How did supermarket bosses fare in the glare of Westminster spotlight?

It’s been a tough period for the grocery sector, at least in terms of image management. It’s a rare thing for politicians of all parties, trade unionists and the governor of the Bank of England to all agree on something – even rarer still when that thing is that product prices in a free-market economy are too high.

Tuesday’s business select committee hearing on food and fuel pricing was the culmination of months of mounting scrutiny on the supermarket giants and was effectively a chance for MPs to accuse the big grocers of profiteering on food and fuel at a time when millions of people are struggling to feed themselves or fill up their cars.

Tesco commercial director Gordon Gafa, Sainsbury’s food commercial director Rhian Bartlett, Asda chief commercial officer Kris Comerford and Morrison’s boss David Potts were each in the hot seats to face over an hour’s worth of questions.

As Retail Week previously reported, all of the supermarkets went into the hearing with effectively the same defence: how can we be profiteering when our profits are down? A sound strategy on paper but one that was exposed by the perception of both the committee and the wider public.

Committee chair Darren Jones quoted figures at the supermarkets at the outset that showed profits for three of the traditional big four had grown. While the representatives of Tesco, Sainsbury’s and Asda could all rightly say that Jones was quoting from outdated accounts, the wider point about reality versus perception stands.

It is likely also the first time in his career as the chief executive of a business that Potts will have been lauded for delivering falling profits over a 12-month period.

Other highlights included Conservative MP Jonathan Gullis’ putting on record that he is the owner of a diesel vehicle and Jane Hunt proudly declaring herself a “capitalist in a free market economy” before questioning whether the fact there are fewer supermarket chains now than there were in her youth means that modern supermarkets effectively run a cartel.

By the time Labour’s Andy McDonald had finished his line of questioning on CEO remuneration, the committee had also touched on HFSS legislation, online delivery costs, agreements with suppliers and farmers, proposed shareholder dividends, the future of electric car charging and obesity, all in less than 90 minutes.

This was never going to be enough time to examine such a complex issue, let alone with all of the other avenues of questioning that committee members went down.

Wasted opportunity

The fact that neither Aldi nor Lidl, the discounters currently at the forefront of the battle around food pricing, were even invited to give evidence as they don’t have petrol stations also leads to questions about the session’s true value.

Supermarket sources felt the wide range of different topics raised by MPs during the hearing played into their hands.

“They tried to cover way too much ground, so it ended up being a very superficial discussion,” said one supermarket source. “A wasted opportunity”.

Another summed it up as: “I don’t think [the committee] landed any massive blows.”

While the grocers feel they have come out of Westminster relatively unscathed, there were still some uncomfortable moments. 

When pushed on whether her chief executive’s £4m-plus annual bonus at a time when frontline staff are paid £11 an hour during a cost-of-living crisis was ethical, all Sainsbury’s Bartlett could offer was that executive salaries are set by a committee. While true, it’s an answer unlikely to win many hearts and minds.

More scrutiny to come

Asda’s Comerford also looked uncomfortable when questioned about what effect ballooning debt under the retailer’s owners was having on customers. Tesco’s Gafa was clearly out of his comfort zone when pressed on how much control Tesco had over petrol pricing and why there is not more transparency around it. 

The supermarket representatives also seemed to be caught off guard when pressed on whether they would support price caps on certain items.

Potts came closest to summing up the industry take when he replied that “competition leads you to the right place”, which was hardly a full-throated defence.

On the whole, there were remarkably few attempts made by any of the retailers to score points off of one another. Although, in the aftermath, one source said Gafa “seemed a bit underprepared and was fed to the lions”.

While a surprisingly unified message may have got the grocers through today, they’re not out of the woods just yet.

The eagerly awaited Competition and Markets Authority report on food and fuel pricing is due to be published next week and, judging by some of the comments from MPs, will not deliver a glowing verdict for the supermarkets.

Jones concluded by saying the committee would “come back for some further questions, either in subsequent written form or maybe in further hearings”.

While the supermarkets may – rightly – feel aggrieved at being singled out, today’s hearings are only the beginning of the scrutiny.

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