If Sam Walton, the founder of Walmart, who died in April 1992, was still alive, he would be the richest man in the world. His three living offspring currently hold positions 6,7 and 8 on the richest Americans (Forbes) list, with a little over 54 billion EACH. Talk about being members of the LSC (lucky sperm club). The next closest is Bezos (Amazon) with 113 billion.
So how does a supermarket owner amass such a fortune? Especially when supermarkets are supposedly ‘champions of value, of low prices for the consumer”. You can’t make that sort of revenue or profit amount through economies of scale or trade volume … it can only be achieved by selling at massive margin.
A Deloitte, Touché and Tohmatsu report (2018) listed the WORLDS biggest 250 retailers. 112 of them are supermarket groups. The top four OVERALL retailers on the list are supermarkets – Walmart; Costco; The Kroger Co.; and The Swartz Group (Germany) – owners of Aldi and Kaufman. They have a combined revenue of US $819 203 billion dollars and combined net profit of over 18.5 billion – this excludes the Swartz Group which is a private Company so doesn’t declare net profit. Walmart alone accounts for $14.293 of that $18.5 billion DOLLARS. The first non food retailer is No.5 – Walgreens, but they do sell some food and then The Home Depot at number 7.
Nobody has an issue with a corporation making profit, but this is obscene profiteering! Supermarkets do it by obliterating the small retailers, ripping off the consumer, cheapening product (which directly impacts health) and a monopoly on pricing and range of products. In the 1970’s, there were 98 supermarket retailer groups in the U.K. – today through buy outs and consolidation we basically have 6. They determine what is sold and usually only carry the brand leader, the number 2 brand, plus an own brand option. Some sectors have a slightly larger range – like toothpaste or hygiene products. This increases the market share of these brand owners exponentially and kills competition for disrupters or new brands. The large manufacturers who are brand leaders pay handsomely to keep this status quo – by way of ‘confidential’ to the supermarket; by economy of scale with massive volume; and by massaging low overheads – which directly impacts (lower) labour wages and staff benefits etc. Supermarkets have impacted our lives tremendously – and it’s mostly negative!
Through purchasing volumes they drive down manufacturers selling prices – thus profit margins and as a result manufacturers have only a few options – delist (which for large corporations who rely on volume like Coca Cola, this is impossible); reduce product ingredient quality; reduce overhead – staff numbers and lower wages, or manufacture or buy off-shore from low cost countries. No industry, not even motor vehicle or fashion has had such a massive impact on off-shore manufacture or importation of cheap product. None of which benefit the consumer or local ‘players’ in the long run and totally decimate labour markets in developing countries.
Note: a “confidential” (other terms exist but it’s the same thing), is the contract established between manufacturer, co-packer or supplier and the supermarket brand to stock the product. It can include advertising; returns policy; store refurbishment; staff packers in the store; visits to manufacturers facility; in-store promotion; facings – the space allocated on the shelves; gondola ends – Yes manufacturers have to pay more to be displayed at the front or back of the aisles and not just in the aisle … gondola fronts (facing you as you walk in the store) are more expensive than the gondola backend; etc. Confidentials are usually a percentage of total gross sales from the first dollar of supply and paid either monthly; quarterly or annually in cash to the supermarket head office. It runs into tens of millions of dollars and is over and above profit from product sales. Suppliers factor this into the price they sell to the supermarket anyway. So ultimately you, the customer pays for the supermarkets ‘double dip’. When supermarkets talk about product margin made on a product – it NEVER includes this confidential.
So how does pricing pressure work? Take the humble banana. It’s the worlds most eaten fruit. Supermarkets understand this so they push to reduce the price they pay for bananas and even sell under cost as a ‘Loss leader’. But the real loser is the supplier and his labourers in Colombia; Africa; Dominican Republic and Ecuador – the biggest producers. The price, according to Fairtrade has gone from £1.08 per kilo in 2002, to £0.68 pence today. Considering upward inflationary curve over that period it’s both impossible to sustain and robs banana suppliers and staff of a living wage. All this means is already poor, disadvantaged labourers in developing countries lose out so supermarkets can use the humble banana as a tool to be the cheapest and entice you into the store. It’s totally unethical. Do we really want to support these ruthless corporations.
