Whole Foods

Us Europeans have a tendency to look down our noses at the "big box" supermarkets that feature so prominantly throughout American suburbia. Sadly, the same people who'd routinely mock American's for their misunderstanding of Europe, history, travel etc have rarely seen what America is really like. Newsflash: some American's don't like shopping at Wal Mart, and that's why America is home to some of the most high quality, pleasant, innovative and socially conscious supermarket chains on the planet.

Remember that markets only ever reflect the preferences of consumers, therefore any indictment of (free) market behaviour is really an indictment of the people who shop there. When people complain about how ugly and brutal Asda is, they're really talking about Asda's customers.

The trouble is for many people price is important, and they'd rather shop at large stores that can charge lower prices, than pay a premium for specially sourced produce. It's hard to patronise one's ethical conscious when you're struggling to put food on the table. As Tim Worstall notes, a point that surfaced when Jackie Ashley argued for Sunday trading restrictions:

 

Like millions of people living on minimal wages or benefits, my wife and I need cheap food, clothes, and household equipment. Well-heeled journalists may long for litle local shops selling these at 30% over the prices that Tesco charges, and I even sympathise in a way with them. But it is a luxury that 50% of the population, literally, cannot afford.

So what's my point? Well I'm saying that we should all just chill the fuck out. If you slag of Asda/Wal Mart then stop it. You're being a snob. And if you slag of American's for creating Wal Mart then stop it. You're being ignorant. As an example of how "ruthless" capitalism creates ethically conscious and aesthetically pleasing social outcomes just take a look at Whole Foods. Before anyone starts to "claim" Whole Foods as being fundamentally different to Wal Mart etc then I'd point out that their CEO - John Mackey - is in the same intellectual circles as myself and other "free market", "right wing", "libertarian", ... , I forget what other names we get called....

So I urge you all to sit down and read this letter by Mackey to author Michael Pollan (who recently wrote a book criticising Whole Foods). Some excerpts:

when is a farm too large to be considered "small?" How far can food be transported before it is no longer considered "local?" How much machinery is a farm allowed to use before it becomes "industrial" (and therefore no longer "good")?

Joel Salatin is portrayed in heroic terms. How large and successful could he become before he was no longer a hero in your book?

While I don't share your fear of globalization of the food supply, I do share your commitment toward helping promote local foods. I will say, however, that buying only local foods may be good for local farmers, but it can also be devastating to poor farmers all over the world who need to sell their products to the developed world to help lift themselves out of poverty. A strictly local foods philosophy is not a very compassionate philosophy. As Singer and Mason write in their new book, "keep your dollars circulating in your own community is not an ethical principle at all. To adhere to a principle of 'buy locally,' irrespective of the consequences for others, is a kind of community-based selfishness" (Singer and Mason p. 141)

Argentina isn't able to sell us automobiles or jet planes or computers, but one thing they can sell us is organic asparagus. If we don't buy their organic asparagus then how are they going to be able to afford to buy iPods from Apple, computers from Dell, or books from Michael Pollan? (You aren't just restricting your books for sale only locally in Berkeley are you? Why not? After all, lot's of fossil fuel gets used distributing books across the U.S. and the world.)

This dialogue should be an inspiration to us all - about how important our ethical concerns should be on what we, as consumers, demand; but also that the best system to turn those concerns into action is one that allows competition and choice.

 

Comments

[tc]

"Well-heeled journalists may long for litle local shops selling these at 30% over the prices that Tesco charges"
This is ignorant. It's simply not true that supermarkets always beat smaller shops in terms of price, even though economies of scale would suggest that they should. My local green grocer on trendy 'middle-class' Didsbury high street is, generally, cheaper than the large Tesco down the road, and the produce is usually better. I buy cds from Zero, a small independent record shop, where new albums are £10. This is, usually, cheaper than HMV or Virgin Records, and the selection is more interesting. Admittedly, I shop there because i think it's cool, but these places are not pricing out anyone. The only difference is that they are less convenient: the greengrocer doesn't sell ready meals or frozen chips, so you have to do the cooking yourself; the record shop doesn't have the top ten moronic best-sellers blaring in your face so you have to browse and take a risk/make an informed choice. Either way it's less convenient. What Asda and Walmart do is, not reflect what people actually want, but play of people's tendency to be lazy and unimaginative - and it's a symbiotic relationship, though only advantageous to the supermarket. The easier it gets the lazier we get until staff are stuffing warm doughnuts in our flapping jaws as we mulch around pining for the new Shane Ward single and clutching our oven-chips.
Asda doesn't just reflect people's docility, it makes people more docile. Therefore it's immoral. As are Americans.

