Like them or not, supermarkets have improved our quality of life

Compare the global wine in a British supermarket with that in France, where you can hardly buy a bottle of non-French wine.

And now there may be three. At the moment there are four national of supermarket chains in Britain: Tesco, Sainsbury, Asda and Safeway. There are smaller ones, of course, including William Morrison, which set off what has become an auction to buy Safeway by announcing that it had agreed to take it over.

But Sainsbury and Asda have now joined the bidding. Sainsbury is number two in Britain, and Asda is owned by Wal-Mart, the American group that is the largest retailer in the world. So both are vastly larger than Morrisons, and unless the competition authorities stop them, one of them is likely to succeed.

Should we care? The big four control 69 per cent of the market. That is a huge concentration of power in what is by world standards a very good market: the fourth largest in the world and one with relatively high margins. Many people resent that. The companies get blamed for a vast variety of ills: profiteering while squeezing the costs of producers; killing high streets and corner shops with their out-of-town temples to consumerism; and imposing a bland uniformity on what were interesting regional variations of taste and culture.

Well, yes, we should care, but not for most of the reasons that are usually cited. Four are better than three in the same way that five would be better than four and six better than five. You want as many decision points as possible while still maintaining reasonable economies of scale.

I'll explain in a moment. Let's first knock down those criticisms above.

Profiteering? Profit is wonderful because you only make profits if you provide people with what they want. You don't have to go to the supermarket if you don't want to. We buy our meat from the local butchers and fish from the fishmonger because the quality is better. Our fruit and veg come from the Kurdish immigrants round the corner because they are nice people and are more convenient. But we go to Waitrose, too, because it has lifted its game a bit above the mainstream chains. However, I don't begrudge any group a profit.

Profit means taking a series of inputs – the raw materials, the land and the buildings, the wages of the people who run the show and so on – and putting them together in a way that we consumers are tempted to buy the output. It is simply a sign that they are adding value to the inputs.

Squeezing down producers? Of course that should always be a concern because buying power can be abused: there is a particular concern about the way some commodity markets operate. Many of us try and buy fair-trade coffee and tea because we are unhappy about the way Third World farmers are treated. But the whole process of increasing wealth in society depends on reducing costs – figuring out ways to do something quicker, cheaper and faster. The mechanism is to push down prices. This is rough on the individuals and businesses that have to find ways of cutting costs, but society as a whole benefits.

Killing high streets? Of course, when a supermarket opens on the ring road, trade in the high street dips. But rationally it makes more sense to have shopping on the outskirts, nearer to where people live and where there is less congestion, than in the city centre. City centres can return to being places where people live and enjoy themselves, just as they used to be before the retailing explosion a century and a half ago.

Of course, there is an adjustment process, and many local authorities have impeded that by refusing to cut city centre rates or allow change of use in line with the change in function. Ill-judged parking restrictions and pedestrian schemes have sometimes made matters worse. But don't blame that on supermarkets – blame it on stupid planners. People without cars? Costs on the outskirts are so much lower that in many cases it is cheaper to take a taxi home.

Blandness, uniformity? Surely the reverse is true: supermarkets have been the driving force that has transformed the way we eat. The food manufacturers are the villains, using cute advertising to persuade people to buy high sugar, high fat prepared foods. The supermarkets, pushed by Marks & Spencer, brought the huge variety of high-quality chilled foods and are now teaching us how to make meals out of new and more interesting ingredients.

Compare our supermarkets with those of America and compare the branded rubbish there (looks great, tastes filthy) with the quality in the UK. Compare the global wine display in a British supermarket with that in France, where you can hardly buy a bottle of non-French wine. If there is one single social change that has improved our quality of life over the last generation it is surely the supermarkets.

So why should we worry about further concentration? It is the need for lots of decision points.

Concentration of power has many benefits. It means that if a supermarket wants to do something, it can call on huge resources to make it work. Tesco has the best on-line food retailing business in the world, so good that it is teaching other groups how to run one. (The principle, I am told, is to integrate the on-line service with the stores, rather than try to create a stand-alone business. )

But the fewer the points of decision, the fewer chances there are for great ideas to get through. We all know how Harry Potter was turned down by a string of publishers before one grabbed it. In supermarkets some of the best ideas come from the fringe, not the core. One important example has been the push for fair trade for coffee farmers from the Co-op. Tesco is on a winning streak at the moment and Asda is doing very well – Sainsbury and Safeway are struggling. So I suppose you could say that taking Safeway out of the equation is not really going to make a radical difference to the market. But it is one fewer option facing the interesting but smallish food producer trying to get a product into national distribution.

Suppose you are a specialist bakery in Scotland producing quality oatcakes for a regional market. You want to widen distribution but you don't want to unbalance your business by becoming too dependent on any one customer. And you want to maintain a decent margin. You have to persuade one of the groups to do the deal you want. If three turn you down there is always the fourth – except when number four is owned by number two or number three.

There is nothing we as individuals can do about the concentration of power in the supermarkets and I'm not at all sure in this instance whether Safeway would be better being taken over by Morrisons, the one way on the table of maintaining a fourth force. But we can keep the supermarkets on their toes by our daily shopping habits.

We can use the corner stores. We can go to farmers' markets. We can buy our meat from real butchers who know about hanging. We can cook for ourselves instead of buying pre-packaged stuff. We can buy fair-trade coffee. We can use the smaller chains that are doing something innovative or interesting rather than the giants. Consumers are the masters now.