And for the record – ever wonder why fresh produce is always at the front of the supermarket – it’s to give the IMPRESSION that everything is fresh and healthy. It’s not! Or why packaged milk and bread is always at the back of the store – they’re the two most bought items so they ensure you walk through the entire store (prompting impulse purchase) and get you to purchase more. Supermarket retailing is extremely scientific!
Does your supermarket have a water mist spraying your fresh produce every so often … it does NOTHING for freshness! In fact quite the opposite – water rots produce more quickly. It’s purely to increase product weight, which you ultimately pay for as produce is sold by weight, and make it visually appealing. Think of a beautiful model climbing out of the ocean dripping water and marketing an aftershave or perfume – there is zero link between water and perfume … it just looks more enticing and hits three of our primary senses hard! Same as misted produce!
Beef – processed cuts like hamburger, ground (minced) beef and sausages say on the label “100% beef”. What your brain takes in is that it’s 100% beef MEAT. But it’s actually cartilage; connective tissue; skin; fat and worse. Yes it’s from a cow, so the label is not wrong, it is beef but it’s very misleading. So big is this scam that the U.K. has now legislated that if you use the word “sausage” – it must contain a certain % of meat and no connective tissue etc. The other term used in the U.K. for sausage is “Banger” – It has no legislation for its content. Can you imagine what’s in a ‘banger’! In the USA I cannot find legislation for sausage content. Most European countries legislate.
Furthermore supermarkets support the development of a few huge centralised abattoirs who process massive quantities of livestock, it helps with distribution. So small local and even regional abattoirs get closed down (job losses) and this stops smaller players from entering the industry and limits the ability of small ranchers and farmers to get livestock processed at decent prices, they have to truck livestock hundreds of extra miles which increase the cost of finished product considerably. The large packers can absorb this cost through economy of scale – it crippled the small players. And this longer journey negatively affect the planet due to increased petrol (gas) consumption and pollution. It’s hugely stressful on the animals as well. These large facilities are highly mechanised and the animals are poorly treated – machines strip hides off an animal which throws faecal matter and hair, pieces of hide etc. into the meat. Ecoli and pathogen increase can be directly linked to the increase in size and reduction in number of localised abattoirs – it’s just not reported. The meat industry has change from a lot of small packers and abattoirs to very few very large packers like Tyson Foods; Cargill etc. Again forming cartels for one purpose only – to control production, price and to direct consumers to supermarkets. If you want to eat good produce or meat (protein) – search out small independent farmers, ranchers and poultry farmers who treat product, poultry and livestock humanely, who slaughter properly and grass feed (free range) and grass finish. They exist. And they’re not more expensive.
Equally, intensive indoor battery caged poultry farming originated because of supermarket requirements. Profit in livestock / poultry is a simple equation – Amount fed and time from birth to slaughter vs. Weight of slaughtered animal. The heavier it is in the least amount of time = more profit (but lower quality). So they pump the animals full of hormone and chemical feed to speed up growth. This DIRECTLY impacts on the health of every American specifically because America does it more than any other 1st world country. Ethical or quality orientated foreign livestock buyers won’t buy American livestock for breeding purposes any more because of long term hormonal development. Take a look at the body shape of American women in the 1950/60’s, and compare that shape to today, especially calf muscles and boobs, and note the massive increase in sizes today! That’s what increased consumption of hormones in food does folks.
Supermarkets and packers in the U.K. sell Scottish or Aberdeen Angus beef or Welsh lamb at a premium. Grass fed is also sold at a premium. Have you ever considered how so much Scottish or Aberdeen Angus beef is sold compared to what is reared. Scottish beef is sold around the world as a premium product – truthfully there are not enough head of cattle (or grass pastures) to supply that amount of beef! Scotland’s a small country! So what do supermarkets, packers and abattoirs do – they collude by transporting livestock across the border into Wales or Scotland and graze the animals for a few days on grass (it’s mostly hay or grain in a grassy pasture actually) in those countries. Then slaughter and can now legally state on the label – “grass fed Scottish beef” or “Welsh lamb”. And we, the unsuspecting consumer are none the wiser.
