Should the market manage our city centres?

By carys [dot] egan-wyer [at] fek [dot] lu [dot] se (Carys Egan-Wyer) - published 18 May 2022

Our city centres and their development are a subject of constant debate. Ulf Johansson suggests that, if we let the market decide, our city centres will eventually be emptied of retail.

Most recently, representatives from our food retailers suggested to municipalities that regulations on establishment locations be relaxed, advocating for the mantra of letting the market rule (Dagligvarunytt 2022a, b, and c). This perspective aligns with voices we have heard over time—why not let the market govern sensitive activities such as schools and care? The question extends to food establishments.

In theory, a market is one of the simplest concepts, considering only two variables: demand and supply. However, when attempting to simplify the complexity of establishing large grocery stores that annually attract thousands, challenges arise. The location of these stores, especially larger ones, significantly impacts the city center, drawing customers away from the area and affecting other trades relying on customer traffic. Deciding where larger grocery stores, as well as other retail chains and external shopping centres, should establish themselves is a complex question that extends beyond demand and supply considerations. It holds great importance for the development of city centers, particularly in smaller towns.

Articles on this topic reveal varying perspectives among municipalities. Understanding which parties govern municipalities allowing establishment with minimal market regulation is not challenging. While acknowledging the importance of the market, it is crucial that it operates in the right place and under suitable conditions, which may not be the case here. Notably, representatives of large trading companies and their trade associations, now advocating for market forces, were among the first to call for regulation and subsidies during the onset of COVID-19. Why not let the market rule in this scenario too? Survival of the fittest, perhaps?

One individual highlighting the complexity of city centres is researcher Johan Anselmsson. Known for making data-driven statements, Johan's investigations provide insights into the consequences of market dynamics. His recent report and debate article, "The City Center Should Become a Municipal Election Issue" (Anselmsson, 2021 and 2022), argue that this issue is vital enough to be an election matter. City centres face irreversible changes, losing the dynamism created by commerce and transforming into museums with fine architecture, service establishments, and an absence of trade. Chains have largely departed from city centres in favour of external shopping centers and trading places. Johan contends that this reinforces societal segregation, attracting more low-income earners, reducing trade, and emphasising architecture and fine culture, appealing to individuals with more cultural capital and higher incomes.

Johan's analysis suggests that allowing the market to rule unchecked (where supply dictates demand and vice versa) may eventually deplete city centres of commerce. What remains may cater primarily to tourists, high-income earners, and the cultural elite. Politicians might find limited relevance here since citizens want improvements in city centre trade conditions. Johan notes that six times more people advocate for investing in city centre trade conditions compared to external locations or facilitating e-commerce. Only 11% believe external trade in the municipality should be improved. These signals provide clear guidance to our politicians.