Supermarkets in the UK Retail Market: Integrated Marketing Communication - Research Paper Example

Introduction Supermarkets play a vital role in the UK retail market. Within the last three decades, the trend of shopping has changed and people now prefer the convenience of shopping at supermarkets. This is because they don’t have to go to different shops and now can get everything from food to non food items under one roof. Adding to this, the prices are very competitive and the marketing is very attractive which makes the consumer s loyal to the firms. however, the industry trend has taken a new direction and is affecting the different industries besides the supermarket industry like clothing, travel and cosmetics industry etc. the government has to curb their control over the supermarket industry as it forms a major part of the economy and may negatively affect economic growth if the government puts restrictions on it. 1.1 Price wars benefits consumers The supermarkets in the UK market compete each other closely and have price wars. According to Maddox (2004), they offer the consumers special discounts, sales and have weekly promotions etc on special items all to attract more consumers by giving them price discounts. Stores like Tesco and Nettle and especially known to have low-priced products. Capizzi (2005) argues on the other hand stores like Sainsbury try to compete their pricing by offering seasonal price cuts. Due to all these price wars, the customers gain in the process. Moreover, the UK market has saturated and new consumers are not found. Thus the supermarkets have to steal market share from one another which they do by cutting prices. Such competition results in low prices for consumers which is very beneficial for them especially in an economic downturn. 1.2 Convenience The superstores add convenience to the way consumers shop. Previously consumers had to go to different stores to buy food items and non food items. But with the advent of supermarkets, consumers have the convenience of shopping for everything they need under one roof. This adds to convenience. They also save on travelling expenses and time which is very essential for them as many consumers now have to work in two jobs. Moreover according to Maddox (2004), even women work and thus they enjoy the convenience offered by these superstores. There is also a growing trend of offering online shopping. The supermarkets have online stores and the consumers can order online and have the products delivered at home. This saves them time which they really appreciate. However, the delivery may not be efficient and online stores may not have all the variety and brands offered in-store. Thus many times even after ordering online, the consumers may have to travel to the stores to purchase some items which make online shopping render useless. Moreover, Fill (2002) adds that consumers have complained about the WebPages being heavy and thus difficult to upload and time consumers which deters them from online shopping. 1.3 Online shopping As per Rowley (1999) , the superstores also have the facility to shop online. However, such shopping may evolve a whole new trend. The virtual way of shopping may be beneficial for the society as a whole, however, the consumers lose out on personal interaction with the firms and they may not avail personal selling experiences. Some consumers also ask the sales personal about advice on particular brands which they cannot avail online. However, such online shopping has its own advantages. It has made the consumer much more informed and the consumers on the whole have become smart shoppers. With the help of the internet they can know about the latest discounts and sales and thus they hop about from one store to another to avail the latest bargain and end up getting the best bargains from different stores. Moreover, Capizzi (2005) adds, they can find information about the competing brands online and compare quality, size and prices before they make the actual purchases. Thus the consumers have better knowledge of the market and the prices and they can’t be fooled. 1.3.1 Integrated marketing communication With the help of the loyalty cards the supermarkets are able to collect personal data of the consumers and they thus contact them one to one via email and direct mail. However, Harmon & Graeff (2002) argue, the firms can customize their marketing efforts and market products only that are wanted by the consumers. With such marketing the consumers are happy as they get a personalized touch and are also saved from unnecessary marketing and promotions. Some firms like Tesco also store customized products. For instance in some areas of UK there is a concentration of ethical groups like Mexican and Indians live in particular areas. Thus Maddox (2004) adds that the supermarkets in that areas stock goods that are needed by these communities like Tesco would stock eastern spices and Diwali diyas and they are part of the Indian rituals. Such customization makes the consumers loyal to Tesco. 1.4 Non food items The supermarkets have also ventured into non-food items like airline tickets, furniture and clothing etc. Harmon & Graeff (2002) add that the industry has transformed from food stores to one stop shops for everything that consumers may need. Such shopping options are affecting other industries in a major way as they are eating into their market share. The supermarkets offer competitive prices and convenience which the consumers prefer. Thus the consumers are attracted towards these supermarkets as a convenient place of shopping. By shopping under one roof they avail points and discounts on a larger scale and thus benefit more. This is another motivation that encourages them to shop with the supermarkets. 1.5 Discount cards The super markets also have the trend of having discount cards. The consumers can register for these discount / loyalty cards and they can get a discount for every subsequent purchase when they present this card. Such a marketing strategy is beneficial for the consumers and the society as a whole as they get discounts and thus are loyal to their firm. However, Rowley (1999) argues, the downside of such loyalty cards is that when a customer forgets to take his card, he is not given a discount even if he has been a loyal customer for 20 years unlike a small retail store where personal relations award you discounts. Thus according to Capizzi (2005) such loyalty cards are impersonal and don’t improve the relations between the firm and the consumers. It’s just the discount that takes the consumers to that particular supermarket. Moreover, getting such discounts is not an anomaly anymore. This is because all the stores now have such loyalty cards and usually a consumer has a variety of such cards from different stores. Thus the purpose of such cards is deteriorating as they don’t increase the loyalty as mush as they did initially when Tesco introduced their Club Cards. However they are indeed beneficial for the consumers as they get the best price possible. 