Soaps – contains glycerine … glycerine in soap = quality. Supermarket soap states glycerine in the ingredient declaration when in fact the producers remove all but 1% of 1% of the glycerine and sell that separately because it’s more valuable than soap! The label says contains glycerine so the unsuspecting customer buys the soap. Pay a little more and buy real soap from an artisan soap maker, the difference will astound you. Check out artisanasoaps.com – lots of companies like this exist.
Consumers think supermarkets offer cheap food. The reality is the ‘cheap’ comes from fillers, poor quality and additives. The reality is most farmers are subsidised by the governments because they can’t make a profit from what they grow. Supermarkets dictate pricing and those prices are very often BELOW cost for farmers. Governments recognise that we need the produce – so they subsidise the farmers which comes from our tax revenue. Trust me people – we pay twice for almost every fresh product we purchase from a supermarket via subsidy payments. In the U.K. (February 2001 reference), milk cost between 18 and 22 pence a litre for the farmer to produce across the U.K. In 1994 the milk board was scraped as a result of pressure from supermarkets arguing that it created an unfair advantage, at the time of scraping it, the Board had negotiated a price of 24 pence a litre with supermarkets. After being scraped in 2001 the AVERAGE price paid for a litre of milk by supermarkets had dropped to 19 pence. That milk sold for 79 pence on average in the top four supermarkets – a substantial margin. The UK average milk price for April 2020 was announced by Defra as being 27.60ppl, down 1.07ppl (3.7%) on the previous month. That’s a 3.6 pence (cents) increase on the milk boards negotiated price from 20 years ago. In no way comparable to the increased costs of labour, feed, utilities or equipment. Dairy is one of the most subsidised industries in most countries. Yet it’s the farmers who get the bad press for being subsidised while the supermarkets sit pretty cashing in the profits and gouging the dairy farmers! If supermarkets don’t buy milk - who do they sell too …!
In 1939 the U.K. had just over 500 000 productive farms. As of 2006 that number is around 280 000 farms and dropping fast, with less than 2% of the total labour force employed in the farming sector. Due to downward pressure on product pricing by supermarkets and cheap imports – farmers cannot make a go of farming! In 1970 North American and U.K. farmers received between 45–60% of the food revenue from food purchase. Today that figure is 3.5% in the USA and 7% in the U.K. In France it’s 18%. So who gets the money now, supermarkets, co-packers and large middlemen like Tyson Foods and Cargill. Sadly the guys who make the stuff and do the hard yards get screwed!
In 1998 the U.K. Competition Commission launched a £20 million pound fact finding mission on supermarket monopoly and price gouging. They found that potato farmers were selling potato at £17–27 pounds a ton below the cost to take the potatoes out of the ground! Same with apples. Yet apples were marked up 198% and eggs 439% in supermarkets! They noted a Northern Foods (uk manufacturer) Dalepack lamb grill product (processed) was £8.45 per kilogram in a supermarket which was 45% more expensive than fresh lamb chops per kilo from a small local butcher. They also found these processed products contained a very high percentage of fillers like whey protein; maize starch; whey powder; sugar beet fibre to bulk up processed protein products. The report constituted 1100 pages but the findings, due to intense lobbying by large scale manufacturers, co-packers and supermarkets themselves forced the Govt. to give the supermarket industry a clean bill of health! They concluded nothing warranted attention. Take a look how many ex-supermarket and food manufacturer CEO’s were in the House of Lords; in Govt. ministerial positions or on Govt. commissions and boards when this report came out. It’s pure croneyism!
Governments in America and the U.K. have spent upwards of 10 billion dollars each to remove nitrates from the ground and rivers caused by poor production methods of large producers like Cargill; Tyson Foods; northern Foods; Iowa Processors and Smithfield’s and by intensive farming techniques using pesticides to create the perfect unblemished produce required by supermarkets. Tax payers pay for that cleanup while supermarkets profit at no cost to them!
