NS Special Report - Cashing in on our lifestyle

<em>Food</em> - Supermarkets are bad news for small shops, farmers and our diet. But they're so conv

Every generation has its villains - ours are the supermarkets. It is strange to think that no more than a generation ago supermarkets, together with convenience foods, were seen as more liberating for women than bra-burning. They seemed praiseworthy because they extended choice, of quality and price, to a great part of the population - the sign of a rich society and of a true economic democracy, in which varied and interesting food can be consumed by many more people than ever before in history.

Yet it is precisely those two aspects, liberation and democratisation, that lie at the root of much of the recent criticism of supermarkets. The charges are that they have encouraged people (mostly women, presumably) to turn away from cooking and spend money on convenience food; they have broken the link between eating and seasonality by stocking fruit and vegetables all year, adding to the artificiality and unhealthiness of modern life; they have encouraged the idea that food should be cheap; they have added to pollution; in pursuit of cheapness and variety (the two ought to be mutually exclusive - but in this list of indictments, they are not), they have concentrated on buying abroad or scouring around the country, thus adding to the problems of British farmers, depressing the prices paid at the farm gate and undermining local economies.

Quite a charge sheet.

The supermarkets' reply is that their first duty is to their customers and the second to their shareholders. They also point out that customers are now used to the idea of buying food the whole year round and would take it amiss if they could not do so. In fact, they would go somewhere else: the particular supermarket that tried to impose seasonal discipline would have to close down branches, making life worse for consumers, shareholders and suppliers. Nor would the local economy flourish if a large employer were to disappear from the scene. They further point out that people who theoretically would prefer to pay more and buy British produce invariably try to pay less when actually in the shops. Buying produce from the developing world is surely a good thing, they say, as it helps the poorer countries' economies.

When the large out-of-town stores started opening in the Eighties, high street shopping was already in decline. The new stores were sometimes custom-built, but equally often took over large, derelict industrial buildings, thus symbolising the country's transition to a post-industrial status. They opened at a time of growing wealth and mobility. Shopping once a week became the inescapable pattern, and the large new stores offered the variety and freshness to make this feasible. Few high streets had parking facilities near enough to make shopping easy; most supermarkets have large free car parks. Making shoppers pay for parking evens the odds a little, but probably not much. A weekly shop of anything between £50 and £100 can take the burden of another £5 for the parking. Supermarkets that charge for parking do not lose custom.

At the same time, the supermarkets repositioned themselves on the social scale. The big chains made a concerted bid for the upper end of the market. They introduced luxury lines of prepared food, extended their selections of fruit, herbs, spices and vegetables, put in elaborate delicatessen, fresh meat and fish counters. The supermarkets, armed with bigger wallets and greater flexibility, entered into direct competition with the specialist retailers.

In response to public worries in the early Nineties, there was a cautious introduction of organic foods. These were not as successful as expected, because, faced with higher prices, many worried shoppers preferred to continue worrying rather than spend the extra for organic baked beans. More recently, the supermarkets have expanded into the value-added service sector: more takeaway counters, photo-developing, prescriptions, dry-cleaning, cafes, better trolleys, bank machines and so on.

From the consumer's point of view, this may seem to be all to the good. From where the small shopkeeper stands, it is a disaster. Who is going to bother to go to other shops at all? All too often, the response has been to demand protective regulation. Small shops and impossibly short opening hours are protected in various ways on the Continent - though this is gradually being eroded, as consumers are beginning to rebel (at least in France and Germany).

The more forward-looking small shops have realised that they need to take a leaf out of the supermarkets' book. They cannot have the same variety, but they can offer service and added value. Some have decided to sell online, making shopping easier, although they have to compete here with the likes of tesco.com. Others have specialised or offered better services. The small Asian shops in British towns have survived and flourished because they have long opening hours and, usually, a wide variety of exotic goods: spices, pulses, oils, rices. Farm shops have started selling cheeses and pates as well as potatoes and tomatoes; butchers now prepare dishes.

As a destructive force, supermarket competition pales into insignificance compared with the regulatory structure. Draconian rules and high inspection charges inevitably hit small businesses more, as they have less extra capital and less time to deal with the avalanche of paperwork. Under the uniform business rate, much criticised when introduced but since dropped from public discussion, small businesses pay proportionately more than large ones. The not-so-new environmental regulations recently threatened by Margaret Beckett will reduce productivity on farms and in small food-producing firms. The EU milk production quota imposed on this country curtails dairy production.

Responding once again to public concern, most supermarkets have announced that they are now buying from UK farmers. This is not as helpful as it sounds. Few individual producers can supply the quantity of goods of consistent quality that supermarkets need. There is a preference for a largely centralised ordering system and correspondingly large suppliers. Smaller producers could become part of the system if they were to unite into some form of co-operative selling outlet. That would also give them the power to negotiate more acceptable prices.

Some co-operatives do exist - but British legislation remains unhelpful. On the Continent, on the other hand, there are laws and tax breaks to encourage the existence of producer co-operatives that are capable of selling large amounts to supermarkets, and have the power to negotiate better deals.

The alternative is to have direct deals through large processors such as slaughter- houses. Some farmers have been advocating this, forgetting or trying to ignore the fact that food production consists of more than the farming community. With the regulatory destruction of most of the small and medium-sized slaughterhouses, it was easy enough for a large supermarket chain to create a scheme with a large slaughterhouse, making it difficult for livestock farmers to sell their meat through anyone else. This provides a regular income to the farmers, but leaves all the power with the supermarket.

A notable example is the scheme created by Tesco and St Merryn Meat, based in Cornwall. Safeway has recently indicated that it is thinking of buying "directly" from farmers - again, presumably, through some scheme that involves one of the large slaughterhouses, and does away with sourcing from cattle markets.

Similar ideas have been proposed and, sometimes, put into practice with dairy produce. On the whole, this is unlikely to benefit farmers and will destroy the small-scale food sector, except for those who rely on imported produce. Once farmers deal directly with supermarkets and all alternative outlets have disappeared, the buyers (not the consumers) will call the tune. A change in economic conditions or in public concerns, and supermarket sourcing will move somewhere else.

There is no question about it: supermarkets respond to consumer demands and feelings. They do not manufacture them. A notable example is their ability to indulge the nostalgia that many of their customers feel for some warmer, friendlier past, while respecting their reluctance to go back to the realities of that past. In the most recent Safeway Magazine, there are recipes for small Continental-style pastries, made mostly from ready-made dough. The accompanying piece starts off with a completely unrealistic reference to people's memories of "granny's baking". No doubt some grannies did bake. But very many of them, faced with the first small supermarkets and ready-made cakes, were more likely to buy McVitie's jam tarts or Mr Kipling's exceedingly good cakes.

The article and the recipes show a very modern combination of nostalgia, love of exoticism and a desire to produce good effects despite the very little time available. Those food producers and retailers, large or small, that can tap into it will survive and flourish.