Tesco is one of the cheapest priced supermarkets and has a much larger market share than any other supermarket in the UK. Tesco has become the first UK retailer to unveil profits of more than £2bn. However, Tesco is profiting at the expense of farmers in the UK and overseas, the environment and local shops in the UK. I will examine the factors that make Tesco so profitable and the cost their desire for market supremacy has on others.
In 2001, Tony Blair claimed that British supermarkets had farmers in an ‘armlock’. Supermarkets control nearly 80% of the British grocery market and this makes them powerful enough to dictate terms, conditions and prices to suppliers. If suppliers complain, supermarkets can simply move their business elsewhere and this would leave the farmers with no one else to sell their produce to.
According to the Competition Commission Report (2000) the buying power of the major supermarkets actually means that ‘the burden of cost increases in the supply chain has fallen disproportionately heavily on small suppliers such as farmers’, and it also revealed that Tesco consistently paid suppliers nearly 4% below the average price paid by other retailers.
There is also proof that Tesco exploits overseas workers. As part of my secondary research I found a new ActionAid report reveals the appalling working conditions of thousands of women workers in South Africa who grow fruit that ends up on Tesco‘s shelves. Tesco is the UK’s biggest buyer of South African fruit. ActionAid found unacceptable conditions among the temporary labourers including poverty wages, exposure to pesticides and dismal housing even though the company is committed to corporate social responsibility and the Ethical Trading Initiative. Supermarkets like Tesco squeeze local suppliers on price and so in order to stay in profit, farm owners cut wages and lower labour standards.
Although Banana Link estimates that Tesco makes roughly...