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A

No distinction has been given to any form of STORE DEFINITION. The word “supermarket” is misleading as the Commission uses it to embrace the whole of the UK retail food industry, thus distorting and hiding the true competitive effects of food retailing in the UK today.

MPC’s research throughout Europe and the UK over the past 37 years shows that there are the following categories of food retailing.

1. Supermarkets which are in effect “convenience stores” with selling areas under 20,000 sq ft, with minimum or no parking down to 3,500 sq ft selling area. Below this level Supermarkets are called Superettes.
   
2. Superstores- Selling area 20,000 – 40,000 sq ft – range of food and non-food. 10 – 20 checkouts. Parking 1 – 3 times selling area
   
3. Hypermarkets - minimum sales area 25,000 sq ft. 15 or more checkouts. Parking in excess of 3 times selling area. Usually located 2 to 4 miles from City Centres. Hypermarket selling areas can extend to 250,000 sq ft with 60 checkouts and parking for 4000 cars as in Toulouse. (Ratio of parking to selling 5:12).
   
4. Commercial Centre. Hypermarket plus 10-20 small independent shops adjacent to a mall running parallel to the exterior of the checkouts.
   
5. Hypermarket parking areas. Parking areas are calculated as a ratio of the selling areas within the Hypermarket. Current performance shows that the larger Hypermarkets operate at a lower ratio as shown below:-
   
   Size of ground level parking area in relation to the selling area;
   
    Small Hypermarkets 6.1 times the selling area
    Medium Hypermarkets 5.4 times the selling area
    Large Hypermarkets 4.6 times the selling area.
   
   
6. Superstore Parking Areas. Selling area 20,000 – 40,000 sq ft, 1-3 times selling area.  

B

No reference in the Competition Commission Report is given to the substantial trading advantages of ON-SITE PARKING for Hypermarkets and Superstores in the UK, where large tracts of land are required. The trading advantages of these parking areas are immense under the umbrella of “No parking, No business”.

C

SATURATION levels of food retailing in the UK are not considered by the Competition Commission. MPC have researched that Hypermarket and Supermarket saturation levels have already been reached in numerous areas of the UK. MPC’s latest studies provide UK planners, local authorities and retailers with methodology to determine current market status.

D

Any form of Hypermarket or Superstore development in areas which are already saturated is likely to cause sheer chaos with increased traffic congestion and carbon emissions both in and out of town. As Hypermarkets and Superstore companies compete against each other for new sites in saturated areas it will be the consumer who suffers most.

MPC's research findings in France for Nancy and Toulouse show the same pattern of competition which MPC are now finding in the UK today.  Toulouse has always been regarded as having more Out of Town retail competition than any other city in Europe.  MPC's research shows that in cities and towns in the UK, the saturation levels as a result of Hypermarket and Superstore openings are now well in excess of the Toulouse ratios.

A case in point is a UK town of 50,000 population (as per the illustration below), of which 4 hypermarkets have been identified by MPC, each with ample parking/selling area ratios which fit the Hypermarket definition (see Section A above) derived by MPC in 1973 as a result of intensive research with Retail Associations and Chambers of Trade throughout the world (see publication "The Changing Pattern of Retailing in Western Europe 1973" - a study to mark the UK entry into the European Community).  The ratio of saturation in this particular town is now 32% higher than in Toulouse.  Needless to say, all 4 hypermarkets are causing increased Traffic Congestion with excessive Carbon Emissions.

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Competition below saturation level is perceived as beneficial to consumers and the area as a whole.   MPC have always had the highest regard for the concept of hypermarkets and superstores, and the efficiencies involved in establishing them for the benefit of the car-born public.  Recent radio research confirmed that 92% of participants appeared in favour of the convenience of hypermarkets and superstores in out of town and edge of town sites.  However, in cases of saturation, the introduction of additional hypermarkets and superstores in out-of-town and edge-of-town sites is no longer feasible, due to the effects of traffic congestion and carbon emissions.   MPC are equally concerned for the survival of town centre retailers who serve the 27% of non-car owners, and those who find town centres more convenient.   Sanity must prevail, in ensuring that in future all towns which have reached hypermarket and superstores saturation levels are protected from further out or edge of town development. 

