The Future of Supermarkets in the UK Market - Term Paper Example

SOCIETAL IMPORTANCE OF SUPERMARKETS IN THE UNITED KINGDOM: A BRIEF REPORT CONTENTS Introduction………………………………...................................... 2 The supermarket sector in the UK……......................................... 3 Big players in UK supermarket………………………………...... 3 Advantages and disadvantages………………………………....... 3 Benefits……………………………….............................................. 4 The ongoing competition……………………………….................. 5 Going organic……………………………….................................... 6 Conclusion………………………………......................................... 6 Reference list………………………………..................................... 8 Societal importance of supermarkets in the United Kingdom: A brief report 1. Introduction: In the global marketplace, supermarkets are considered as one of the most powerful transnational corporate forces. With increasing numbers of consumers as well as producers across the globe, supermarkets are fast becoming to have significant impact on our everyday lifestyle. Moreover, the quick changing trends of globalisation are taking supermarket chains to places like never before. For instance, who can deny the emergence of the US retailer Wal-Mart as the largest company in the world (Burch and Lawrence, 2007) in terms of sales? Now coming to another larger marketplace of the United Kingdom, there is a lot of competition witnessed among the retailers, let alone the supermarket giants do the talks. The four supermarket chains in the UK - Tesco, Asda, Sainsbury’s and Morrisons - are the proud retailers dominating the UK grocery market with a lion’s share in each. As competition is going tougher and stronger, supermarket retailers are focusing more on offering optimum number of benefits to consumers including lower prices, improved quality and choice while working harder on continued innovation in the market. This paper briefly addresses the broad picture of the supermarket sector in the United Kingdom. It makes specific note of the strong competition of supermarkets and explains how the retailers handle the situation. Moreover, the greatest impact of the supermarkets is on the consumers. The paper also looks into the advantages/disadvantages of the supermarket boom upon the consumers of the United Kingdom. The impact of the rise of supermarkets definitely has positive as well as negative aspects. As the society in the UK is getting familiar with more advanced supermarket stores, it is important to go through all the relevant aspects and assess, in order to assure that consumers are indeed happy and satisfied shoppers and benefactors. Lets have a look into the larger supermarket scenario in the UK first. 2. The supermarket sector in the UK: The United Kingdom has witnessed the rise of its supermarket sector in the 1990s. Over the course of the 20th century, the UK market has been mainly dominated by manufacturers resulted in the rise of supermarkets (Fox and Vorley, 2004). The report also mentions that supermarkets captured a noticeable 30% share in the food service sector in 2004 while capturing three-quarters of the bread, milk, fruit and meat markets (Fox and Vorley, 2004, p. 3). According to the report of the Competition Commission, the growth of supermarkets has significant impact on employment, viability and stability of town centres, accessibility by low-income groups, and the emergence of food deserts (Supermarkets: A report on the supply of groceries from multiple stores in the United Kingdom, 2000). In this context, the names of the big players are worth mentionable. 2.1 Big players in UK supermarket: Tesco is without doubt the leading food retailer of the UK and also its leading supermarket. When supermarket boom was on in the 1990s, Tesco developed its new market strategies with winning scope for innovations as well as emphasis on efficient customer service. Other big players are Sainsbury, Asda, Safeway, Morrison and Marks & Spencer. UK supermarkets are now considered as among the world leaders especially in food retailing market. As the competition among the supermarket chains is primarily based upon product prices, low profit margins is on rise, which further signalises exploring and innovating new avenues of business. UK retailers are more focused on the implementation of information technology due to which supermarkets are efficient in product innovation. As the presence of supermarkets is felt at every step in the lifestyle of the UK consumers, it is important to go through the advantages and/or disadvantages of supermarket chains that affect our daily lifestyle. 2.2 Advantages and disadvantages: When it comes to discussing the advantages of supermarkets, the first thing that comes to mind is the very concept of a supermarket - a larger size of a store (than a normal shop) with the availability of multiple products. We can summarise the advantages of supermarket chains as following: They are convenient as they store most of the necessary products used in everyday lifestyle. Supermarkets feature maximum flexibility in terms of store layout design in accordance with the changes taken place in the marketplace. They follow remodelling schedules to adapt to changes. They are customer-oriented while taking care of the consumer requirements as well as consumer taste. Emphasis on innovation is important for supermarkets in order to stay ahead of competition. This, in result, draws more consumers. They are interested to adopt new and advanced food processing and preserving technology ensuring health and hygiene of consumers. Latest trends in technology have made supermarkets develop and expand online marketing, thus making life easier for consumers. However, there are disadvantages too although not many in them to be noticed in supermarkets of developed countries like the UK. For instance, management of multiple products can get complicated if not handled carefully and strategically. Due to the rise of global marketplace, supermarkets tend to have their chains all over the world. This further indicates the complexity of the management in handling the supply chains of other countries. Storage of food products is another significant task that requires advanced food preserving technology. 