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Monday, March 06, 2006

Hypermarkets in Overdrive

A hypermarket in the "giant shed on the edge of town" is a store that combines a large range of products, including groceries, under one roof. Wal-Mart Supercenters are hypermarkets. If hypermarkets are allowed to operate free of current restrictions, we have a pretty good idea of how this story will end for small shopkeepers in France, though it looks like they may be ready to put up a fight:

How France is readying for a hypermarket free-for-all, by Adam Jones, Financial Times: Hypermarkets are difficult creatures to love. Even their most loyal customers can feel guilty for shopping at a giant shed on the edge of town instead of patronising their small neighbourhood stores. Yet they are lured back by the vast range of goods spanning both food and non-food items... The ambivalence is perhaps strongest in France. While it may have invented the hypermarket format in 1963, France was also the birthplace of the poujadistes – the militant shopkeepers who battled against big business in the 1950s under the banner of Pierre Poujade, a small-town stationer and politician.

During his 11-year presidency, Jacques Chirac has taken the small shopkeepers’ side. Early in his first term, hypermarkets were hit with restrictions on how cheaply they could sell their goods, while their ability to build new stores was also curbed... Now, approaching the end of Mr Chirac’s second ... term of office, the shackles ... have been loosened ... amid popular discontent at ... high prices ... for neighbourhood shopping.

The talk is now of a potential hypermarket price war that could reshape a grocery industry long distorted by political interference. ... In the run-up to the election next year, a wave of hypermarket discounting would help the ruling UMP party blunt accusations that it has made consumers poorer. ... The government certainly expects prices to fall significantly. ... Yet there are also political reasons why a full-scale price war may not develop: notably, the long shadow cast by the poujadistes.

In 2006, if prices drop to the point that they threaten smaller outlets, angry shopkeepers could once again complicate life for the government as they did half a century ago. That in turn could play into the hands of one prominent former poujadiste in particular – Jean-Marie Le Pen, the leader of the far-right National Front. Given that Mr Le Pen landed second place in the 2002 presidential election – a result that is still a source of shame to mainstream France – the UMP will be wary of leaving itself open to accusations of strangling traditional commerce as the vote next year draws near...

    Posted by on Monday, March 6, 2006 at 12:21 AM in Economics, Regulation | Permalink  TrackBack (0)  Comments (4)

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