[dearieme]

No garden, however small, should be without its orchard and Orangery.

[Matthew Whitfield]

Unsurprisingly, I agree with Thomas. It's ludicrous to suggest that the largest supermarket chains have achieved a retail nirvana that meets the need of all shoppers. When I criticise Asda, Tesco et al, I'm really not criticising the people who shop there in a form of covert snobbery. All I really care about is that I don't like those shops, they make me really rather sad and they don't meet my needs. J.S. Mill in 'On Liberty', in typically self-reflexive mode, is concerned by the potential effects of the liberty he promotes in his writing. Richard Reeves, Mill's biographer, writes this in the May 2006 issue of Prospect:

'Mill's principle target was not state coercion. A potentially bigger threat to individual freedom was the constricting effects of public opinion, or what he variously called "the despotism of custom" and the "tyranny of public opinion." Mill had been greatly influenced by Tocquville's assessment that American democracy and freedom were homogenising, rather than diversifying, opinions and lifestyles.'

And so it is with the effects of liberal economics on the retail sector. The supermarkets, led by Tesco, purport to represent 'what shoppers want', but given that ultimate economic freedom, the market will simply serve up gloopy, pasteurised facsimilies of people's real needs. Homogenisation is certainly the issue here - if you have four major companies pushing the same homogenised foods and products on the majority of the population every week, then very soon those people will also be buying the homogenised opinion that all their needs are being met.

It's an illsuion of liberty, an illusion of choice, and the growing dominace of large stores really does pander to our laziness and make us lazier still.

[AJE]

It's ludicrous to suggest that the largest supermarket chains have achieved a retail nirvana that meets the need of all shoppers

When did I suggest that? The whole point of the post was to say that different customers have different needs, and supermarkets reflect that to provide us with a choice.

When I criticise Asda, Tesco et al, I'm really not criticising the people who shop there in a form of covert snobbery. All I really care about is that I don't like those shops, they make me really rather sad and they don't meet my needs.

If that's not being snobbish I don't know what is. Inflicting your own preferences on others, and seeking to constrain their own choices because you disagree with their tastes seems wholly illiberal

A potentially bigger threat to individual freedom was the constricting effects of public opinion

That's my point! There are great alternatives such as Whole Foods which provide exactly the services (in America) you're crying out for over here.

Homogenisation is certainly the issue here

Do you have any evidence to support your claim that Tesco sell more homogenised produce than previously? I think that's nonsense - any trip to a major supermarket bowls me over with the array of choice and increased selection (and quality) of food

You've both responded to my post by trying to claim that you're not being snobbish about hating people for shopping at Asda, but you've ignored the main point. Ok, so you have an aesthetic problem with places like Asda, lets take that as given. What's your problem with places like Whole Foods?

[tc]

Incorrect. I admit my snobbery:

"Admittedly, I shop there because i think it's cool"

The implication is that Asda is not 'cool', and I'm being more than a little facetious here. But I do take issue with the point that you raised about independent shops always being outpriced:

"local shops selling these at 30% over the prices that Tesco charges"

In my experience this is not always the case, particularly with fresh produce, which is something that annoys me about the supermarkets.

Another thing that annoys me is that they actually RESTRICT consumer choice through marketing strategies: BUY ONE FROZEN BOAR GET ONE FREE, 1/3 OFF BERNARD MATTHEWS HONEY GLAZED OFFAL, OUR MANAGER'S SPECIAL TODAY IS THIS LIFE-SIZED WAYNE ROONEY DOLL WITH DETACHABLE LIMBS and such things. You may think you 'see' choice on the shelves, but your gaze is always interupted by the big red 'reduced' sign on a certain brand; the hand is forced. It's very difficult to buy what you actually want in a supermarket, rather than what they want to sell you. Once I went into Tesco for some writing paper and came out with two pounds of plums and a copy of Katie Price's autobiography. I was halfway home before I realised.