Supermarkets don’t police labels – it’s not their function. They are simply ‘middlemen traders’ who house products in a large facility for you to buy. They turn a blind eye at best or are usually complicit in the deception and supply a supply manual of requirements for manufacturers to adhere to in order to trade with the supermarket groups. I have a Tesco’s manual (the largest retailer in Europe), its nearly 300 pages of mostly unnecessary rubbish but it allows them to be at arms length from any supplier once you’ve signed the supply agreement and therefore they cannot be prosecuted. The supermarket industry is one of the most protected in the world and TOTALLY self regulated. Even hygiene inspectors cannot close a supermarket down like they can a restaurant and there is no public publishing of supermarket health and hygiene scores.
Because of these myriad of rules, ‘confidentials’ and extra costs, the small manufacturers cannot compete any more. The entry cost is prohibitive. And with fewer and fewer independent outlets – where can they sell new product? The big get bigger and the choice of product brands get smaller. Look at the monopolies of healthcare conglomerates too, like – Procter & Gamble; Unilever; Reckitt Benckiser; and Kimberley Clark or Colgate Palmolive. These have been created because there are so few supermarket brands that they monopolise the trade and cannibalise the brands! And yet supermarkets market themselves as convenient and pro customers. They simply are not!
Sell by / best before dates:
My personal pet hate! Supermarkets hire cheap inexperienced labour, and they do almost zero product training. So they invented the “sell by” label concept. They sold it as a fantastic service to the consumer. For hundreds of years consumers could smell, taste or touch products and know they were off, but supermarkets decided we were no longer capable of doing this, we were now so far removed from the food chain (city slickers) that we needed help.
The real reason though is the lack of quality training supermarkets provide, time taken for staff training costs money per hour (downtime) when the staff could be stacking shelves and serving customers. By placing a date sticker on every product, untrained staff can simply bomb through aisles and remove dated or near dating product. But here is the net effect of that practise:
Business Insider state that 43 billion lbs. of food is thrown away in the USA annually due to dating. The net effect of dating is a surge in food thrown away by both consumers and supermarkets – in the USA alone 40% of all food produced and dated (that’s $165 – 218 billion dollars worth), is thrown away depending on which report you read. In the U.K. 780 million eggs were trashed in 2018. Only because they’d passed the best before date. Best before doesn’t mean the product is off!! The U.K. throws over 700 million tonnes a year of mostly perfectly edible food. Purely on the basis that it’s past it’s best before or even sell by date. One extra day on the best before / sell by / use by dating system could save 600 million pounds sterling a year – now that’s insane. There are no laws or rules about how long a particular date stamp should be for a specific product in the USA (besides baby formula) and the EU is not much better because of countries doing as they please – essentially nothing happens. Since when have we become so far removed from the food chain that we cannot smell off meat or eggs or fish or see slimy bad vegetables.
Ugly Veg:
Supermarkets only buy unblemished perfect produce and it must be uniform in size. They’ve convinced everybody that this is what the consumer wants. It’s not! It simply makes the supermarket job easier and the produce displays aesthetically ‘pretty’. The real question is if you could get produce cheaper, but less uniform in shape or colour, would you buy it?
The net effect of this is millions of tons of discarded vegetables. I urge consumers to seek out this product directly from farmers, producers and put pressure on your supermarkets and produce purveyors to sell this stuff. If we found a way to transport this perfectly good produce to poor nations, it would go a long way to eradicating world starvation. The volumes are huge!
According to food scientists this represents 30–40% of the fresh produce in the worlds food chain. This is roughly 160 billion dollars in the USA alone … 50 million tons across Europe according to research carried out by University of Edinburgh. It noted the cause as the ‘structural power of supermarkets’. With producers citing “supermarkets carry all the cards”. A blemish on a tomato or apple doesn’t change in any way the products quality but supermarkets reject it.
Community Impact:
“87% of GLOBAL CONSUMERS believe that BUSINESS needs to place equal weight on society issues (community) as on business interests”. Tanya Steele – CEO of WWF.
