The Uk Supermarket Industry, And Analysing The Condition Of The Current Market

The following case study is in regards of economic market structure. In the world of economics all businesses or companies rather, are categorized in certain market structures such as monopoly, oligopoly, or perfect competition, for instance, the market structure for restaurants. Most restaurants are considered monopolistic competition. Being that they all sell and serve food. They have to have instances that vary such as price, logos, servers, locations, décor, types of food, and hospitality.

The threat of entry of the supermarket industry in US is low, which base on the analysis of the three major sources that related to the entry barriers. The first barrier is the economies of scale of the existing large supermarkets. When these incumbents achieved larger volume sales, they can have lower unit costs than new entrants, and it will very difficult for those new entrants to compete with them (Johnson, Whittington, &Scholes 2011). For example, Wal-Mart had invested in innovative procurement, automated distribution centre and bar coding to increase its economies of scale, and these investments created a great barriers for new small retailers to enter into the supermarket industry (Porter 2008). The second barrier is the incumbency advantages, which mean the incumbents established their own strengths that cannot be used by competitors (Porter 2008). For example, the top ten supermarkets in US have accumulated extensive experiences on how to run their businesses more efficiently than new entrants (Johnson, Whittington, &Scholes 2011). The subtle differentiation between the products that sold in supermarkets is the third barrier for new entrants. Because most of the product assortment is same or similar between each supermarket,

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

Potential entry of new competitors is rendered low for the grocery retailing industry. Puregold, SM Hypermarkets, Rustans, and Robinsons Supermarkets are amongst the top key players in the game. The entry of new competitors could be very low because of the huge capitalization funds that this industry requires. In addition, the industry has been long time dominated by the giant players that had already well established and positioned their brands throughout the country and that they had already spread out with branches in Metro Manila and other regions.

Barriers to Entry: The entry barriers in the market are relatively low, making it easy to access. However, as the market is saturated it could be unlikely for new companies to decide to start new enterprises in this field.

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)

In oligopoly market, each firm has substantial market power with high degree of interdependence. The key for success in a oligopoly market is to gain more market share than the competitors. Increasing the price can lead to loss of market share to the competitors, so in the oligopoly market, if a firm decreases the price, the other firms will always follow, but if a firm increase the price, the other firms will not follow. The demand curve is kinked.

pricing closely, as being out of step with the market can cause dramatic market share changes in a

2.0 PORTERS FIVE FORCES MODEL FOR UK SUPERMARKET INDUSTRY Supermarkets’ performance is reliant on consumer’s income and their willingness to spend. The growing consumer pressure to drive value, quality and taste requires companies with strong management teams to understand the market trends in the industry of which this had led to constant competition among firms in the industry. This rivalry is based on firms in the industry battling to win the highest market share in

When only a few sellers offer a product with little regard to competition it is called an oligopoly. It is different from a monopoly because multiple corporations are involved, but the effects on the consumer are the same - bad. Although competition is usually in the best interest of the consumer, it is not always in the best interest of the corporation. If we examine the two leading soft drink producers, Coca-cola and Pepsi-cola, we see a prime example of an oligopoly (Zachary, 1999). As things are presently, each of these soft drink companies has about half of the soft drink market, and examined from a world-wide perspective that is a pretty large market. Either one of them, Coke or Pespi, could conceivably lower their prices in

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.

Therefore, all firms in the industry would suffer from a sharp fall in profits as they continuously cut prices to compete with each other. Eventually, prices will have to rise again to restore profitability and the firm that started the price war could have lost market share. Therefore firms want to avoid price competition as all firms will lose out in the long term due to reduced profits. So there is an incentive for firms to form a price agreement in order to reduce uncertainty.