1. Have supermarkets become too big to the extent that they are damaging competition?

1. The grocery industry is a commoditized industry, which makes it difficult for grocers to sustain through differentiation. Buyer power is high and thus, cost leadership and operational efficiencies are critical. There is fierce competition amongst various grocery stores, with the main players such as Loblaw and A&P holding multi-banner stores in various market segments. Traditional grocery stores also lose some of their market share to drug stores, convenience stores and other retailers who have entered the industry. Threat of substitutes from fast-food and take- away outlets is not as prevalent, since many grocery stores have started stocking ready-to-eat meals and have deli services available for consumers. Competitive

1) The Big Three firms, Kellogg, General Mills, and Philip Morris, formed practically an oligopoly in the RTE cereal market. Their price and cost levels moved in lockstep, following signals sent mostly by the biggest player, Kellogg, while their tactics could be used against outside competition, as suggested in the scenario below. Although RTE cereal is a basic food item and production technology stabilized for about half century, the industry had effective barriers to entry. The competition between incumbents was friendly while most of the inputs came from a perfectly competitive market, agriculture. Major customers, the food stores, were coopted in perpetuating barriers to entry in the form of shelf space “slotting”.

Barriers will be placed on all new supermarkets entering the sector; this will be from the existing supermarkets. For example Tesco may have cornered the market for certain goods therefore has established a relationship with its supplier so that it will pay a lot less for large volumes of goods whereas the new supermarket will not be able to find cheap, reliable suppliers this gives Tesco's the advantage of economics of scale. A new, small supermarket chain can only buy a relatively small volume of goods, at a higher

Larger stores also offer people the convenience of additional services along with their shopping, for example post office, pharmacy and opticians. By addressing consumer’s expectations and using their buyer power they can offer a choice of products to reflect consumer’s diverse budgetary, dietary, ethical and environmental requirements. Furthermore their global buyer power enables consumers to benefit from choosing exotic produce all year round. With 30,000,000 customers (Bevan cited in Allen, 2009) choosing to use the big four supermarkets on a weekly basis it would suggest that they provide a format that consumers want.

1. Location, specifically proximity to strategic markets. Being located close to or within key markets lets firms capitalize on their exposure, allowing them to maximize their control of a region and to enhance their margins. Grocery competition exists locally, since there is only so far that consumers are willing to travel to fulfill their needs, so if a firm can dominate a market with minimal competing operators it will enhance its profitability.

The competition to a chain retail grocery store, such as Kroger, is not limited to other

The grocery retail industry worldwide has grown in recent years to become one of the most intensely competitive industries due to the continuous amounts of new entrants. A grocery retailer is one that sells food and other general household items. Hypermarkets, supermarkets, discounters and small grocery retailers are all under the grocery retail umbrella. Between 2003 and 2008, the grocery retailing industry accounted for 45% of store-based retail values sales over the world. The figures

The Australian Supermarket Industry is the very hot topic that’s why very interesting topic now days. The Australian supermarket and grocery stores have a very severe competition in Australia mainly because of organizations competing in this mature industry are going towards cost reduction initiatives with competing advantage rather than product differentiation strategies, In other words business in this industry increase market share by charging lower prices while making reasonably fair profit. The growing popularity of ALDI – German based company of introducing its own label goods (products manufactured and sold under the retailers own brand) with low cost has forced the two giants –Woolworths and Coles to cut price

     Porter’s five forces of competition framework can be a valuable tool in analyzing an industry. Porter’s five forces of competition include: competition from substitutes, entrants, rivals, supplier power, and buyer power. We will now analyze the retail grocery industry according to Porter’s five forces. (this is straight out of the Barnes and Noble report I wasn’t sure if we should cite this or not)

The UK supermarket industry resembles an oligopolistic industry, with several characteristics. Oligopolistic markets tend to be characterised by high concentration ratios, barriers to entry and…Since the turn of the century, the industry has been scrutinised by both the Office of Fair Trading and has been referred to the Competition Commission on two occasions. (Seely, 2012)

