University report gives supermarkets seal of approval

July 16, 1999

Researchers from Manchester's universities have rejected accusations of profiteering among Britain's supermarkets. Kam Patel reports

The accusation that the United Kingdom's elite supermarkets are greedy profiteers is "simplistic and unfair" and comparisons with discounting competitors inappropriate, according to researchers at Manchester University and UMIST.

The charge fails to acknowledge that the UK's leading supermarkets have created a distinct system of retailing in which competition is based on product range, convenience and quality rather than price alone.

This distinctiveness has been produced by a variety of developments in the sector, including the creation of long-term relationships with suppliers, provision of goods right across the price-quality spectrum and extensive investment in product development.

Researcher Mark Harvey says: "What the UK supermarkets offer is choice, quality and convenience. It is this emphasis that accounts for some price differences. As discounters like Wal-Mart typically offer a more limited number of standard goods, and do not have equivalent quality standards, the two are not in direct competition."

Dr Harvey says that supermarkets have introduced innovation that has changed the whole nature of food supply.

The study, backed by the Economic and Social Research Council, concludes that given the differences between the two retailing systems of leading supermarkets and discounters and the range of choice the UK consumer has come to expect, government must take into account long-term potential for innovation as well as short-term price issues when developing competition policy.

The report from the ESRC Centre for Research on Innovation and Competition is available at http://les.man.ac.uk.

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