The Scottish National Party’s (SNP’s) election promise to cap prices on essential foods sold in large supermarkets has been poorly received by retailers of all sizes. The Scottish Retail Consortium (SRC) called it a “wrongheaded 1970s gimmick”, while the Scottish Grocers’ Federation (SGF) claimed that the policy could create competitive disadvantage for small local stores and potentially distort the market through changing consumer behaviour.
SNP pledged to establish statutory price ceilings on a basket of 20 to 50 essential food items at large supermarkets, such as bread,
milk and eggs. The system would require the outlets to make one example line of the listed essential food items available at the capped price.
Luke McGarty, SGF Head of Policy, said:
“While the policy may be aimed at larger retailers, price caps on selected products will inevitably have knock-on effects for similar items sold in local stores.
“Capped prices in supermarkets could encourage customers to travel further to out-of-town locations for staple goods typically purchased locally, reducing sustainability and creating a competitive disadvantage for small local businesses.
“Local stores play a vital role in their communities, providing accessible, lifeline goods and services, supporting local employment, and enabling a local multiplier effect. All within walking distance of people’s homes.
“At a time when local retailers are already under considerable pressure from additional costs added by government regulation and global issues, some may feel compelled to try and match supermarket prices, which could threaten both their viability and the benefits they provide.”
He added that SGF would engage fully with the consultation process and seek to engage ministers on this policy if the SNP were returned to government.
Ewan MacDonald-Russell, SRC Deputy Head, said:
“Elevated food prices are a direct result of soaring supply chain and commodity costs and frankly relentless rises in statutory costs imposed by governments. Yet despite this, the fiercely competitive grocery market in Scotland has helped to keep food prices among the most affordable of all the large European economies.
“Supermarkets have always run on very slim margins, especially when compared with other parts of the food supply chain, but profits have fallen significantly in recent times. Even so, retailers continue to invest heavily to keep prices down, expand their affordable food ranges, lock in the price of many essentials, and raise pay for staff.
“Many of the costs keeping shop prices high are now arising from the muddle of new regulations and taxes coming from government policies. Rather than recreating 1970s-style price controls and potty gimmicks, public policy should get serious and focus on cutting retailers’ costs so that resources can be directed to keeping prices as low as possible for customers.”