In reference to snobbery, I was recently called a snob for prefering Earl Grey tea to PG Tips. I wonder whether this is a wierd deeply routed class thing? I'm not sure. But is it snobbery to prefer one product to another, or to consider something to be of inferior quality, or to dislike something because it doesn't give you pleasure? What is snobbery, and where's the line?

[AJE]

I think supermarkets tend to be cheaper than small independent shops. That doesn't mean that at all times, for all products, this is the case. If you're right than i'd be delighted - I personally prefer shopping in local farm shops, but certainly in my experience larger supermarkets are cheaper.

I don't think there's anything snobbish about preferring Earl Grey to PG Tips. Personally I prefer Yorkshire Tea. That's fine. I think it'd be snobbish to assume that your own tastes are superior to others, and therefore justify you to choose on behalf of others - especially if the prices differ.

Both yourself and Matthew sound very much "let them eat cake"

[tc]

"the best system to turn those concerns into action is one that allows competition and choice."

Isn't that exactly what Tesco and Asda are destroying?

[AJE]

Definately not. They're acting within a competitive system, acting competitively.

Tesco and Asda aren't destroying anything. Their customers are making it increasingly hard for poorly run stores to stay open, but those customers continue to have choice about what they want from their shopping experience.

We often implicitly assume that if firms start to get too big then they become all-conquering, but fortunately that piece of Marxist bullshit has been proven wrong - in the past (capitalism doesn't lead to an increasing concentration of capital, see Warren Nutter), and today (as Whole Foods demonstrate in the States, the apparant "monopoly" held by dominant firms is fragile and always tied to it's ability to satisfy customers)

[tc]

Hmmm, but do the big supermarkets sometimes act a little more aggressively than is necessary?
I don't have any evidence of this, would anyone like to help?

I read recently about an English village where a proposed Tesco was refused on grounds of adverse public opinion. I guess this is an example of the system working well.

[Matthew Whitfield]

'Both yourself and Matthew sound very much "let them eat cake"'

Not at all. I realise that people need to eat, and some people need to eat cheaply. My point is that supermarkets make it more difficult for people to have a real choice about where they shop and what they buy.

'Do you have any evidence to support your claim that Tesco sell more homogenised produce than previously? I think that's nonsense - any trip to a major supermarket bowls me over with the array of choice and increased selection (and quality) of food'

A major selection, it's true. The homogenisation I'm talking about comes from Tesco's products being largely the same as Asda's Sainsburys etc. There are subtle differences of tone, branding, quality etc, but between the four majors there is generally one overall 'offer'. No matter how large the product range (and I admit it's a lot larger than in the past) when supermarkets dominate the market to such an extent, isn't it sad that choice is limited to what a small cabal of buyers have decided should be on the shelves?

Supermarkets don't ever lead the market - all of their innovations have stolen from a variety of other sectors and used their ideas. We have a (limited) range of organics and fairtrade products in a shop like Tesco, not because they've innovated in bringing in these products, but because consumer demand for them from other sources was sufficiently strong that Tesco decided to muscle in on the market.

From what I've seen on the Whole Foods website, they've taken the supermarket model and simply stocked their sheds with much higher quality foods. Fantastic. This is good for individual consumers, especially those who haven't previously had the choice to but good food. My concern is that simply by fighting fire with fire i.e. more agglomoration and buying power (NB: Whole Foods absorbed the independent and highly innovative 'Fresh and Wild' in London in 2003) then the market ends up with just another large player. If they gained a foothold in the UK then we'd just have four standard supermarkets and 'the one that sells the really good stuff'. Meanwhile, with more and more independents going to the wall, from whence will come innovation?

[AJE]

This is getting a little confusing. Are you saying

a. Supermarkets make people worse off but they're too stupid to realise it

b. Supermarkets don't fulfill my own consumer needs but I don't have any alternative

The point of this post was to stick up for people who want convenient and cheap food, and demonstrate how those who want other options have them available. Our varying tastes can cohabit peacefully.

Either you're attacking Asda's shoppers (i.e. being snobbish) or claiming that Asda's shoppers are attacking you (even though neither of you ever need step into an Asda or Tesco).

So why can't we consumers just chill the fuck out?

