Blog: Dean BestThe UK's "big four" await supermarket review

Dean Best | 30 October 2007

As Tuesday’s (30 October) working day draws to a close here in London, no doubt the UK’s big four supermarkets are awaiting tomorrow’s publication of a two-year study into the sector.

The UK’s Competition Commission will unveil the initial findings of the investigation tomorrow morning.

Sections of the UK media, pressure groups and swathes of the British public believe the growth of the UK’s big four supermarkets – Tesco, Asda, Sainsbury’s and Morrisons – has stifled competition and driven local shops out of business.

Tesco, the market leader, has been singled out for creating so-called “Tesco Towns” and for alleged “land banking”, buying up land to stop rivals opening stores nearby.

However, according to research into the UK grocery market, competition is alive and kicking and will only intensify in the future.

"There is a common belief that because food retail has a number of very large, dominant players consumer choice is somehow stifled," said Neil Saunders, director of consulting at the study’s authors Verdict Consulting. "In truth, it isn't - the biggest battle grocery retailers face is how to hold onto increasingly fickle customers who are able to transfer their custom elsewhere."

Indeed, looking at the bald sales figures of the UK supermarket sector, the fact that there are four relatively vibrant players in the market – with the leader account for just 25% of the market – suggests there is some truth in Saunders’ views.

However, the Competition Commission has been tasked with taking a more holistic view of the sector. And with the Commission expected to have studied issues like land banking and the often fractious relationship between retailers and suppliers, the big four will likely have to face some “recommendations” to reform their businesses.


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