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Wednesday, 11 April, 2001, 11:19 GMT 12:19 UK
Hypermarket economy: Checkout the big boys

hypermarket economy, n, • state where a handful of major supermarkets wield undue influence on grocery sales. They, not the consumers, are kings. RELATED TO: oligopoly - state of limited competition between small number of producers or sellers (nb a dirty word for economists).

INCIDENCE: perhaps on the way to the UK. Five supermarket chains, led by Tesco (which has broken 1bn profits barrier) and including Sainsbury, Walmart-Asda, Safeway and Somerfield - sell nearly 75% of the country's food (see fig. 1).

Fig. 1.
EXPANSION: number of superstores increased from 457 to 1,102 between 1986 and 1997 according to Verdict Research. Tesco alone has a 16% share of the UK food retailing market.

DISTINCT FROM: a market economy, ie. the capitalist system - the basis of our economic structure. The theory of the market economy is that the consumer is king and lower prices and better service result from there being many retailers vying for customer business.

In the hypermarket economy, supermarkets are sovereign. This, according to Tim Lang, professor of food policy at Thames Valley University, leads to the distributor (i.e. the supermarket) mediating between producer and consumer, controlling and profiting from both.

In short, a hypermarket economy in extremis means: • consumers (ie everyone) having limited choice and high prices
• producers (eg farmers) facing falling prices for their goods.

CONTESTED: PM Tony Blair recently said supermarkets had farmers in an "armlock". But the Department of Trade and Industry's competition commission, which looked into criticism of supermarket practice, found that overall they do not charge excessive prices nor earn excessive profits.

ALTERNATIVE PERSPECTIVE: from the home of hypermarkets. "You never hear debates about ethics or morals [in the UK], just about saving money. It's no wonder the place is falling apart. Britain really is a nation of shopkeepers." Patrice Claude, London correspondent of the French daily Le Monde.

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10 Apr 01 | Business
Tesco profits top 1bn
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