Harvey, M 2000 ‘Innovation and competition in UK supermarkets’, Supply Chain Management: An International Journal, 5, 1,15 - 21

Group topic: Is Fair-trade a good or bad business practise?

Group number: I7

Through his work, Mark Harvey clearly argues how drastically the supermarket industry has innovated. The main points discussed are firstly how development in the UK has resulted in a new system being introduced and what consequences this has. Furthermore, the author wants to argue that the standard approaches to assessing consumer benefits and anti-competitive behaviour may not be appropriate; UK supermarkets are offering something different from a simple basket of goods including product range, innovation and convenience factors. He also touches on competition policy relating to the aforementioned facts.
A major point Harvey clearly argues is how the development in the UK has changed radically and drastically leading it to develop a ‘distinctive system in retailing in the UK’. (Innovation and competition in the UK supermarkets 2000).Early in the article, Mark Harvey expresses how the supermarket industry has changed and innovated ‘One of the major and most important innovative areas of change has been the development and investment in a whole new system of distribution, largely replacing wholesale markets, undertaken by the major multiple’ (Innovation and competition in the UK supermarkets 2009). The author argues how wholesalers have been forced out of the market by the investment of the major multiples.
The article also suggests this new system that has been put in place has very little to compare to the old one according to Mark Harvey. ‘Terms of product range, service and speed, freshness and quality of this new system has little to compare directly with the system it has replaced’ (Innovation and competition in the UK supermarkets 2009). So Harvey is trying to express the new system is so unique and different it cannot be compared with the old one and this suggests how drastically different the new system is.
Also in the article Harvey states how major infrastructural investment has been made in the supermarket industry and that this is why the system is so much more efficient than previously. This is shown by the high rate of capital growth. In addition to this Harvey also talks about how the big four supermarkets have the most amount of market share ‘One effect of the concentrated power in the UK supermarkets has been its capacity to “cream” the top quality range across a wide range of produce and sourced from a wide geographical area’ and because the they are so big they can cover a much wider range of produce, and cover more of the country geographically than ever before.
When assessing consumer benefits and anti-competitive behaviour, traditional approaches may not be appropriate because the nature of the market has changed considerably. An example of anti-competitive behaviour is customer segmentation which the author of the article argues has created demand for customers when bringing different socio economic groups together. Mark Harvey discusses how the supermarket industry has the ability to offer a wider product range to consumers, and the ability to sell their products to high and low income earners at the same time. This also could further increase the ‘concentrated power’ mentioned previously.
In other words expanding product range is a way of bringing in different socio economic groups together. A method they use to target both high and low income consumers. However the author clearly argues this will create a quasi-monopoly in ‘their respective catchment areas’ (Innovation and competition in the UK supermarkets 2000 Mark Harvey) Add to this, consumers love a great range of products hence the expansion of product range and a shaping in demand. This is fundamentally telling us how supermarkets have innovated in a unique way.
Harvey mentions how the office of fair trade has been