleys? Food retailing and the hypermarket economy', a report by Hugh Raven and Tim Lang with Caroline Dumonteil, is published today by the Institute for Public Policy Research at £4.95.