Amira, I really enjoyed reading your post as I could truly relate to it. This brings back great memories of watching my mom go shopping at the grocery store. To give a quick definition for monopolistic competition is it many firms offer products or services that are similar, but not perfect substitutes. As I grew up I started to understand what exactly a substitute was as my taste buds had evolved. My mom typically uses Prego spaghetti sauce when she makes spaghetti, but one day she used the Walmart brand and everyone in the house tell the difference without her even telling us. I do not intend to say that all substitutes are not popular, but the Kroger oatmeal was a fan for older brother compared to the name brand oatmeal. At the end of the

There are 92,796 grocery stores in the UK and the market value increase by 19.5% in the last 5 years and according to IGD forecast the UK grocery market should reach £203bn by 2019. But what we can see in the figure 1 that from 2009 to 2014 annual grow in the grocery market start decreasing from 4.9% in 2009 to 2.8% in 2014. One of the reason for this is difficult economic conditions which had an effect for consumer spending. Consumers choose to spend less money on food by buying less food or by looking for cheaper places. Retail market is diversified into three main sectors: Hypermarket and superstores which accounts for 42.3% of retail market, convenience stores 21.4% and small supermarkets 20.3% (Figure 3). So about 84% of sales are done in these three sectors. The biggest 4 retail chains in UK are: Tesco which takes 28.7% market share, Asda has 17.3%, Sainsbury’s 16.6% and Morrison’s 11%. (Figure 2) So, if we will sum up 4 biggest retail market chains we will have about ¾ of market share. Finally, a strong characteristic of this sector is competition with price wars and a

2.3 THREAT OF SUBSTITUTES Substitutes do not entirely replace existing products but may introduce new technology or reduce the costs of producing the same product (Porter, 1980). Substitutes may limit the profits in an industry by keeping their prices down (Porter, 1980). The threat of substitution is quite high in this industry because consumers are able to substitute to other major retailers, convenience stores, niche product outlets, restaurants, bakeries, butchers and farmers (Coriolis Research, 2004). Supermarkets like Tesco and ASDA have a range of products and services that have close substitutes, effecting price elasticity of demand because the market is sensitive to price (IBISWorld). The demand for a particular brand or retailer will increase or decrease concurrent to the movement of price in comparison to its competition (IBISWorld). The UK supermarkets are always trying to increase the quality of products and services resulting in a constant need to differentiate products and services from competition to make them less price sensitive.

Nowadays we could easily find minimarkets in Surabaya. As we can see, in one area we can find 4-5 minimarkets. We are walking 100m and then we will find Indomaret, walk again slightly we will find Alfamart and others minimarkets. According to Businesstempo.com Government of Surabaya has saved 667 name of minimarkets in Surabaya. The details are 234 Alfamart, 293 Indomart, 3 AlfaXpress, 9 Rajawalimart, 7 Superindo, 42 Alfamidi, 15 Circle K, and 64 others. So many minimarkets near from our house appear due to increasing community needs. Not only primary needs like rice, shampoo, soaps and foods, but also we can find in Minimarket nowadays to fulfill our secondary needs like refil the phone credits, top up E-toll card, pay the electricity bills and even in Minimarkets we can buy ticket for plane, trains, bus or travel. In addition, products in minimarkets are more complete, we can find so many various items in there so that many people support the existence of many minimarket. The number of minimarkets also bring good economic effects

The supermarket wars has been increasingly frustrating for consumers as sometimes consumers tend not to know where to get the best deals, as they all advertise the same price and brands, in the UK companies such as Tesco and Asda advertise and sell the same products but also claim to low on prices for the customer satisfaction, but in fact they charge more when it comes to their own brands, looking in the telecommunication sector is clear that with the privatization of the telecommunications industry, the mobile phone industry experiences transformations that enhance the dynamics of competition.