1.5.1 RFID technology The discount cards that the firms use are beneficial for the consumers indeed. However, they reveal a lot of information about the customers to the firms which the consumers may not be aware of. The new technology of the RFID via the magnetic strip of these cards enables the firm to read the shopping habits of the consumers(RFID News 2004). This tracks the habits of the consumers so closely that they may even be offended. Again this information may also be revealed to the legal authorities without the consent of the consumers which may not be liked by them. The consumers may not be informed that their card has such a technology and their personal information may be tracked so closely that their privacy may be endangered. Thus this may even raise some serious ethical issues. 1.6 Oligopoly The supermarkets especially in the UK have completely taken over the retail sector. Gone are the days when customer had to travel to different stores for different products. They can now shop at the same store for virtually everything that they need. However, these supermarkets have eaten up the smaller retailers. The supermarkets account for 75% of the retail market of UK (Humphreys, 2001). This gives them a bargaining power over their suppliers and they demand food items that will give them both profits and build their brand name. the handful of supermarkets like Tesco, Asda, Sainsbury and Wal-Mart etc have an upper hand in the industry and thus can demand their own price from the suppliers. They can also control the prices and press their suppliers for better quality. However, the large supermarkets have taken over the industry and pose a threat to the small retailers. Tesco for instance is the largest retailer in the UK market. It also has power and finances which it uses to capture key locations for the location of its stores (Johnson and Payne 1991). Tesco has been blamed to have too many stores in particular locations that affect the business of smaller retailers and they are slowly going out of business. Thus the supermarkets trend may eventually put the retailers out of business and steadily change the industry trend also. 1.7 Government intervention The four main supermarkets in the industry have practically captured majority of the market. Thus they have control over the market and the suppliers and they can maneuver the industry. Moreover, these supermarkets avail competitive advantage due to economies of scale and thus lower prices. This also makes difficult for new entrants to venture the industry. Such a power of the supermarkets can be bad for the consumers as they can be maneuvered and manipulated. To curb this, the government intervenes. The government also tries to lessen the competitive environment. For instance, Tesco was forced to sell one of its large stores to a competitor to assist competitiveness. Tesco, being the largest in the industry has also been asked to stop the purchase of their future stores through Office of Fair Trading because it would increase competition. Moreover, Humphreys ( 2001) adds, the government has strict quality checks and encourages these supermarkets to use environmental friendly products which are biodegradable. Such enforcements increase the costs of these supermarkets. However, the government intervention can only be limited. This is because the supermarkets play a vital role in the economy as they provide jobs to a large number of people and are sustaining their suppliers. The government cannot restrict these supermarkets as this may cause other economic problems. Thus even the government is limited and may not be able to protect the consumers completely. Conclusion Today the consumers enjoy the convenience offered by the supermarkets and like the price cuts and discounts that are offered to them. However, such shopping places are changing the shopping trends as consumers get used to the convenience of shopping at one place and they now expect these price discounts and sales. This makes the industrial environment more competitive. Slowly these supermarkets have changed the way consumers shop and only a handful of these supermarkets have become superpowers in the industry. They are so huge that they can influence the suppliers and the price structures. As per Humphreys (2001) 4 giants have formed an oligopoly and are heading towards near monopoly. In such a market scenario, the consumers may suffer as the industry is engulfed by the giant firm. Price and quality may be something consumers have to compromise on. Nevertheless, today the supermarkets are benefitting the consumers as they compete to offer them the best quality within the most competitive price range. REFERENCES . Humphreys, J. 2001.The Great Food Gamble. Hodder & Stoughton, London. Johnson, B and J. Payne J 1991, “Consumer Decision Making, in Handbook of Consumer Behavior, Englewood Cliffs, NJ: Prentice Hall. Maddox, K 2004, “Special Report: Integrated Marketing Success Stories,” accessed on 30th April 2009, available at: http://www.btobonline.com. Fill, C 2002, Marketing communications, frameworks, theories and applications, Prentice Hall, Harlow, England. Harmon, S & Graeff, T 2002, Collecting and using personal data: consumers’ awareness and concerns, Journal Of Consumer Marketing, Vol. 19, no. 4, pp. 302 – 318. Rowley, J 1999, Loyalty, the Internet and the weather: the changing nature of marketing information systems? Management Decision, vol. 37, no. 6, pp. 514 - 519 Capizzi, R2005, Loyalty trends for the twenty-first century, Journal of Consumer Marketing, Vol. 22 , no. 2, pp. 72 - 80 RFID News 2004, Searching … Future Store Keeps RFID Except in Loyalty Cards Accessed on July 30th 2009, available at: http://www.rfidnews.org/2004/03/05/future-store-keeps-rfid-except-in-loyalty-cards Read More