Shane Frith is director of the classical-liberal think-tank
Progressive Vision. He has worked for Conservative MPs in the UK and
National Party MPs in his native New Zealand. He is a former chairman
of the International Young Democrat Union, linking young people
involved in centre-right political parties worldwide, including the
Conservative Party.
This is the first in an occasional series of articles exploring the need for a pro-economic growth policy agenda.
Last year, the chairman of the BMA accused government health “reforms” of attempting to make hospitals operate like supermarkets. I responded at the time that we wished the NHS operated more like supermarkets on the grounds that supermarket customers can buy a wide and diverse range of products, at very reasonable prices and can expect minimal queues or waiting times to get what they want.
Yet, despite the success of Britain’s supermarkets in delivering good service and great products at a fair price, it remains common practice to attack supermarkets – including from prominent members of the Conservative Party. Primarily the call is for government regulation to limit the ability of supermarkets to open new shops and, perversely, to force supermarkets to weaken their negotiating position with certain suppliers.
The farming lobby, not content with living off taxpayer subsidies, has been very effective at complaining that supermarkets negotiate too hard. Well, diddums! If Tesco negotiates hard with a Chinese manufacturer of widgets, we wouldn’t criticise them. If Waitrose drives a hard bargain with a New Zealand wine supplier, we don’t hear them crying into their Chardonnay. The free market is competitive and this is the world supermarkets inhabit.
Tesco may be at the top of the tree today with a 31 per cent market share, up from 21 per cent in 1998, however the next decade could see them following Morrison’s fall of over 14 per cent since 1998. There would be no bailouts (I hope!) and little chance of an EU subsidy. If a supermarket fails to respond to technological change or a new competitor, they can close. As a supermarket customer, I hope they negotiate hard with farmers and pass on some of the savings to me – and if they don’t I’ll go to a competitor.
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