Aurora Magazine

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A nation of shopkeepers

Published in Mar-Apr 2018

The darker side of Britain’s grocery revolution.

Napoleon once sneeringly remarked that Britain was “a nation of shopkeepers.” It was meant as a put down in contrast to Gallic sophistication and culture.

Be that as it may, it does seem that we have a particular genius for creating the retail chains that dominate our towns and cities, much to the chagrin of romantic types who have reconstructed a fantasy of a golden age, when little independent shops delivered friendly service and acted as the hub of the local community. But there is no progress without loss, or at least a sense of loss.

The undoubted benefits in the UK of the revolution in retailing have a dark side. All revolutions do. They have winners and victims and nowhere has the retail revolution been so complete as in grocery, with the march of the multiples over the past four decades. Such a radical change in the way Brits buy their food has multiple drivers, causes and consequences for suppliers and the wider culture.

Cheaper food

Multiple grocers concentrated their buying power and this drove down prices. The small, independent, high-street grocers could not compete. ‘Good food costs less at Sainsbury’ was their claim. Tesco competed by ‘piling it high and selling it cheap’ – in the immortal phrase of the founder Jack Cohen. The 2008 economic crash opened the door to the German discounters – Aldi and Lidl – which grew initially with a formula somewhat similar to Cohen’s; they had limited ranges and offered cheaper price points. You could save quite a lot if you switched from Sainsbury to Aldi or Lidl. The decade after 2008 saw wages stagnate and that was the big opportunity for the German discounters to take share and move upmarket. These shops are no longer places where middle-class folks would not be seen dead; they are now a smart choice for the cash-strapped middle-class. Meanwhile, Tesco, Sainsbury and Morrison’s have to watch their backs and remain keen on prices or else the German discounters will further increase their market share. UK grocery today consists of big, powerful companies with sophisticated and extensive supply chains, competing fiercely in a mature market. The winner: consumers. Forty or 50 years ago, working-class people had to spend as much as 50% of their income to feed their families; today, the food budget is half that. That is a driver of a wider social and consumer revolution. Bearing down on food costs frees up cash for other things – such as holidays, big TVs, fashion, going out and more.

Convenient

Stores from the big grocery brands are ubiquitous and not only the big superstores, but town and city centre stores. As out of town superstores reached market saturation, the only way to grow was to go back into town and reinvent the local store. Hence the ubiquity of Sainsbury Local and Tesco Express (as well as small format Waitrose and M&S in more upmarket areas). Within a 10-minute drive of where I live, there is a Sainsbury Superstore, three Sainsbury local stores and an M&S. So, it is convenient but it is something more; it is something I don’t have to think hard about.


The revolution in convenience moved in lockstep with another – the changing role of women and the nature of the modern family. As more women went out to work, they became busier and overstretched, juggling the roles of mother, wife and home manager.


I assume that there will be a store within easy striking distance; I know the store layout and what they sell, and behavioural psychology teaches us that we are naturally lazy and drawn to make the least exhausting decisions.

The revolution in convenience moved in lockstep with another – the changing role of women and the nature of the modern family. As more women went out to work, they became busier and overstretched, juggling the roles of mother, wife and home manager. Forty percent of marriages end in divorce, which produces yet more “women who juggle” – as the role of childcare typically falls to the mother. Big grocery multiples, ever alert to the evolving needs of their customers, responded with ‘the ready meal’, increasingly found in the in-store chiller cabinets. To deliver this food safely from central production units to local stores, they invented the cold storage supply chain and created expertise in logistics and stock management. (Amazon’s power in this area is built on their pioneering work). Mum could come home from work, pop a ready meal in the microwave and put food in demanding nippers within minutes.

Choice

A big superstore might carry as many as 40,000 lines; a massive increase in choice no local store can compete with. Sainsbury switched their ad claim to ‘try something new today’. As Brits travelled (and ate) more abroad and watched an ever-expanding number of chefs on TV, the big grocers were on hand to feed their taste for experimentation. People watched Delia Smith, Jamie Oliver, Gordon Ramsey and many others and could be sure that they would find not only the mainstream ingredients, but the obscure ones too. Because of Empire and large-scale immigration, Britain has soaked up food cultures from around the world. Most towns have at least one ‘Indian’ or ‘Chinese’ – and increasingly ‘a Thai’ or ‘a Mexican’. Pizza and pasta are now so much a part of our diets that we have forgotten that they were originally Italian. Fruit and vegetables once considered exotic, are now available. Global sourcing and supply chains mean that mangoes and pineapples can be bought year-round. Brits have been decoupled from the seasons of the agricultural year. When I was a boy, I knew that the asparagus season lasted about a month and that strawberries arrived around the same time as the Wimbledon tennis tournament. Now, they are in store all year, courtesy of the extensive poly tunnels in southern Spain or the fields of East Africa and Peru.

A customer centric revolution

Cheaper food, convenience, time saving products and a dizzying range of choice all-year-round have produced great companies that have pioneered in – among other things – product innovation, category management, environmental and store design, data-driven targeting, stock management, global sourcing, supply chains and branding. Once upon a time, the brands were owned by manufacturers. Now the likes of Sainsbury, Tesco, M&S, Morison and Waitrose outgun them in both brand fame and ad spend. Companies often talk about wanting to be ‘customer centric’, but the big grocers genuinely are. Daily sales data teaches them what customers want. They have to adapt or one of their lean, mean, hard-nosed competitors will eat their lunch.


In Britain, grocery shopping is culture. And you can’t really understand its high streets, the shape of the people and how they like to spend their time unless you know about the history of how Brits buy food.


The price of progress

The big grocers used their buying power to bear down on supplier prices. Some they wiped out completely, when manufacturer brands were replaced by own label brands. I remember the ashen face of one of my clients who had just lost 30% of her business in one meeting with Sainsbury. At its high-water mark of market share, Tesco was revealed as a bully, abusing its market power. The result was consolidation on the supplier side. Unilever and P&G culled their brands to focus on fewer power brands. P&G closed factories and laid off staff to increase ad spend and innovation behind those power brands. Power on the buying side had to be matched with power on supplier side. Business got tougher and uglier. Suppliers cut corners to maintain their margins. Horse meat was found in the burgers of a famous brand. Britain had become used to paying too little for its food. Something had to give – and often it was quality.

As for those independent retailers – well, they were wiped out and they have not come back. True, some high streets in prosperous areas reinvented themselves with specialist coffee shops, delicatessens, fishmongers, wine merchants and butchers. All very nice, all very premium and all very bijou. But, visit small towns across the UK, where money is tight and you will find that the high streets are a shadow of their former selves with a dispiriting collection of empty, charity and betting shops, interspersed with struggling newsagents. If you want an image of Brexit Britain, this is it.

It turned out that the convenience food that made mums life easier was in fact bad for you. Britain is in the grip of an obesity crisis partly because readymade and processed foods are packed with calories, fat and are high in salt. The UK Government has pretty much given up trying to persuade people to have a healthier diet and is now leaning on ‘big food’ to change the formulations of their popular lines. In a way it is a backhanded compliment: only ‘big food’ has the resources to change the nation’s diet.

Napoleon had a point. In Britain, grocery shopping is culture. And you can’t really understand its high streets, the shape of the people and how they like to spend their time unless you know about the history of how Brits buy food.

Julian Saunders was Strategy Director, Ogilvy and Head of Strategy, McCann Erickson. He has worked on behaviour change campaigns for the UK Government and on innovation in The Zoo at Google. He blogs at www.joinedupthink.com.