A decent sized community in the 1960’s and 1970’s had several butchers, bakers, delicatessens and maybe a fishmonger and a food hall. So where have they gone? They taught skills to new staff; had great food knowledge; gave employment to locals; invested in the local economy; bought products from other small artisans and manufacturers in the local economy; created secondary employment – bookkeepers and accountants, banking jobs, advertising, marketing, etc. One butcher could directly employ 6 people, mostly with specialist skills and indirectly another 10 – packaging suppliers, home industry delivering apple pies on weekends, perhaps a small sauce company making a few bottles of pickles or relish.
Along comes a supermarket and these shops close down. Now admittedly some are simply not good enough … and deserve to close, but mostly because clever marketing has fooled us into believing that one stop shopping is faster, more convenient and prices are cheaper at a supermarket. Time and motion studies have proven beyond a doubt that it’s not faster or more convenient. Loss leaders (milk below cost) have given us a false notion that supermarkets are cheaper. Range is limited – reasons given above. Quality is NEVER better. Fresh produce is deep chilled to assist distribution and tastes floury and awful because the natural sugars haven’t naturally ripened. Convenience meals are packed with cheaper additives and sodium (cheap salt), directly affecting health. Preservatives in food is directly attributable to supermarket growth, they need to hold product for longer in central distribution facilities; to generate more revenue as it gives more days on the shelf to sell the product; reduces health issues (litigation) from food poisoning; and allows it to be shipped around the country. Bread goes green before it goes soft and everything contains high fructose corn syrup – even bread! Why? Sugar makes us eat more …
But the REAL issue is that all revenue from people buying in a local community at supermarkets goes straight out of that community to corporate head office and into the pockets of owners, executives and shareholders. It literally does nothing for the local community you live in, except make Sam Walton the worlds richest man!
The local shops close down as people go to the supermarket, highly valuable skills are lost and local unemployment increases. If 5 out of 6 butcheries close, that’s upwards of 50–80 staff (directly and indirectly), while the supermarket that replaced the shops hires just 3 TOTAL unskilled butchery staff, whose skill ability is breaking open pre-prepared boxes of delivered lower grade meat and maybe slicing some muscle meat. The supermarkets de-skill the service departments (meat, deli, bakery, fish etc) and makes the supplier do all the work so they can hire cheap, unskilled labour with no expertise! Per dollar generated, supermarkets pay the least of all industries because most of the staff are unskilled and easily replaceable. The USA and U.K. don’t even list being a butcher as an employment option in vocational guidance anymore – most people under 20 don’t know what the word fishmonger means, never mind does! So what is the real benefit to your local community – nothing is my answer. In fact it’s a negative influence.
Packaging:
Supermarkets singlehandedly are the culprit for the growth of the plastics industry across the globe. In 2018 supermarkets in the U.K. accounted for 59 BILLION tons of single use plastic PER ANNUM! And 70 % have actually increased plastics footprint according to Greenpeace despite legislation! The average single use plastic bag is held for a total of 12 minutes but takes 450 years to decompose. As of the beginning of 2020, the USA has no Federal or national restriction on single use plastic but certain States have begun to enact laws to restrict single use plastics! However current statutes prohibits the banning of single use plastics in many States (Earthday.org), linking it to polystyrene laws amongst others. By 2050 plastic floating in the ocean will weigh more than the total weight of all sea life in the ocean! Supermarkets created this industry to enable packing of product for convenience shopping and transportation to an ever extending number of outlets. It wouldn’t happen if we shopped local because that packaging isn’t necessary. But in any event we should be fighting to stop single use plastics!
Have you noticed it’s mostly third world countries (like South Africa) that have stopped single use plastic use first.
New York alone uses 23 billion single use plastic bags a year … imagine what the entire continental USA uses. (NRDC). The Coca Cola Company produces 200 000 plastic bottles per minute just in the USA!
So given all this what can we do:
“61% of Millennials BELIEVE they can make a difference to the world with their choice of consumption” –EUROMONITOR.