(SEE SATURATION DEFINITION FOOTNOTE BELOW)

E

MPC’s research in France and the UK shows that the main competition of city/town-centre trade comes from Hypermarkets and Superstores located on the edge and out of town. The main in-town retailers to be affected by this form of retailing are SUPERMARKETS/CONVENIENCE STORES, which fall into the same category. What is also shown, particularly in France, is that SPECIALIST FOOD RETAILERS sited in town centres are thriving in spite of heavy Hypermarket and Superstore competition from outside the city or town.

The success of these specialist retailers is mainly due to quality of product and presentation supported by improved City/Town centre parking facilities.

F

Whilst car ownership is critical to easy access to Hypermarkets and Superstores, the Competition Commission’s report appears to ignore the plight of those households who have no car either in or out of town.

The scale of households without a car is surprisingly high as the following figures show for a town with 56,000 population.

The fact that 27% of urban households have no car stresses the importance of maintaining Supermarkets/Convenience Stores in town centres rather than allowing them to close down as a result of added Hypermarket/Superstore competition in saturated out of town areas.

This also emphasizes the importance of retaining local stores in Villages and Fringe areas where 9% of households have no car.

SATURATION FOOTNOTE

Saturation level should be a pivotal factor in retail planning. A dictionary definition of “saturate the market” is: to provide too much of a product so that there is more of this product available to the people that want to buy it. Retail market saturation occurs when the retail market in a given area expands and additional competition is introduced to a level which significantly exceeds the catchment spending power. Saturation is taken to exist when the optimum level of each retail sector in any geographical area has been reached or exceeded.


As a result of their more recent research, MPC have introduced new methodology showing the impact of Hypermarket, Superstore and Supermarket levels of saturation for towns and cities (over 4000 population) in the UK, details of which are shown below:

MPC’s REPORTS

THE IMPACT OF OUT OF TOWN HYPERMARKET, SUPERSTORE AND LARGE SUPERMARKET SATURATION UK 2007

Unique research methodology developed by MPC Associates for all cities and towns throughout the UK following over 30 years specialist studies on the growth of Out of Town shopping throughout the world.

MPC Associates exclusive working document:

Incorporating:-

 Original definitions of Hypermarkets, Superstores and Supermarkets
 Retail saturation levels in Towns and Cities in excess of 4000 population
 Driving times and distances
 Hypermarket, Superstore and Supermarket Balance of Power
 Levels of car ownership
 Catchment make up of spending power
 Carbon Emissions
 Traffic Congestion
 Isochrone Analysis.

Copyright © MPC Associates Limited 2007 

THE TRADING EFFECTS OF HYPERMARKET AND SUPERSTORES ON CITY CENTRE RETAILERS IN TOULOUSE 1994

Incorporating Le Loi Royer – the French Planning Law “To avoid Hypermarket dominance and consequent loss of small businesses”.
MPC Associates exclusive research conducted in accordance with the MRS (Market Research Society) Code of Conduct.

Extract from Market Research report 1994 : 

When Toulousian retailers were asked what was their main competition threat as a one-off question, they stated that out of town shopping complexes were the No 1 threat.

In rank order the competitive threat diminished as follows:

1.   Out-of-town shopping complexes

2.     Medium and large sized city centre stores

3.     Other City stores of a similar size (not immediate neighbours)

4.     Immediate neighbours (same street)

However, when asked by means of using trade-off techniques and scenarios to reveal the relative importance of competitive threats, they stated the following perception of current competition:

Perception of current competition

(number of shopkeepers shown)

 Taken from: MPC Associates Toulouse Report 1994
Copyright MPC Associates 2007

Impact of changes in the trading environment

The Toulouse in town retailers assessed how various changes to the environment would impact on their turnover.  The largest changes are associated with opening of an ‘immediate’ neighbouring competitor and closure of the largest out-of-town complex affecting their business.  

