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Shut the Door, the Horse has Bolted
By Tony French, Forum Manager

In the last week of September, the Office of Fair Trading released a much-discussed, widely-covered report exhaustingly titled The Welfare Consequences of the Exercise of Buying Power.

The report is a year-long investigation into consumer buying power, with a special focus on supermarket bulk buying and subsequent savings, or lack of savings, to consumers.

The report concludes that "there is generally a lack of price competition" among supermarkets Tescos, Sainsburys, Asda, Safeway, Somerfield and others. I read this in a national newspaper where a significant percentage of advertising was taken up by supermarkets offering discount vouchers. (I was especially attracted to the Sainsburys advert for cheap beer…) I pondered the incongruity of this as I went to collect my post, stepping over the offer leaflet left on my mat by Somerfield and finding my Tescos Clubcard letter in with my other post.

Still, according to the OFT’s report, supermarkets are making enormous profits while squeezing suppliers and ripping their customers off. But since when does an approximate 3.5% net profit suggest over charging? Has anyone paid a car-servicing bill lately? Solicitor’s invoice? Mortgage rate?

British supermarkets are the envy of Europe. They have shorter queues, added service, clean bright environments and huge...no, HUGE product ranges. But they’ve also been fighting charges of profiteering and price-fixing since the early 80’s. Through a period of deep recession while we lost our businesses, homes and jobs, supermarket profit levels remained about as much as they are now. Pity the OFT didn’t think to look into alleged over-charging or price-fixing when it could have made a difference.

Tony French previously managed The Microsoft Network's UK Business & Finance forum, and is the Managing Director of AF Stocktaking.

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