RURAL SUPERMARKETS

Unless you can get special permission, supermarkets in Denmark have a maximum size of 3,500 sqm (roughly 35,000 sq ft), which is small compared with the rest of Europe, and tiny compared with the U.S. Hypermarkets just don't exist here.

Which means two things. First, the amount of retail space per inhabitant is higher than anywhere else in Europe. Secondly, prices for groceries are higher as well, at least 10% more than in neighbouring countries, according to the consumer council.

The Government, as part of its plan to get the economy moving again, is mulling over the idea of relaxing the maximum size rule. Bigger supermarkets, the argument goes, would both allow the stocking of a wider range of goods, and attract the interest of companies like Wal-Mart. Buying in greater bulk, more efficient distribution, and greater competition would together put downward pressure on prices, to the benefit of consumers (i.e. everybody).

There is, however, a definite cost to this benefit. Hypermarkets would almost certainly be sited on the edge of large towns. Which in turn would mean a) that people would end up travelling more in order to do their daily shopping, and b) that many rural supermarkets would close (many have already under the existing rules). This is certainly what has happened in Sweden. Since the presence of a local supermarket is one of the most important single indicators for the health of a rural community, this could have potentially adverse consequences for the outlying areas of Denmark far away from Copenhagen and Aarhus. Promoting these areas, or at least not wishing them to decline, is already one of the Government's stated policies. As is reduced Co2 emissions, which increased travel would do nothing to help.

Getting the balance right in this decision will not be easy. That is reflected in the fact that one half of the governing coalition (Venstre) wants to liberalise, whereas the Conservatives do not. My own view, based on admittedly selfish reasons, is that they shouldn't. We have two supermarkets in the small town (3,000 inhabitants) where I live, the second of which opened only this year. Being able to shop for groceries, either by car or bicycle, 3km away from my house is something which I value. Quite a lot. People in worse situations than me (eg the elderly, without access to a car) value it even more.

Moreover, as retail experts have also pointed out, it is not certain that liberalising the supermarket rules will in fact attract the likes of Wal-Mart. Denmark is a small country of 5.5m people, not much more than the population of the Hamburg metropolitan region. It also has one of the highest cost labour forces in the whole of Europe. Trying to muscle in on such a market (which otherwise functions very well) doesn't seem particularly attractive in comparison with the much larger populations of (say) Poland, or even Russia.

Anyway, no decision has yet been taken. It will be interesting to see the outcome of yet another potential conflict between economic liberalism and social protection.

Walter Blotscher