Generational groups younger than Millennials (Gen Y and ALPHA) increase this percentage to almost 83% … SO PLEASE START INFLUENCING FOR YOUR OWN BENEFIT and get your parents and friends to shop locally, at small independents and pressurise independents to price competitively. Eat healthy! Changing how we purchase is SO easy – internet searching will get all you need to buy for a fraction of the price and far better quality.
- So again, buy and support local and search out ethical independent options. Check out companies that farm /ranch properly like reverentwildranch and many more like it, go online to sites like certifiedhumane.org and remember searching online takes seconds.
- Stop shopping based on price – it’s costing you in healthcare in old age;
- Stop buying from supermarket chains – they’re not in it for you – and add zero value to your community or food enjoyment! Rather use independent supermarkets if supermarkets are your thing;
- Get your family closer to the food chain process. Let’s teach children milk doesn’t come from Walmart or Tesco!;
- Go pick some fruit and vegetables in the countryside, it’s fun;
- Let’s reset our lives after Corona. You are talking to your neighbour for the first time in decades – now go one step further and start a cooperative buying circle on your street or start a local food market … trust me there are enough suppliers in your area – you just don’t know it;
- Buy jointly with friends and work colleagues to reduce prices. Did you know you can buy a whole cow, or pig (or half), or a lamb direct and pay much less. Many butchers will do it on a cost plus 10% or a little more if you want it fully broken down. But the supplier will process it for you too. Just share it amongst friends;
- Go to fish markets like Billingsgate in the U.K. and buy collectively. Most fish on display in supermarkets is pre-frozen anyway;
- Grow your own vegetables if you can … it’s easy, as the thousands that are doing it because they’re bored at home with Corona have shown on social media. And see how satisfying it’s been – I’ve loved every minute of it and I’m in an apartment using my balcony and have never grown a bean. I just bought a grow bag because I saw a guy on a TikTok show how easy it is – check out barnyardbloomz;
- If you cannot grow, seek out companies that supply a box of fresh produce weekly in your neighbourhood;
- Seek out local honey producers; jam makers; pickle and relish companies; farm eggs and poultry and support artisanal endeavours;
- Reject imports unless your country cannot grow or produce the product. Eat seasonally;
And if you’re really keen for a lot of work – petition your congressman or member of parliament to stop large scale abattoirs, unethical farming techniques; meat packers; large co-packers; and new supermarkets that are not independent where you live. Join organisations that keep a check on this stuff like Greenpeace etc. Support your local farmers actions; fight for reduced pesticides; and above all, become aware in your community.
I’m currently researching retail in Italy – they have the healthiest population in Europe and one of the healthiest in the world. They have throughout the whole of Italy, 20 249 small independent food retailers and only 9117 large group supermarkets – Nielsen 2014. Now look at how much Italy has influenced world food culture. Chain stores don’t thrive in Italy. They have the highest number of supermarket brands in Europe, but each brand has a small number of outlets. Only two of its groups are in the top 250 listed earlier. Quality of food in Italy is untouchable. Is that a coincidence? Most European countries are similar.
My aspiration is to limit a supermarket group to no more than 50-outlets. Giving them 2 years to offload the surplus units. Surplus stores can be individually purchased and turned into independent neighbourhood outlets or franchised (without buying controls or forcing product take up). And if politicians are really serious about regenerating High Streets and CBD’s in satellite towns, this one development will achieve that.
It may sound far-fetched. Maybe it is? But the alternative is much much worse. You are what you eat. America is just waking up to the health costs and obesity issues in our 60 plus age group for eating poor quality fast food; poor quality supermarket foods and convenience offers … it’s not too late to change. Let’s nip it in the bud!
B
I state that I have no connection to any of the companies or organisations listed in this article.
The rejected vegetables that aren’t even wonky – BBC News Oct 2015.
A mountain of rejected parsnips – 30 TONS … not the right size and shape for the supermarket this farmer supplies. This is one weeks supply. It’s sacrilege! The person in the picture is not the farmer – it’s a uk chef.