Let them go to Asda, and you don't have to. What's wrong with that?

[Matthew Whitfield]

You're right - it has got a little confusing! I'm saying that not only do I not have a proper choice in the current grocery market, but that everyone, regardless of income or inclination, does not have a proper choice. When the 'big four' supermarkets have 70%+ of the entire grocery market, and they are all selling very similar ranges, experiences, environmental practices, then none of us can find the variety we need as consumers in the 20% or so of the market that is made up of independent, smaller shops (many of which are pretty scuzzy convenience outlets, in any case).

I'm familar with your argument that the big supermarkets have got where they are by giving people what they want, and I agree with it up to a point. I just feel that the competetive advantage they gained by being better than others at what they do reached an important staging post of growth, and after that point, further growth was based mainly on the competetive (and self fulfulling) advantage of size. This has led to the stagnation and declining choice for consumers (whilst paradoxically creating the illusion of more choice).

I also see your point that in such instances (a WalMart dominated US, for example), then a sure-footed competitor will come along to pierce the smug monopolists by once again giving people what they actually want. I'm not at all confident this can happen. Whole Foods is, after all, just another supermarket, and will simple canibalise market share from the others.

What's needed, I feel, is for more entrepeneurs who want to compete with Tesco, but not by becoming Tesco. On their own they may (will?) perish, but maybe a new model is called for. Just as the internet has altered and continues to alter the buiness model of so many industries, maybe a new approach is needed in food retailing. I was interested to read this http://books.guardian.co.uk/review/story/0,,1815519,00.html and would like to hear what you think. Sure, it's about books, but what do you think of the principle?

[AJE]

everyone, regardless of income or inclination, does not have a proper choice

I just think that's utopian nonsense. Unless you're defining "proper choice" as how the world would look if you were Dictator, any reasonable definition of choice is satisfied in the UK grocery market. No-one need shop at Tesco, Sainsbury's, Asda or Morrisons unless they want to. It's as simple as that. Every day new, small, indendent shops open and give further options.

Ideally (and htis is my opinion) we'd sort out farming subsidies so that farms have a greater incentive to branch out into farmshops and become low-cost hubs of local produce, but even today they exist, and I can't see why anyone would worry about it continuing. If there's a market for what you want, it'll be there.

further growth was based mainly on the competetive (and self fulfulling) advantage of size.

Again, the old Marxist concentration of capital bullshit. If Tesco build a new store they're not just in competition with smaller, poorer independent shops. They need steel, builders, JCBs, plastic, planning permission, local suppliers, national logistics support - all these things are in competition with other industries. There's not a set amount of steel available to supermarkets which Tesco bullies other shops into purchasing: they're competing with all other industries that require steel. They're fundamentally constrained in their growth by the willingness of customers to keep going. No conspiracy, no inevitable growth, just an indication that they're making lots of people happy.

Whole Foods is, after all, just another supermarket

I really don't think it is. Fair enough if you define things in terms of whether a supermarket is of a certain size, and has shelves, and tills, and staff. But if you look at the operational organisation of Whole Foods, the way they do business, the way they interact with suppliers and initiate customer dialogue... I think they're different.

So too Wegman's, a phenomenal US supermarket similarly eroding the market share of encumbants.

What's needed, I feel, is for more entrepeneurs who want to compete with Tesco, but not by becoming Tesco

I think this is going on all around us. We regularly walk down the road to shop at Battlers Green, a fantastic farmshop with some geniunely innovative produce. They're booming and I don't see any reason why that model can't be replicated elsewhere. Indeed my relatives who live in rural areas (such as the New Forest and Bath) have similar alternatives. That model is unsuitable for more urban areas with fewer farms, but witness the rise of farmers markets.

Again, this comes down to personal tastes. I demand small shops, and feel that I get them. But i'll never shop exclusively at them because they are too expensive, and they are a little too "community selfish". Hence Whole Foods as a beautiful balance.

