High street hits back in rip-off row

Labour is playing empty politics with prices instead of finding solutions, retailers claim

IN A CAMPAIGN set to raise the stakes in the battle between the Government and high-street chains such as Tesco, Boots and Kingfisher, retailers have condemned ministers for including them in Britain's so- called "rip-off culture".

"The Government didn't invent the idea of consumers," said Ann Robinson, director- general of the British Retail Consortium. "Retailers live or die by how well they get along with their customers."

Mrs Robinson called on the Government to stop playing politics with prices. She challenged it to develop policies to help supermarkets and other chains hold their own against overseas rivals at a time when national boundaries are dissolving in the retailing sector.

"The way to get lower prices is not to bash our stores, but to find ways to improve their buying power when negotiating with their multinational suppliers," she said.

The launch of the BRC campaign follows publication of a Department of Trade and Industry consumer White Paper on 22 July. Unveiling 70 measures to tackle consumer predators - from cowboy builders to dodgy used-car merchants - Trade and Industry Secretary Stephen Byers declared: "We need to recognise that many feel they are living in rip-off Britain, paying high prices for shoddy goods, with cheats allowed to prosper and move with ease from one scam to another."

Mr Byers' decision to compare prices of 100 goods in Britain with the same goods in the US, France, and Germany incensed retailers because it put them at the centre of the debate.

"We have talked to the DTI about the list," said one retailer. "They say off-the-record that it's an over-simplified way of looking at things. But they say they are under pressure to make headlines."

In addition to investigating store prices, the Government has attacked car dealers and last week turned up the heat on providers of mortgages and long-term investment products.

"If you look at the timing of all this cynically," said a bank chief executive, "what you see is: Government identifies problem, Government investigates problem. In the run-up to the election, the Government is seen to solve problem, without really doing so."

The BRC says 70 per cent of all goods sold in supermarkets come from 10 to 12 multinational suppliers ranging from Unilever and Diageo to foreign companies like Nestle and RJR Nabisco. It says Tesco, Sainsbury and Safeway deal with the multinationals at a disadvantage compared with Wal-Mart and continental European chains like Carrefour and Ahold.

It is calling for fresh thinking on ways UK stores can diversify overseas to increase their share of global markets, and thus bolster their buying power with suppliers.

Currently, multinational electrical goods makers tell Kingfisher they have to charge more for electrical products because of special UK specifications, according to the BRC. Similarly, health and beauty products makers tell Boots they have to charge more for certain products to cater to special UK consumer tastes.

Retailers believe the DTI's 100-item price comparison - due to be released in January - will highlight high UK prices for electrical and health and beauty products. They fear the Government will gloss over the reasons for the price differentials.

Retailers say price comparisons are notoriously subject to interpretation. They believe a long-delayed OECD study of comparative price levels will set the standard when published, and that it will show UK prices at continental European levels.

"The risk the Government runs is in raising expectations," said one retailer, "then not coming up with solutions to bring down prices."