1	Closure of the biggest out-of-town shopping complex affecting your business		+15.6 %
2	Closure of the biggest in-town competitor		+13.1%
3	A doubling of the immediately available car parking space		+10.4 %
4	The opening of a new out-of-town shopping complex		-9.2 %
5	Establishment of a neighbouring (“immediate”) competitor		-15.9 %

(The average percentage change in trade is shown – some retailers showed much higher expected changes)

See  Maps showing location of all Hypermarkets and Supermarkets as well as inner city stores which were researched:

Copyright © MPC Associates Limited 2007

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OUT OF TOWN SHOPPING AND THE TRADING EFFECTS OF HYPERMARKETS ON CITY CENTRE RETAILERS IN TOULOUSE, NANCY AND EDINBURGH 1973

MPC Associates research including shops losses and gains, report conducted on the principles of the MRS (Market Research Society).

Extract:

Speaker addresses include “The Future of the UK Shopping Centre” by Peter Wynne-James, Chairman, MPC Associates Limited, “The Carrefour Story” by Etienne Thil, Director of Public Relations, Carrefour, “The Creation of the Parly 2 Shopping Centre at Versailles, France, by HMD NORTON, Vice President, Larry Smith and Company, “The Role of Finance in the Retail World”, by Michael Bliss, Marketing Director, First National Finance Corporation Ltd, “The Problems Facing Supermarket Development in the 1970’s by Peter Firmston-Williams, Managing Director, Key Markets Limited.

Exclusive for MPC Associates Seminar Attendees
Copyright © MPC Associates Limited 2007

MPC Associates was founded by Peter Wynne-James in 1968, as specialist consultants in the Retail and Leisure industries, concentrating on location analysis and retail development throughout the world.

In 1973 the Company held a major seminar in London to launch “The Retail Revolution”, concerning the future development of Hypermarkets and Regional Shopping Centres in the UK. MPC Associates subsequently worked for Associated Dairies on a 5 year programme of Superstore and Hypermarket development to bring the company onto a National basis, under the name of Asda.

From 1976 – 1994 MPC has also worked for Sainsburys, Tesco, Low Cost, Discount (Safeways) in the UK; Carrefour, Champion Supermarkets and Promodes in France; and Ahold (Albert Heijn) in Holland.

In 1973 MPC published “The Changing Pattern of Retailing in Western Europe” of which 5000 copies were sold throughout the world.

Also in 1973 the threat of Out of Town Shopping competition on the commercial future of City Centres in the UK was causing much alarm with shopkeepers and medium sized retailers. Realising that the largest expansion of Hypermarket development was in France, MPC decided to carry out detailed in-house research into the City of Toulouse. At the time Toulouse had more Out of Town shopping space that any City in Europe with 640,000 sq ft. MPC, with the help of local traders’ performances and the French local authorities, before and after the opening of Hypermarkets such as Carrefour, Geant Casino, L’Escale and Mammouth, was able to chart the annual openings and closures of City Centre shops over preceding years.

By 1994 in terms of research methodology, MPC had developed a structured approach, using new research concepts, with a combination of ‘projected’ techniques and trade off analyses, in order to unravel the true reasons for City Centre decline as a result of out of town shopping competition.

As a result MPC decided to update their Toulouse (pop. 650,000),research with a larger sample of small traders, convenience stores and City Centre supermarkets, bearing in mind that Out of Town shopping space had increased by 91% to 1.223 million sq ft, with a ratio of 1.88 sq ft per head of population. At the same time MPC undertook a further research programme in the town of Evreux, (pop. 59,880), (60 miles from Paris), which has 240,000 sq ft of Out of Town shopping space, with a ratio of 4.06 sq ft per head of population.

In September 1994 the Department of the Environment produced “The Effects of Out of Town Retail Development”, purely as a literary review, whilst admitting that this only highlighted “the distinct shortage and in some cases the complete absence of research which deals with the identification of reasons of vitality and viability, and of work examining the particular effects (be they economic, social or environmental) of new retail development under particular circumstances”. This factor spurred MPC on to develop further research in the 21st Century.

The Company considers that density and subsequent saturation have now become of critical importance to retailers (large and small), town planners, local authorities, government departments, developers, stockbrokers and market analysts.

Copyright © MPC Associates Limited 2007