The supermarket industry in UK Analysis

Table of Content

The supermarket industry in UK

In UK, there are a immense sum of big supermarkets and people in British are normally go to these sorts of supermarket one time a hebdomad, for illustration, Tesco, Sainsbury ‘s, ASDA. Even though the supermarket industry in UK is non every bit good as the supermarket industry in America ; nevertheless, it is an of import portion for people who populating in British and a big portion of supermarket is adopt the concatenation construction to run and it is all over the town. Therefore, the selling mix of the UK supermarket industry can be shown as in four parts. The monetary value in the UK supermarket industry have connexion between each houses because the monetary value rigidness. Turning to the topographic point of the UK supermarket industry may construct in suburbs or in the metropolis which may profit for the consumer to take and it have developed the service which can shop on the cyberspace. And the publicity of the UK supermarket, they may utilize some advertizement in the web site and hoarding. This essay will be structured as four parts which is the background of the supermarket in UK, the features of oligopoly, the advantages and disadvantages of the market construction for consumer and decision.

Furthermore, the supermarket in UK can be described as an oligopoly market so that the competitory in the UK supermarket industry is really altitudinal. The features of oligopoly can be divided into four parts which is non-price competition, monetary value rigidness, L-shaped norm cost curves and collusion. The construction of the oligopoly market is there is a little sum of interdependent houses which compete with each other and it can be used barriers to entry to the industry. Furthermore, the oligopolistic houses may concentrate on the houses which relative to their industry to see the supply. ( Anderton A, 2004 ) The of import feature is the clang between cooperate and self regard. The oligopoly group will bring forth less goods and garner the monetary value which higher than the fringy cost. Therefore, each marketer ‘s activity may hold a great influence to the other house ‘s net income. ( Mankiw N, 2009 )

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In add-on, the supermarket industry in UK is similar with the oligopoly construction. First, oligopoly is dominated by few big companies which mean collusion that plan the device and do net income together. Even though the UK supermarket industry is really competitory and good ; nevertheless, there are four chief houses in the industry which play an of import function and the other houses will concentrate on the niche market to be. The four houses are known as Tesco, ASDA, Sainsbury ‘s and Morrison ‘s which are running food market construction. The “ large four ” have become an oligopoly market construction that they have combined portion of 76 % of the market at the terminal of 2008. ( BBC intelligence, 2010 ) This can be seen as barriers to entry to the other assorted smaller companies. Harmonizing to the BBC intelligence ( 2010 ) , there are about 50 UK supermarket ironss have defunct. Furthermore, the monetary value between each houses have made a monetary value rigidness which will retain a lasting degree.

The supermarket market construction in UK can be seen as oligopoly market and it have brought the benefits and disadvantages for consumer.

First, harmonizing to the Tutor2you ( 2007 ) , non-price competition has play an of import function in the gross revenues of supermarket. Because of the extremely competitory of the supermarket industry in UK, houses will increase market portion and usage tactics to sale publicity, such as shop trueness cards, banking and other fiscal service and extension of gap hours.

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This figure can be shown that Tesco was dominant in the supermarket portion research. Furthermore, BBC intelligence ( 2006 ) list that Tesco ‘s market portion remains lifting and non merely this supermarket but besides other supermarkets have an upward inclination such as Sainsbury ‘s. It can be seen that the step that Tesco have usage is successful to help the company. Besides, each house will convey out at that place discriminatory steps and supply to the consumers which can let them to take and every step may hold their attractive force.

Second, oligopolistic houses are really superior in the market on a regular basis and production capacity is by and large larger which means that the houses have ability to defy the hazard and hold advanced direction technique. It is good to consumers because it have insurance that consumers can purchase with assurance.

However, it besides bring disadvantage for consumer in two ways. First of all, one of the feature of the oligopoly market is interdependence between each company which means one of the companies may see the reaction of the other houses in the selling such as doing monetary value and some investing determinations. It may obtain the suited net income that each oligopoly houses would satisfactory with it. Furthermore, for the consumer, it may diminish the penchant and the monetary value will go indefiniteness because the monetary value may fluctuate by the oligopoly houses. The houses may unite together and derive the monopoly monetary value which can get monopoly net incomes. ( Tutor2U, 2007 ) Firms may besides bull operation and it is far beyond the existent value of the merchandise. It is bad for consumer because it will und ermine the involvement of its consumers. Harmonizing to the Top retailing ( 2008 ) , because of the lifting monetary value of fuel and nutrient which allow people seek the cheaper monetary value.

All in all, based on the feature of the UK supermarket and the advantages and disadvantages of the market, the oligopoly construction should pay more attending to the step which can give people the benefit while they can do the net income. The non-price competitions which can let consumer seek a high quality and service among the similar monetary value between each supermarket. Company should non in their ain involvement but besides consider the consumer that it should hold many considerations such as proficient and geographical to better and hone the system such as different price reductions to the clients. Furthermore, company can do a research to place competitory providers, understand the information of supply market and efficient trade good scheme.

4. Mention

Anderton A. ( 2004 ) Economics ( 3rded. ) Ormskirk, Causeway Press Ltd.

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BBC intelligence ( 2006 ) , Business

Economicss ( 2009 ) , UK supermarkets, oligopolistic competition

Oligopoly ticker ( 2003 ) , British food market oligopoly

Structure of industry, the economic sciences of supermarkets Author: Robert P.

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Top retailing ( 2008 ) , Grocery portion Author name: Nesbitt L.

Tutor2U ( 2007 ) , Oligopoly

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