PRESS RELEASE 2

MPC ASSOCIATES ANSWERS THE FLAWS AND OMISSIONS IN THE COMPETITION COMMISSION’S REPORT DATED 31/10/07

Copyright © MPC Associates Limited 2007

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 THE EFFECTS OF HYPERMARKET SATURATION ON UK TOWNS AND CITIES

As the originators of Out of Town Shopping in the UK in 1973 MPC have conducted specialist Market Research over the past 37 years in France ( Toulouse , Nancy and Evreux ) and the UK to calibrate Out of Town trading effects on Town and City Centres.

Toulouse has always been regarded as having more Out of Town retail competition than any other city in Europe .  However MPC’s latest research shows that in cities and towns in the UK, the retail saturation levels as result of Hypermarket and Superstore openings are now well in excess of the Toulouse ratios.  

MPC have now developed a unique formula for assessing Hypermarket, and Superstore saturation levels and are in the process of analysing 1,800 areas of Towns and Cities in the UK with populations in excess of 4,000  

A case in point is a UK town of 50,000 population (see map above), of which 4 hypermarkets have been identified by MPC, each with ample parking/selling area ratios which fit the Hypermarket definition (see section A on Press Release: Hypermarket and Superstore competitive threats to Town and City Centres continue unopposed as a result of serious Flaws and Omissions in the Competition Commission Grocery Report published 31/10/07) derived by MPC in 1973 as a result of intensive research with Retail Associations and Chambers of Trade throughout the world. 

 In this town, recently researched by MPC all 4 hypermarkets are sited within 6 minutes driving time from the city centre and within 12 minutes driving time of each other.  The ratio of saturation in this particular town is now 32% higher than in Toulouse .  Needless to say all 4 hypermarkets in this UK town are causing increased Traffic Congestion with excessive Carbon Emissions.

 THE COMPETITIVE EFFECTS OF HYPERMARKETS ON TOWN CENTRE FOOD SHOPS

In their studies in France in conjunction with local Chambers of Trade and local traders, MPC researched the competitive trading effects on Town Centre Trade in Nancy (population 130,000) as a result of the opening of 3 Out of Town Hypermarkets with a total selling area of 160,000 sq ft.  The results were as follows:  

 Notes

1      In the cases of department stores and cheap variety stores, 75% of the decrease in sales occurred in the food department

2      Decreases in sales vary according to the proximity of the hypermarket store

3      It was necessary by law for French Retailers and Hypermarket operators to reveal their annual turnover figures to the Chambers of Trade – hence bringing strong viability to this research

As can be seen from the above figures, those retailers most effected are those trading in convenience food goods.  It is interesting to note that, contrary to what many local chambers of Trade might expect, independent specialist food traders within a town centre are not as seriously effected by the advent of the Hypermarket as are Small Supermarkets/Convenience Stores/Superettes.

 THE SURVIVAL OF THE INDEPENDENT SPECIALIST FOOD TRADER IN FRANCE AND THE UK

Unlike their UK counterparts the French Independent specialist food retailer is generally thriving and not effected by the growth of Hypermarkets. (As can be seen above Small Supermarkets, Superettes and Convenience Stores will continue to lose trade to Out of Town Hypermarket competition.)

The reasons for the lack of success for UK Specialist Food retailers are as follows:  

• Poor quality of food ingredients
• Poor quality of presentation
• Poor hygiene
• Little attempt to use the smell of the product (i.e. Baked Bread).  On-site cooking is an advantage. 

• Poor quality of location in Town Centres.  (Unlike other retail outlets this is not always essential as the smell of bread has a habit of wafting down high streets)

Independent UK Speciality Food outlets are therefore poor in comparison with the French.  So too are Farmers Markets which still have much to learn from French Town Centre Independent Specialist food Retailers particularly in respect of Hygiene and Presentation.  

Generally the French public are far better informed of the quality of food which they eat than their UK counterparts

MPC believe that in spite of Hypermarket competition there is an excellent future for specialist In-Town food shops providing that the lessons are learnt from the French.  On the other hand the real battle will be between small supermarkets/Convenience Stores and Superettes.  With the advent of more town centre Supermarkets owned by Hypermarket groups there are bound to be casualties.  However these will not effect the encouraging future for UK Specialist Food Shops. 

The following extract is from an article dated 4 November 2007 titled “Supermarket probe lacks high-street credibility” by Andrew Murray-Watson, business editor of the The Independent on Sunday.

“Some of the best research to come out since the commission published its findings has been from consultancy MPC Associates.  It points out, quite rightly, that the commission made no attempt to define what a supermarket actually is.  The commission’s use of the word is misleading because it is used to embrace the whole of the British retail food industry, so distorting and hiding the true competitive effects of food retailing in the UK today.

MPC also points out that the commission did not take into account that some parts of the UK have saturation of food retailing.  Any form of hypermarket or superstore development in these areas is likely to cause “utter chaos”, with increased traffic congestion and carbon emissions both in and out of town.”

 

See also other press release on this subject by MPC Associates:  Press Release 1: Hypermarket and Superstore competitive threats to Town and City Centres continue unopposed as a result of serious Flaws and Omissions in the Competition Commission Grocery Report published 31/10/07 Press Release 3: MPC Competition Commission Report ignores Hereford's rising traffic congestion and carbon emissions as city's hypermarket saturation reaches record European levels

 

Peter Wynne-James 
Managing Director

MPC Associates - Established 1968
Marketing, Management & Economic Consultants  

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