Are all supermarkets evil?

Peter Roberts asked earlier: Are all retail banks evil? 

The UK’s banks have had a lot of bad press lately. From gross – and it seems illegal – overcharging to a succession of mis-selling scandals, the banks have not done much to endear themselves with their customers. 

But how do they stand up against their non-banking competitors in the retail sector?

Ten years ago last month Sainsbury’s became the first supermarket to enter the UK financial services arena. It’s since been followed into the market by a succession of major supermarket chains and big name high street retailers.  

The new arrivals promised to shake up the UK financial services industry forever, bringing all their marketing clout and superior customer service standards to bear on a sector grown complacent on rich and easy pickings. The banks, with their old-fashioned branch networks, dodgy CRM systems and poor customer relations skills stood no chance against these ruthless retail interlopers. 

But according to figures released by price comparison Web site moneysupermarket.com, the old line banks generally offer much better value for money than their shiny new competitors across a range of financial products, from home and motor insurance to savings, credit cards and loans. 

The supermarkets are old hands at moving into a new sector, driving out competitors through fierce pricing and then slowly ratcheting up their prices when they have the market to themselves. The pile ‘em high, sell ‘em cheap philosophy generally only applies to Known Value Items (yes, they even have their own acronym) – staples like milk where the customer has a good handle on the prices charged at local convenience stores. The more exotic products, where price comparison is difficult, come with a much higher mark-up. 

So, to return to Peter’s earlier blog poser, we could also ask: Are all supermarkets evil? 

Well, perhaps they are. But so long as the market in which they operate is transparent and competitive, the consumer can still secure a decent deal. Thanks to the Internet and the array of best buy charts in newspaper finance supplements, today’s customer is much better informed when shopping for commoditised financial products.

And the much vaunted loyalty once commanded by the supermarkets? It’s gone the same way as the deference once accorded to high street bank managers.

We're all rate tarts now.