Regarding the link on bookshops, of course no-one really knows before hand what will work - that's for the market process to discover. Clearly though cooperatives and independent alliances are fantastic ways for smaller firms to enjoy the economies of scale that larg corporations posess. That Guardian article didn't seem to mention the internet, which I think has had a positive effect on independent bookshops, offsetting somewhat the "warehouse" approach taken by supermarkets and big chains. My problem with small independent bookshops is that they tend to be pretentious and expensive. I don't need them to buy a book - Amazon are far better for that - and they don't seem to provide the atmosphere which would tempt me to spend a lot of time in their shops and buy add ons. For this the larger chains are excellent - they provide coffee shops and a place to meet, and spend time (full disclosure - I don't personally like such places, but others seem to).

The type of bookshop I personally prefer (and hope that enough other people do to make them prosper) are the dotty second hand shops stacked full of treasures and the eccentric elderly, and charity shops that have book sections. Notice how Oxfam clearly find this profitable enough to run chains of shops that exclusively sell books. Today I bought a couple of books from an Oxfam far cheaper than they'd be on Amazon for, and noticed a good many books that are recently published.

The bottom line though is whilst I feel strongly about my own personal tastes (pro farmshop, pro independent bookshops) I wouldn't want to inflict that on other people if they prefer something else. As I say, co habitation is possible (and I believe prospering) and therefore we should chill out, marvel at the complexity in all these industrys, and have faith that if left free to function fluently the marketplace ensures that our demands and choices are catered for and heard.

[Matthew Whitfield]

I'm not expressing 'how the world would look if [I] were Dictator', nor am I trying to 'inflict' my own preferences on others. Like you, I'm just expressing my personal preferences and my own views. I'm off to 'chill the fuck out'.

[Rhiannon]

"Do the big supermarkets sometimes act a little more aggressively than is necessary?"

I belive the Competitions Commission would say yes.

"It comes as the Competition Commission begins an investigation into whether supermarkets have stifled competition by assembling “land banks” or frustrating attempts by rivals to build supermarkets in specific towns."
http://business.timesonline.co.uk/article/0,,8209-2241809,00.html

"A watchdog [CC] has agreed to an inquiry into claims that the 'big four' store chains abuse their power to kill off small independents."
http://www.thisismoney.co.uk/news/article.html?in_article_id=408919&in_page_id=2

"Do you have any evidence to support your claim that Tesco sell more homogenised produce than previously?"

Yes, only today I was speaking to an organisation that has banded together to distribute produce from local farmers in Lancashire and Cheshire. We were discussing strawberries, when they happened to mention that a number of farmers had refused advances from large supermarkets, as if they had accepted them as clients would have not been able to produce quantites big enough to supply anyone else, so would have had to agree to certain demands from their only customer or face losing their only source of income. The particular issue they had with this is that one of the key requests was to change their crop to the high yield (and therefore more cost effective) species prefered by the the large supermarket in question, and those species didn't taste as good.

"I think supermarkets tend to be cheaper than small independent shops. That doesn't mean that at all times, for all products, this is the case."

You're certainly right there, in my experience fruit and veg are cheaper in small shops, but toilet paper, cleaning fluids etc, processed foods, and anything that is not it's raw form i.e. bread cheese, fruit juice, rather than wheat, milk, fruit, are cheaper in supermarkets, which is why I find your comment:

"Tesco and Asda aren't destroying anything. Their customers are making it increasingly hard for poorly run stores to stay open, but those customers continue to have choice about what they want from their shopping experience."

somewhat insulting. Products from small businesses (other than fruit and veg) cost more not because they are badly run, but because small business can't buy the required raw ingredients in bulk (and therefore don't get the discounts supermarkets do, and are able to pass on to their customers), or as demonstrated above, utilize their buying power to force suppliers to switch to substandard produce which is cheaper to produce.

This is one, but not the only reason, why on the whole small specialised businesses do produce much better quality produce.

Fruit and veg in supermarkets is much older and not naturally ripened as it has to travel long distances.
Bread is pumped full of preservatives to increase the shelf life, rather than being bake in small batches (even the "fresh baked" is pre-prepared dough, frozen and simply baked in store, which significantly reduces the quality).

I would also say that choice is an issue in terms of fruit and veg. Standard items are cheap, but anything considered "exotic" is far more expensive than you can get in small grocers, and the range is often pathetic. Who wants a rock hard flavourless mango, of the same variety year in year out, when you can go to your local Asian grocers and pick up which ever variety is in season, and much tastier.

