Supermarkets: Unemployment, Monopoly Prices and Food Deserts

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The supermarket problem

 
 Panorama on Supermarkets from 2010

YouTube Video

 


Commentary 


The information, in this video, is from the 1990’s.  However, the situation remains and has  deteriorated. 

The supermarkets may struggle to demonstrate their benefits to the public.  If small independent grocers close then there is unemployment.  This is a situation which the supermarkets can exploit by charging monopoly prices.

Increasingly, the major four supermarket chains in the United Kingdom are competing amongst themselves.  Profitability may suffer.  It would be interesting to find out the profitability of each individual store.

It is not clear that supermarkets are benefitting society, with better overall public sustenance.  The business policies of some of the fast food sector could be criticized in a similar manner.  


Updated Commentary for 2012

The point on profitability suffering has been borne out.  Tesco's profit warning could have been partly caused by its shoppers going to  Asda instead.  There is significant competition between the leading supermarkets.

The 'Food Desert' problem could be less serious with Asda's acquisition of Netto.  Asda has provided more fresh food to people in inner city areas using the old Netto stores.

Perhaps, there has been a trade-off between lower supermarket profitability (for Tesco) and higher food sales (for Asda).

The argument in the top video about lower supermarket profitability, particularly from out of town supermarkets, becomes more relevant. This is the case with the continued expansion of supermarket space in the UK. The Panorama report discusses supermarket expansion too. 

Out-of town supermarkets remain unhelpful for the old and poor in inner urban areas.  These groups have limited access to them given their low car usage. Therefore, the 'food desert' problem remains relevant in 2012. 
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