Are Supermarkets Undesirable

According to Economic theory Oligopolies are an example of imperfect competition and therefore deemed undesirable for consumers since they do not adhere to the conditions of perfect competition. I would argue that there is compelling and increasing evidence over the years to suggest that supermarkets on the whole significantly benefit consumers, even if there are are a few large number of firms.

Pre 2018 Financial crisis most supermarkets were built out of town in huge stores that competed with the size of small village high streets! Congestion by cars was taken out of the high streets, making them safer places and consumers could spend car parking fees on buying products that they desired. The choice was immense, isles of variety of products that every consumer of every budget could choose from. We lived in a world where time was precious and having in store butchers, bakers, pharmacy, optician, dry cleaners was convenient for those for whom time is precious. The marketing and branding of each supermarket attracts a certain socio- economic group of customers and every supermarket strives to provide a `version` of the product that every household demands to mainatain a standard of living.

Supermarkets have had to demonstrate a great deal of flexibility post financial crisis as they had to adapt to strengthening their smaller stores for smaller and regular purchases of products, when and if consumers desired them. One thing we can be thankful for is the occupancy by supermarkets of previous pubs which have faced a dramatic decline due to economic, social and legal changes. What would have filled these empty shells if supermarkets were not ready to arrive. At worse it would have attracted vanadalism and the ugly side of derelict buildings. At least this way footfall remains healthy and other surrounding small businesses can survive with the passing traffic. Neighbourhoods can seem safer if they have economic activity, especially important for the vulnerable members of our society.

Supermarkets make interesting study for the understanding of contestable markets. Aldi and Lidl which were at one time seen as truly discount stores where only those marginalised from the big four would go have really stepped up. Providing quality products at significantly lower prices and stealing considerable market share from the big four. This has caused the latter to really work hard at competing aggressively to maintain their market share and to the benefit of all of us! We have never got so much value for our money as we do know and with so much choice.

Recent times have seen supermarkets and their staff really in the spotlight, they have had to grapple with ensure supermarkets are safe places to come and shop, often being the only places open. Their morals and social responsibility towards key workers and the vulnerable must be commended and recently they themselves enforcing the wearing of masks. Community spirit really has developed during these times of what we call giant oligopolies.

But we have to balance all of this against the damage the existence of supermarkets have upon our lives and the world we live in. The use of plastic packaging, the air miles incurred to ensure that products that are out of season are still on the plates of customers. The low costs from economies of scale that has destroyed the small retailer and the subsequent choice that consumers would have got as a result. Their monopsony power over dairy farmers has been much commented upon and to many unacceptable.

Economics is all around us and we need just two pairs of glasses to interpret what it is all about - one pair that allows us to see the rosiness of it all and the second pair that magnifies the flaws and the ills.