Yahoo Finance The UK supermarket industry is one of our best
Some words from one of our supermarkets about how good they are. Quality. Choice. Innovation. Value.
Which one is that? All of them really. The narrative the grocers tell us about themselves is slightly 1984-ish.
Frozen food has never been fresher! Prices are down! Chocolate rations are up!
They are all taking market share from each other, they individually claim, something which simply cannot be true.
What’s actually happening with market share, impartial industry figures suggest, is that Sainsbury’s is telling the truth about winning customers from rivals, but no one else is.
Asda and Morrisons, re-organising under private equity ownership, are having the rough time they completely deserve for having cashed out to people who want to count beans rather than sell them.
Here's the thing though. If you go into an Asda or a Morrisons store you might notice a few small things going wrong, but mostly this is an entire industry that just works.
It showed that during Covid. After a brief wobble in the early days when food shortages looked like becoming a problem, they collectively aced it when it mattered most.
It is a clear example of the free-market functioning like it is supposed to – customers and shareholders can do well at the same time.
Sainsbury’s profit margins are about 3p in the pound. Tesco makes a bit more, some of the others less. None of that could possibly be regarded as price-gouging.
The attitude of the big grocers to suppliers and staff needed to improve, but mostly it has. Pay is up and the supermarkets are learning the advantage of long-term relationships with suppliers, not least in case of another crisis.
The grocers have a clear advantage as an industry in that it sells something we all have to buy. Indeed, we get about 80% of our food from supermarkets.
But as they ponder their weekly big shop, no one need doubt that this is an intensely competitive market.
