Monday, 11 April 2011

Dear Res Publica, taxing the shopping habits of the poor to subsidise the preferences of the wealthy is immoral and stupid

I wasn’t planning to comment at length on Adam Schoenborn’s Res Publica report, The Right to Retail – indeed Guido’s comments might have sufficed:

Food price inflation is bad enough as it is without Blond trying to undermine the competitiveness of the supermarkets, who will inevitably just pass on increased costs to consumers. Blond and Zac are a danger to the affordability of basic needs to consumers with their attempts to foist a Tory form of autarky on us all. If Blond wants to open a grocery store good luck to him, no need to hobble the supermarkets in the process.

However, I made the mistake of starting to read the report and to consider what it says:

The finding of the Competition Commission in 2008 – that the grocery market represents a “good deal for consumers” – has exposed the limitations of our national competition framework. We participate in our economy not just as consumers but as employees, community-members, investors and crucially as owners. As such, competition law must go beyond price-based consideration of consumer interest. It must create and sustain markets and a model of growth that can sustain small owners alongside the big. If instead we continue to be indifferent to ownership, we will continue to be a society without assets, practicing capitalism without capitalists.

The obvious question that springs from this comment is why? Why do we need to “sustain small owners” – surely in a free market small owners will succeed if they make a good enough offer, buy well and are properly managed. And I know this because I wrote a Masters Dissertation on street markets and farmers markets. Unlike the author of this report, I took the trouble to read the wide academic literature, to look at the experience of the USA, Canada and Europe and to consider how you can see small traders succeed alongside the supermarket. And yes, there is a movement out there, growing and expanding – filling a niche of local, high-quality food.

  • FARMA, the farmers’ market, farm shop and pick-your-own organisation now boasts over 700 members trading through 800 markets and retail outlets across the country.
  • Ocado, set out in 2002 to provide high quality food online and is now a listed company – demonstrating again how new entrants to the grocery market can succeed
  • And Abel & Cole lead the field in the provision of veg boxes – regular deliveries of fresh, seasonal fruit and veg to the consumer’s home

Moreover if you visit inner-cities you’ll see other grocery phenomena – thriving municipal markets stuffed with Asian, African and East European stalls, corner shops that, in response to demand, have suddenly become the Polish shop and in places like Bradford great supermarkets like Pakeezah and Haq. All these businesses are successfully trading in competition to the big supermarket chains. I even saw fruit and veg van sales in Bradford last week – something I’ve not seen since I was a child!

What saddens me about Schoenborn’s report isn’t just that it completely ignores all this exciting new retailing but that there is absolutely no reference to the extensive literature about the drivers for supermarket success, the long term decline of town centres as locations for convenience and bulky goods shopping and the different strategies available to rejuvenate town centres. The only theory in the report relates to economics – there is nothing from the wider field of urban studies, from town and country planning (despite the proposal for a whole raft of new planning regulations and controls), from sociology or from geography.

And the prescription set out here – to introduce a further tax on out-of-town retail – won’t work. It may provide some extra cash for town centres but are we really suggesting that a tax on one business should be used to subsidise another business – selected through some unspecified process of ‘designation’? Is that not a recipe for state control, corruption and market distortion?

More importantly, at a time when food inflation is well in excess of 5%, such a tax would act merely to raise prices. And it would be the less well off – the folk who shop and Morrisons, Tesco and ASDA – who will pay those prices. What Schoenborn proposes is a tax on the shopping habits of the relatively poor so as to subsidise the shopping preferences of the relatively rich.

A while ago I wrote – referring to a study by US sociologists Susie Pryor and Sanford Grossbart (“The Ethnography of an American Main Street”, International Journal of Retail & Distribution Management 2005):

Main Street is not simply a place of commerce – a shopping centre. Nor is it (as if in some Soviet dream) just a place for formal events and celebrations. It is a place of engagement and co-operation between merchants, consumers and “ancillary actors”. It is alive.

The driver to the success of Main Street isn’t the shop – although to hear us talk about town centres you would think that – it is the relationship we have with that place and the space it provides for the events and activities of our lives. In Bradford, when Pakistan wins at cricket, hundreds of fans head for the local centres. Not to shop but to share their happiness at victory.

Yet we distrust such a use for the spaces of our town centres. Many of us grumble about public drinking, about young people gathering together, about hen parties and stag dos. And we certainly dislike political campaigns and religious promotion (unless of course it’s an official and state-sanctioned occasion) – to the point of complaining about these activities.

To make town centres work we need to start thinking about them differently:

1. Places of performance – planned or otherwise
2. Centres of culture not temples to shopping
3. A locus for excitement and discovery rather than the workaday
4. As venues for communal celebration, sharing and festivity

So rather than beating down the door of John Lewis, Selfridges or some other “iconic” store should we not be finding impresarios to programme and create the framework on which the community's events and occasions – large and small – might be hung? After all we won’t go to Tesco to celebrate when West Ham win the world cup again!

Simply using the blunt instrument of tax and planning controls to give preference to selected small high street shops (not street markets, farmers markets, van sales, veg boxes, farm shops or other innovative retail businesses) is both wrong and misguided. To make town centres work you have to animate them, to put on events, to make them party friendly and to make the centre accessible by car – so cheap or free parking and plenty off it, please.

And, when you undertake some research, it’s good practice to actually refer to the literature lovingly written by academics across the world who specialise in that field rather than simply revisit one report (in this case from the UK’s Competition Commission) the conclusions of which you – without any substantiation or theoretical basis – choose to disagree with.


1 comment:

Adam Schoenborn said...

Hi Simon,

Thanks for the feedback, I would be very interested to read more about the work you reference on town centres.

I suppose there are several seperate points on which you disagree with me here. The first is the problem itself: independent grocery retailers are steadily disappearing from the high street, as bakers and butchers did before them. Some people think that this is a problem, others do not. Still others regret this, but feel it is the cost of low priced groceries.

Part of my intention in writing this report was to argue that we should care about ownership and not just low prices, while acknowledging the latter is very important and that trade-offs will be required.

The second area is the recommended use of "blunt" policy instruments -planning, competition law, tax (which was a very small feature of the report, although it received a lot of media attention), etc. to enable more small retailers to compete.

While you have pointed to some other mechanisms for encouraging local businesses, many places have achieved drastically higher levels of local ownership using planning laws - continental Europe has many examples, particularly Germany and Northern Italy, or New York State.

Thanks again for your input, and I would welcome you to submit a blog to our site setting our your position and continuing the debate.

Best regards,