Grocery shoppers in the UK are, according to new research, becoming choosier, but at the same time they are becoming more constrained in their choices. So does consumer choice depend on more than just proximity to major retail outlets? And how does the UK’s Competition Commission evaluate choice in the grocery market? Kate Barker finds out.
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A new study has compared recent shopping behaviour and retail provision with that of 1980 and has found that the increase in food retail competition over the last 20 or more years has led to consumers becoming ‘choosier’ but at the same time more constrained in their choices.
The Retail Competition and Consumer Choice study, which was carried out by Lancaster University Management School to address the implications of the growth in concentration in food retailing in the UK and its impact on consumer choice at the household level, found that many people do not make conscious choices but instead have their shopping choices determined by their daily routines and household situations.
The research stems from the UK Competition Commission’s 2000 conclusion that the degree to which consumers will have adequate choice will depend on local circumstances. In the Competition Commission’s 2000 report, the regulator assumed in its analysis that catchments with only one or two of the five major retailers (Tesco, Sainsbury, Asda, Safeway and Morrison) present would have restricted choice, while a catchment with three such retailers would provide adequate consumer choice if each of the three stores was large enough and was of a type to be an effective competitor. The Commission found that using these criteria there were 175 local catchments where there was potential concern, while everywhere else had adequate consumer choice.
Limited consumer choice
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By GlobalDataHowever, the study suggests that regulators often fail to take local circumstances into account sufficiently when they consider choice. For example, people living in so-called food deserts, where there are no grocery stores within a short distance, may not be the only people with limited consumer choice. There is also the question of access, where choice depends on a person’s circumstances, including their support network, the size of their family, whether or not they own or have access to a car, whether they can afford a taxi and so on. As the report says, no single idea of choice fits all individuals in a particular locality.
“Despite the huge explosion in retail provision and improvements in living standards over the last two decades, people just don’t have the retailing choices available that planners and policy-makers think they do – irrespective of their social standing,” says Lancaster University Management School’s Professor Ian Clarke, who led the three-year project.
“People almost seem too busy to do their food shopping – they are not so much ‘making choices’ as struggling to fit their food shopping in and around increasingly busy work commitments and lifestyles,” Clarke adds.
The importance of secondary shopping
One of the key findings of the report is that the number of people shopping less than five minutes from their home has nearly doubled over the last 20 years, increasing from 17% in 1980 to over 38% in 2002. The well-documented popularity of top-up shopping was also mentioned: while only 9% of people shopped three times a week in 1980, by 2002 this had more than doubled to 21% of people.
People are also shopping at more stores to get the food they want: in 1980, people bought 46% of their food at the main store, while by 2002 this had dropped to 31%. Among the other notable changes in retail behaviour is the fact that despite the increase in the number of cars over the last 20 years, the proportion of people using their cars for shopping has actually dropped by 5%, while only 7% of people have used the internet for grocery shopping.
The study suggests that most of these changes are a response to increasingly busy lifestyles, where shopping is often fitted in around work and other commitments. All this points to a rise in the importance of secondary shopping, which some people believe should lead to changes in the way the retail sector is regulated.
“At the time of the Competition Commission’s review in 2000, they should have had a look at the ‘smaller store’ sector. A future study into the sector would be flawed if it ignored the growing importance of secondary shopping habits. In this respect, Tesco specifically were ‘let off the hook’ in their acquisition of the T&S chain. Similar acquisitions should be subjected to wider scrutiny in the light of this new research, which puts consumers’ shopping habits and needs back on the policy agenda,” John Bridgeman, former director-general of the UK’s Office of Fair Trading, said at a recent conference to discuss the findings of the study.
Competition Commission under fire
One person who agrees with the need to re-evaluate the Competition Commission’s approach to grocery retail regulation is Bill Grimsey, chief executive of the UK’s Big Food Group and an outspoken supporter of a single grocery market when it comes to competition investigations.
“This very important piece of research drives a ‘coach and horses’ through the Competition Commission report on supermarkets, published in 2000. This wrongly concluded that there are two markets for groceries (one-stop and convenience). This new research clearly shows that consumers do not distinguish between convenience stores and larger superstores – they are using large and small stores interchangeably,” Grimsey told the conference.
He believes the two-market definition needs to undergo an urgent review as large supermarket operators are making acquisitions in the convenience sector without investigation by the competition authorities.
“This will reduce consumer choice in the future as their buying power undermines the economics and infrastructure necessary to maintain a vital and viable independent small store sector. The playing field is not level, and this needs to be addressed. The industry is at a crossroads. I’m calling for the authorities to revisit their ‘two-market’ assumption,” said Grimsey.
The research team identified two key challenges to properly evaluating consumer choice: “First, retailers need to understand households much better than they do at the moment, since there are big market opportunities at stake and because they need to work harder to ‘stand out’ in the marketplace. Second, policy-makers will need to develop ways in which to represent what having ‘adequate choice’ really means at the local level for different types of consumers, and to regulate and plan accordingly.”
