The All Party Small Shops Group inquiry finished taking public evidence this week and, due to the huge response it has received, will publish its findings early next year. But what has the inquiry actually considered? First, let’s review some of the issues raised. When I spoke I explained how this is a crucial time for c-stores, with consolidation in the market putting pressure on the sector, and stated that if action is not taken soon a “tipping point” will be reached where it becomes impossible for fair competition to take place.
I made the point that government policy is not supporting local shops. Unlike other many other European countries we don’t have a policy banning below-cost selling or have transparency of buying prices. This has allowed the UK retail market to develop so a few large chains dominate. One of the stars of the inquiry was Ian Proudfoot, joint managing director of the Proudfoot Group. The committee heard about Ian’s evidence on predatory behaviour and focused discounting by his local Tesco.
He described how in July 2002 Tesco opened in Withernsea, East Yorkshire; Tesco’s initial start was slow, so it began offering vouchers for £8 off with every £20 spent - a discount of 40%. Ian argued that this was an example of predatory pricing, which the inquiry chairman Jim Dowd MP later described as “scandalous”. During the hearing, witness after witness expressed concern about the future of small shops. Many made the point that choice not only means choice of product but also choice of outlet, independent store as well as supermarket chain.
Two of the most eagerly anticipated speakers were Gerry Sutcliffe MP, the Competition Minister, and Tesco company secretary Lucy Neville-Rolfe. Sutcliffe repeated the view that there is “something wrong” with the grocery market, and said that “something needed to be done” to address it. However, he stated that the OFT was the body to consider issues relating to competition policy. Remember - that’s the same OFT that by its own admission made a mess of its last rulings on the market. Neville-Rolfe made some interesting assertions.
When probed on the subject of building a Tesco in Stockport 20% bigger than the original planning application, she said they “probably did not do the right thing”. And when questioned about the predatory behaviour by Tesco against Proudfoots, she denied that it was a tactic to put Ian out of business, saying it was used to “draw attention that Tesco had a reasonable offer”. Experienced superstore-watchers will take this with a pinch of salt.
This inquiry covered many issues, but has raised the profile of the high street and put it on the political agenda. The ACS hopes that the government will listen to the inquiry’s recommendations and take action to make a fairer market.