When it comes to food and other goods the UK has one of the most concentrated retail environments in the world. This is due to the powerful hold of the big supermarkets. Here I describe how this pattern developed. There are links at the end to other blogs which extend the story.
The rise to dominance of the Supermarket
The first multiple food stores developed in the nineteenth century. The Co-op led the way. John Sainsbury opened his first store in 1869. In 1903 the 100th Sainsbury store was opened. Jack Cohen set up a market stall holder in 1919. The term Tesco was first used in 1924 [a contraction of T E Stockwell, a partner tea supplier and Co from Cohen].
However, as table 1 shows, the real explosion of the supermarkets came from the 1950s – following a path being pioneered in the USA.
Concentration into fewer chains
Concentration refers to the rise of large chains which have come to sell more and more of UK groceries. You can see from the table 2 that small stores are now marginal, and the Co-op is no longer the player it was. In 1950 the top 5 chains sold 28% of all groceries. By 1998 the figure was 52% and by the early 2010s the Big 4 sold an astonishing 78%.
This is one of the most concentrated grocery markets in the world. You can also see that there has been movement at the top with Morrisons falling behind. The table also shows the size of the ‘posh sector’ and the rise of the discounters.
Location
Until the 1960s the expansion of supermarkets was limited by two major constraints. One was retail regulation including planning limits. The second was the difficulty of shopping using public transport. Regulation weakened and with the explosion in car ownership it became possible develop out of town supermarkets in retail parks with easy car parking.
Today there are some 1500 retail parks in the UK. Most big towns will have two or more. They tend to be built around different supermarket stores since the big names do not want to compete directly with another.
Growth in Supermarket Size and Products sold.
The size of individual stores, largely on these retail parks, has grown. The 13,000 supermarkets today are actually fewer than 50 years ago. But many are now stores which take £ 1 million plus in weekly revenue.
Early supermarkets were physically tiny. A new Sainsbury store in 1950 had 2000 sq. feet. In 1970 it was 11,500 and in 1990 33,500 sq. feet . Superstores (defined as above 25,000 sq. feet) are now everywhere and some have 60,000 sq. feet. When space is constrained supermarkets and their parking lots have been built up or downwards.
Supermarkets have also grown in terms of the number of goods sold. A Sainsbury store in 1950 might sell 500 different items. By 1990 the figure was 12,000. Today a major superstore might sell up to 40,000 different items.
This range reflects the multiplicity of their own and other grocery brands but also diversification to selling cosmetics, pharmaceuticals, toys, books, clothing, DIY, white goods etc. These involve restricted ranges – a process known as ‘creaming’ the most popular items In 2000 around 10% of all clothes and shoes were bought in supermarkets. Now the figure is 25% and higher for children’s clothing. Supermarket petrol stations sell around 50% of petrol and 43% of the diesel bought in the UK.
Who does the work?
Supermarkets have thrived by passing on part of the ‘labour’ of shopping to customers. Earlier multiples had a counter-service like any independent store.
Self-service took off in the 1950s and by 1971 65% of groceries were being sold in self-service stores. Today self-service more or less universal. From self-service self-scan developed. Now we have self-checkouts. One of the issues with internet shopping is that it has transferred some of this labour back with ‘pickers’ taking stuff off the shelves for us.
Saturation
Will the reign of the big supermarkets persist? One issue is possible market saturation. This means that future growth may be limited. Past multiple groups have risen by amalgamation or new entrants driving forward – Asda was only created in 1965. Chains have also fallen. Names like Safeway and Somerfield are part of the retail past not the present.
This has led some to speculate that retail companies and models have a limited life span in the face of new challengers. Think also how department stores have gone.
We can see evidence of a retail life cycle in the rise of new discount retailers . Aldi entered the UK market in 1990 and Lidl in 1994. Discount retailers based on limited ranges and own brands are not new. The now defunct Kwik Save had more than 900 stores in 1990. But Aldi and Lidl have grown fast after a slow start.
However the discounters narrow range limits their capacity to continue to grow their share. And the degree of power at the top too is now such that the big chains have been able to react and find new ways (e.g. loyalty card prices) of defending themselves. The shift into home deliveries is also harder for the discounters to emulate.
Whether physical supermarkets will change as much in the next decades as they have in the past is therefore, still an open question.
***
- R.Clough, Retail Change: a consideration of the UK food retail industry, 1950-2010, University of Middlesex PhD, 2002, p.84; Kantar
- http://www.kantarworldpanel.com/en/grocery-market-share/great-britain
Related blogs
This is one of a series of continuing blogs related to the UK retail sector.
The fall of the small grocery and corner shop in the UK
Supermarkets, inflation and the role of confusion marketing
How supermarkets stalk us the role of loyalty cards
Greedflation – are supermarkets really profiteering?
Mike Haynes - The Jobbing Leftie Historian and Researcher 