My favourite is the small yellow banana shaped pakistani variety I recently bought for 50p at my news agent, but sorry you've just missed the two week long season! You'll have to wait until next year as you certianly won't be able to pick one up from Tesco, I'm sure they would never invest in such a transient product, it wouldn't give them time to collect enough data on them to market it effeciently.

[AJE]

Like you, I'm just expressing my personal preferences and my own views.

In which case you deserve an apology: sorry. I was under the impression that you'd favour some form of intervention (as Rhiannon points out this is in motion) to alter the current situation and bring it more into line with what you're arguing in favour of. Your own views are very very similar to the DTI's justification for intervening, so I assumed that you'd be in favour of that.

If, instead, you wholly support Tesco's right to behave competitively but merely wish to point out your personal objections and reasons for seeking alternatives then not only do I apologise but I completely agree with you.

But I hope the points i've made move you somewhat closer to my own position: that the industry is competitive and there's no economic justification for fearing a decline in the shopping experience we both enjoy.

Indeed consciously or not Rhiannon supports my point with a series of examples of how big supermarkets don't have a competitive edge for many products. Apparently (and I agree) smaller shops' fruit and veg are often fresher, in season, tastier, cheaper, bread is freshly baked... wonderful!

She doesn't think it likely that Tesco can replicate these things, and neither do I. Hence there'll always be room for such places. Thomas' greengrocer is cheaper and higher quality than Tesco, and his local music shop is cheaper than HMV and a more pleasant shopping experience. As Thomas acknowledges this price difference is something of an illusion considering the transaction costs involved in frequenting multiple shops – but the option is there. Tesco is more convenient, so people aren’t being “stupid” to shop there, just demonstrating that they have time constraints.

I think that there'll always be enough of us to keep these places in business, and the stronger Thomas and Rhiannon's depiction, the greater the chances: ”you certianly won't be able to pick one up from Tesco, I'm sure they would never invest in such a transient product, it wouldn't give them time to collect enough data on them to market it effeciently” - exactly!

Rhiannon - welcome to the conversation, i'm very familiar with what the Competition Commission have to say about this. The problem is I don't accept them as a definitive opinion. I think you're underestimating the quality of The Filter^ if you think that the economics being discussed on here is being led by places like that. Myself and Steve are better economists than those guys (and if you read regularly than so too are you). I know full well that i'm contradicting what they're telling you. They're wrong!

I'm a little confused about what you're disagreeing with but i'll make two points

one of the key requests was to change their crop to the high yield (and therefore more cost effective) species preferred by the large supermarket in question

I think this sentence demonstrates the misunderstanding of a market economy that underpins the current issue of competition within supermarkets. Sir Terry Leahy (probably) doesn't especially like large, flavourless strawberries. He's not satisfying his tastes and inflicting them on us. Therefore "the supermarket" in question doesn't have a "preference" over strawberries. All they do is attempt to predict their customer's preferences, and cater to them. Supermarkets don’t have preferences, only consumers do.

I think it’s impossible (in a competitive system) that any individual supermarket can force customers to buy things they don’t want. If other large supermarkets won’t offer a better service, then smaller ones certainly will (such as the Pakistani shop you mentioned). So – and this is the original point I was making – to lament the quality of produce in popular stores is to criticise the tastes of that stores customers. Supermarkets, no matter how big, can only reflect the preferences of their customers and forever remain tied to satisfying them.

I find your comment … somewhat insulting.

I should rephrase that because you’re interpreting it as a personal indictment of people who run small businesses, rather than a simple statement of fact that if a smaller shop can’t compete with Tesco it’s because it’s not as effective at satisfying the wants of the general public.
It seems that there’s an undercurrent throughout this where all three of you imply that sheer size determines efficiency. I’ve tried to point out why I don’t think that’s the case, so by all means disagree with those points but we won’t get anywhere if those points are just ignored. If a small independent shop is forced to close down as a result of Tesco opening a new store there’s no conspiracy or inevitability at play. It’s a simple challenge between two shops trying to out compete each other. Some customers inevitably will prefer an alternate outcome, but the whole point is that they’re voting for what they prefer and the outcome will reflect that. For every Guardian journalist who enjoys spending Saturday’s traipsing from one shop to another, there’s a busy person just trying to get what they need quickly and efficiently so they can get home to spend time with their family.