Supermarkets can often be seen as mundane or unremarkable, but their importance becomes clear when something goes wrong. If there’s a problem with our food supply, we can’t put food on the table. The way we produce and sell food reveals its vulnerabilities whenever there’s a disruption, whether it’s fuel protests, trade barriers, or supply crises. Unfortunately, as consumers, we lack real alternatives due to the centralization, concentration of ownership, and global supply chains in the industry.
Supermarkets are more than just retail establishments, they are economic powerhouses, but they have inherent design flaws. The “house of food” is built on shaky foundations and is ill-equipped to handle future shocks. About a decade ago, UK supermarkets experienced a golden age, dominating the market and enjoying high profit margins. However, this came at the expense of independent shops, jobs, and community cohesion. Regulators identified abuses and anti-competitive practices, but took no substantial action.
I highlighted the dangers of supermarket power in my book, Tescopoly, over a decade ago. While new players like Aldi, Lidl, and Amazon have entered the market, critical problems persist in a heavily centralized and concentrated supply chain. The largest supermarkets in Britain have been accused of profiteering during the current cost of living crisis. Research shows significant price increases over the past two years, with some products rising by more than 30% since 2021.
Four companies, Tesco, Sainsbury’s, Asda, and Aldi, now control 66% of the market, with Tesco being the most dominant. Their size and power allow them to prioritize profits and shareholders over the needs of local communities and the overall economy. This makes them difficult to regulate. While supermarkets present themselves as consumer-friendly, the numbers don’t add up. In the previous financial year, the top three retailers made £3.2 billion in profit. As food prices increased, Tesco and Sainsbury’s reported their highest profits since 2014 and are now passing on £1.2 billion to shareholders.
Unite defines profiteering as taking advantage of a situation to make a profit, often by charging high prices for essential goods. A report by Unite earlier this year concluded that supermarkets have used the cost of living crisis to drive profits to levels not seen in a decade. Despite a 17.4% inflation rate for food and non-alcoholic drinks, supermarket executives remain unaffected. While public sector workers were told to restrain their demands for pay increases, Sainsbury’s CEO received a 36% pay rise, earning £4.9 million. Tesco and Morrisons’ bosses also earned over £4 million each, with salaries over 200 times higher than their average workers.
As CEOs and shareholders reap the benefits, these financial gains often come at the expense of others. Tesco and Asda announced job cuts, with thousands facing pay cuts or losing their jobs. The Office for National Statistics revealed that 25% of checkout jobs were lost between 2011 and 2017. Amazon’s entrance into the market eliminated the need for checkout assistants altogether. While these changes may result in cost savings and efficiencies, they also create a more impersonal atmosphere and can negatively impact vulnerable populations.
One US supermarket chain recognized the importance of human interaction and stated that “helping one another just cannot be replaced.” They emphasized the benefits of employing local neighbors and how it positively impacts communities. Supermarkets employ a range of tactics that make it challenging for low-income households to afford food, such as confusing marketing or missing pricing information. Many low-income individuals rely on smaller local stores, but the supermarkets stock few affordable essentials there. This lack of access is concerning and raises questions about the true intentions of supermarkets.
We need a more resilient and humane food system, but we seem to be moving in the opposite direction. The lack of small, independent growers, producers, and retailers leaves us increasingly dependent on supermarkets and their self-interest. The pandemic made it evident that people desire a better system. Future climate and energy shocks will exacerbate these issues and leave us even more vulnerable.
To address these challenges, we need stronger regulators who have the power to limit the size and market share of supermarkets in specific areas. These regulators should also address the advantages supermarkets have over smaller retailers, such as dedicated car parks, which encourage unnecessary vehicle use. Preferential business rates could be granted to small, independent, local businesses to acknowledge the benefits they bring.
Our food system must prioritize resilience and meeting people’s needs over the profits of a select few. As it stands, every tap at the self-checkout drives us closer to the edge.
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