Comment: Tighter rules will hurt competition in food retail
The Royal Highland Show is a crucial event for Scottish retailers. Retailers (many of whom have dedicated Scottish buying teams), producers, and farmers met last week to build relationships and understand market conditions and emerging trends. Considering those retailers spend £5 billion a year on Scottish products, it’s serious business.
Just as vital is showcasing those products to Scottish consumers. Thousands of visitors enjoy the show, and retailer stands will compete to demonstrate they have the best locally sourced and innovative new products. That’s done through demonstrations, display stands and, of course, free sampling – one of the great joys is grazing on freebies at supermarket stands.
But behind the customer-facing front there were serious discussions taking place. Everyone in Scotland’s food and drink industry is concerned about the risks a no deal-Brexit poses, along with the challenges resulting from sluggish economic growth and cautious consumers. However, nearly as great a concern are plans to restrict the sale of less healthy products in an attempt to reduce obesity.
We don’t disagree there is a need to encourage consumers to make healthier choices – it’s something retailers have led the way on. Fresh fruit and vegetables are heavily price promoted and are often the first thing shoppers see when entering stores. Healthy snack alternatives are now much more prominent, and ready meals and sandwiches have been improved by including the quantity of fruit and vegetables. Retailers led the way on reformulating products to reduce salt, sugar, and pioneered the traffic light labelling system and clear energy information to help consumers understand products so they are able to make informed choices. That work won’t stop – it matters to customers and it’s the right thing to do.
In fact, we even support government intervention. Where there is clear evidence which supports proportionate measures we think the time has come for the UK and Scottish governments to get involved. Government legislation should look to take on the good work of the retail industry to ensure the maximum number of people benefit – and that food manufacturers, hotels, restaurants and other food businesses compete on a level playing field.
In fact, we think there is a case for government going beyond what our members have already done. We accept certain food categories should be treated differently. Confectionary, crisps, and cakes are great, but we accept they should be sold responsibly to avoid encouraging over-consumption. That’s why we think there’s a case for restricting multi-buy promotions. We also recognise that promotional space in store should be used to promote both healthy and indulgent products – not least as this is the best way to promote healthier versions of those treats.
For our industry this is unprecedented territory. Our business models are built on allowing retailers to promote products to ensure customers can find the best deals. That competition has delivered for consumers; figures from the Office for National Statistics show the proportion of household total food spend has halved from 33 percent to 16 percent in recent decades.
We believe the steps outlined above match the government’s own evidence and would help to tackle obesity. Action is needed, and industry must accept a role – but there is a balance to be struck.
Because proposals must be proportionate and not inhibit fair competition. Calls to restrict where in store retailers can promote Scottish biscuits for Burns Night or tablet for St Andrew’s Day are an unreasonable intervention. Banning the advertisement of temporary price promotions means consumers can’t tell what is a bargain. It also removes the incentive for price competition which keeps shopping basket prices down. As for bans on sampling – well that would scupper those Highland show tasting treats.
Kill-joy measures which stifle competition don’t just hurt consumers. They also make it very hard for small producers to compete with established brands. Small indigenous products need in-store placement and marketing to get off the ground. The work retailers do to promote these companies and products through putting them in popular parts of the store is essential to grow these businesses. Without these opportunities only the very biggest businesses with large brand recognition will succeed; reducing customer choice and harming small suppliers.
No doubt social media will be replete with politicians taking advantage of the show to pose for pictures with animals, farmers, and retailers. We’ll hear about how they want to support the rural economy. We’re playing our part in making that happen – but politicians need to look at the wider issues and take a sensible view. Otherwise future shows are going to be a lot less fun for all of us.