Supermarket Price Wars

Children, rainforests and animals: the real casualties of the supermarket price war 

Supermarket fixation on low prices is driving low ethical standards which have wide-reaching consequences:

  • 46% of supermarkets have no policy for purchasing certified cocoa despite widespread use of child labour in uncertified products
  • 31% have no palm oil policy despite links to deforestation
  • 69% have inadequate availability of sustainable fish
  • 85% have poor animal welfare standards
  • 62% have inadequate policies to prevent animal testing in their own supply chain

Reduced spending at a cost

Despite widespread concern that food prices are rising, today households in the UK spend proportionally less of their income on food than they ever have.

So why are the supermarkets still locked in a price war? And who is losing out?

According to the most recent data, the Office for National Statistics (ONS) reports that the average British household spends around 11% of their income on food and non-alcoholic drinks, a figure which has remained largely unchanged for at least 14 years.

The vast majority of this spending takes place in supermarkets. And it easy to see why. Convenience and low prices keep us coming back for more and it’s a lure that’s hard to resist. In fact, when consumers were quizzed about their motivations for choosing their supermarket of choice it came down to price, with 36% quoting low prices as their decision reason and 90% ranking it in their top five.

Supermarkets gather rafts of information about our shopping habits — every can of beans, every bottle of shampoo and every bag of crisps is recorded against reward cards to entice you with money-off vouchers, points and discounts. And supermarkets are constantly monitoring competitors and comparing like-for-like products to tell you exactly how much you are saving with them — literally down to the last penny.

It easy to imagine the vast sums of money and the amount of time that is ploughed into this analysis and marketing activity. Supermarkets know the exact price of every product in every competitor store, computing thousands of prices daily to calculate their exact profit margins and how much fat they can trim to be the cheapest.

It’s easy to imagine that supermarkets would use this intelligence in much the same way in scrutinising their supply chain. Surely, they have the same level of control? Surely, they can interrogate products from source to shelf, prove safe working conditions, fair pay and sustainable practice?

The truth is a very different story and it demonstrates the true cost of cheap prices.

Squeezing supply chains

When supermarkets slash their prices, they don’t lose out. They squeeze the supply chain and this creates problems, mainly for the producers and farmers, both here and abroad.

Largely due to the size of the supermarkets, and the breadth of their offerings, they have lost track of their supply chain. They can’t ensure that the ingredients and processes used in producing the vast majority of the products that they sell are ethical and sustainable.

Image: Cocoa production

We were shocked when we looked into the supermarket sector in more detail. We produced a report which ranked the main 13 main supermarkets, here in the UK, according to their policies in areas such as supply chain management, workers’ rights, environmental reporting and animal rights. The results made for pretty sober reading.

Supermarkets could achieve a maximum score of 18, indicating a clear ethical practice across all categories, but the highest scorer was Co-operative with only 5.5 and Asda, at the bottom of the table, received a zero score.

Lack of control in their supply chains

A lot of the low scores were due to the lack of control that supermarkets are demonstrating in their supply chains. The sourcing of four particular ingredients is widely recognised as an area of concern: cocoa, cotton, fish and palm oil.

Only five companies have dated targets for using 100% certified cocoa, despite widespread knowledge that there are 2.1 million child labourers involved in farming uncertified beans in West Africa5. 46% of the supermarkets mention nothing about Cocoa at all, including Booths, Iceland and Ocado.

Cotton fares better, with six out of eight supermarkets that sell cotton products indicating that they don’t use Uzbekistan cotton, where forced labour is rife. However, Aldi and Morrisons still have no policy on this practice.

And it’s not all about human rights. Supermarkets are also showing disregard for sustainability in their supply chain with only 2% of Morrisons’ seafood range consisting of MSC certified products. Asda and M&S aren’t far behind with only 12% and 13% respectively. On a more positive note, Sainsbury’s and Waitrose are showing real commitment in this area with 72% and 67% MSC certification across their seafood products.

Some supermarkets are making a real commitment when it comes to palm oil, with 69% of the supermarkets using 90% RSPO certified oil. Although, despite the widespread acceptance that palm oil production is linked to deforestation and climate change, Iceland, Booths, Ocado and Spar still have no policies at all.

Animal welfare and biodiversity

Bees have been making the headlines recently, and various campaigns are addressing the very real issues that agriculture faces with a declining bee population. Co-op, M&S, Sainsburys and Waitrose have all launched bee campaigns focusing on habitats and biodiversity, but no supermarket is addressing bee welfare in their own supply chains.

This continues into the animal testing area. All supermarkets sell branded products whose ingredients may have been tested on animals in non-EU locations, with 62% of supermarkets having inadequate policies to prevent animal testing taking place in their own-brand supply chains.

Image: cow supermarket meat price wars

And it doesn’t stop there, we marked down 85% of the supermarkets on their poor animal welfare standards. Only M&S and Waitrose are showing a leadership position on the Business Benchmark for Farm Animal Welfare (BBFAW).

A new focus for supermarkets

If supermarkets put as much effort into their supply chain management systems as they have into their pricing and marketing information systems, we would all truly be in a better place,

Our challenge to the supermarkets is simple: stop focusing on this unnecessary price war, of your own making, and instead get to the heart of your business. Make your supply chain robust, make it fair and make it ethical. Give consumers a wide choice of ethically produced good food and cosmetics that don’t cost the earth and the people within it. 

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