UK supermarkets are using a business model which has placed them on a knife edge, says a report by Professor Lisa Jack, an accountancy academic who focuses on the food system.
Her discussion paper, published by the Food Research Collaboration, explores how supermarket accounting aimed at more sustainable practices would impact shopping.
It says the cost at scale of stock, premises, IT systems, staff, displays, and logistics, are expensive, yet supermarkets need to keep prices down to attract customers.
Bargaining power is the one real advantage that size and scale give supermarkets but it risks putting financial and emotional burdens on suppliers.
Supermarkets charge suppliers fees for marketing and selling their products, generating “commercial income’” which can equal or exceed supermarkets’ bottom-line profits. Without the commercial income generated by charging supplier fees, British supermarkets would run at or near a loss.
This model risks unbalancing the rest of the food system. It’s described as a false economy of scale which has created a system characterised by over-purchasing, over-eating, over-production and waste.
Food is transferred to cupboards in consumers’ homes and left unused; empty calories are stored in our bodies; and edible food often ends up in bins.
The report asks whether it is possible to design a system that is sufficiently profitable, refuses waste but provides affordable food. It questions the possibility of:
- Supply negotiations precluding requests for discounts
- Prices paid to farmers including management costs and overheads to reflect their expertise and necessary investment
- Consumers learning to buy things differently, not just buy different things
It says we need to face up to these questions, as we try to move closer to a more climate-friendly, healthy, regenerative and equitable food system.