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Supermarkets threaten Asian shops

Thousands of Asian-owned corner shops are likely to be wiped out due to the pricing strategies of big supermarket chains, says a study.

india Updated: Feb 16, 2006 13:42 IST

Thousands of Asian-owned corner shops - one of the most visible symbols of multiculturalism across Britain - are likely to be wiped out due to the pricing strategies of big supermarket chains, according to a study of the retail industry published Wednesday.

Most of the convenience shops are owned by people with origins in the Indian sub-continent who arrived in Britain from Uganda in the early 1970s. Many have been struggling to survive due to low prices in nearby supermarkets.

Prashant Patel, who owns such a corner shop in Leicester, told IANS that his family was already making plans to move to Surat, Gujarat, since they found it virtually impossible to compete with the low prices offered by supermarkets.

The study was conducted by an influential cross-party group of MPs and paints a grim picture of how Britain's high streets will look in the next 10 years. Its conclusions reiterate the fears of Asian owners of corner shops, grocers, newsagents and petrol forecourts.

These shops, the report said, "are unlikely to survive" in the face of low prices being offered by the big four supermarket chains - Tesco, Asda, Sainsbury's and Morrisons.

The 91-page report by the Parliamentary Small Shops Group warns that the supermarket chains will start raising prices after achieving saturation point in the high street by wiping out small local shops.

It says: "Prices of products will remain fairly low until consolidation reaches a saturation point and the attention of the multiples turns to increasing value to shareholders by growth through margin. Prices are then likely to increase with fewer competitors in the market."

Members of the group called on the government to appoint a retail "tsar" to oversee the industry and introduce an immediate moratorium on further takeovers and mergers.

The report added that the domination of the supermarkets will have knock-on effects on local communities. Women, who make up the majority of small shop workers, will also suffer as their jobs disappear.

Minority communities will also lose out, the report said. "The Muslim population of Britain have to rely on small shops to purchase halal meat, which is an essential practice in their religion."

The report says that between 1965 and 1990, 15 percent of small rural settlements saw the closure of their last general store or food shop. Between 1991 and 1997, 4,000 food shops closed in rural areas. Local shops had transformed into convenience stores to compete with the superstores.

But now the majors were expanding their convenience outlets, again at the expense of the small shop keepers, forcing them into a "head-on" fight.

Sandra Bell of Friends of the Earth told The Guardian: "The government and Office of Fair Trading appear increasingly isolated in their view that market dominance is good for consumers.

"This report goes a long way towards finding solutions to protect the many small shops which offer genuine choice, good value, a personal service and a lifeline for local communities. They must now be taken forward by the competition authorities as part of an urgent investigation into the grocery market."

Reports say that the Small Shops Group has no legislative powers but it is considered an influential body and is optimistic that its report will force the government to act.