2.3 Benefits: The importance of supermarkets in our lives is distinctive. “Supermarkets are universal, their customers drawn from all elements in society, from richest to poorest.” (Seth and Randall, 2001, p. 218) But the market keeps changing. And so do the factors determining success. For this reason, the management of a supermarket requires sufficient amount of flexibility to create and develop new marketing strategies that guarantee competitive advantage. The best thing about supermarkets is that they provide a wide range of products at reasonable prices, assuring consumers of reliable supplies of fresh food. Besides, supermarket chains make sure that customers are aware of their highest standards of food safety, quality and environmental integrity (Burch and Lawrence, 2007). Availability of the stores for longer hours as well as of a wide variety of product supply makes health-conscious consumers go for informed decisions. Above all, supermarket chains are responsible for providing hundreds of thousands of employment opportunities. Thanks to the fast growing processes of globalisation, such opportunities are growing too. One of the significant benefits of supermarkets in the United Kingdom is a direct consequence of the high competition among retailers. When there is competition for storing the best quality food products, there is also a fierce war of price cuts among the leading players of supermarkets. As a result, UK consumers are the ultimate winners availing the lower cost products with higher quality. This is very much apparent during festive seasons or seasonal sales. Supermarkets also provide a pertinent field for building and developing long-term relationships between the retailer and the local community. This is important for the success of the retailer as well as enhancement of interpersonal relationship among people within and outside the organisation. 2.4 The ongoing competition: As supermarket chains are thriving in the UK marketplace, there is definitely a strong atmosphere of tough competition. Especially, the dominance of the UK grocery market by the four supermarkets (Tesco, Sainsbury, Morrison and Asda) is itself a strong indication of the competition among these chains as well as with other retailers that are struggling to come ahead of the competition. The Competition Commission is responsible for assessing and investigating the supermarket sector of the United Kingdom, which critically examines the products, services, innovation, prices and values of the supermarket chains. In this regard, it is significant to mention that the UK supermarkets are facing competition not only from the retailers within the nation, but also from other countries across the globe. After all, it is repeatedly stated that market positions keep on changing also due to global competitive moves. This further allows the management of supermarkets to maximise flexibility for efficient and effective handling of every aspect of operational as well as strategic market positions. The competitive environment is quite supportive for UK supermarkets as they are now more focused on product innovation, logistics, warehousing and other relevant aspects. Besides, adequate emphasis on various socio-economic trends as well as consumer behaviour is playing the primary role in shaping a better future for UK supermarkets. 2.5 Going organic: The most effective way to experience benefits from supermarket retailers is to go the organic way. Following organic eating practices means our health is safe and secured. This is the deciding factor of today’s supermarkets in terms of leading the competition. However, it is often found that the leading food retailers tend to be most expensive places to buy organic food in the United Kingdom. For instance, Tesco and Sainsbury, the two leading food retailers in the UK offer organic food more expensive than local farm shops. In any case, supply of organic food is always demanded in UK supermarkets. Keeping customer requirements in focus, the retail chains should emphasise on reducing product prices while preserving the quality. 3. Conclusion: Supermarkets in the United Kingdom are definitely a distinctive unit contributing to the world industry in its own characteristic manner. Rise of the supermarkets in the 20th century has been proved quite effective for UK consumers who are now dedicated customers of supermarkets. The future of supermarkets is very bright in the UK market with leading supermarket chains expanding transnationally. While the consumers are becoming happy shoppers, the society is waking up to more employment opportunities along with healthy interpersonal behaviour (personal and professional), food safety and hygiene. Development of new and advanced food processing technologies is a welcoming factor for the supermarket industry in the United Kingdom. This has further intensified the competitive environment in the UK market as well as in the world industry. The latest revolution in supermarkets is organic food processing. Moreover, online marketing facilities have further enhanced the operational and strategic functionalities of supermarkets in the UK. In the words of Seth and Randall (2001), supermarkets are going to stay in the UK. The boom witnessed in the 1990s was actually a consequence of the rise of supermarkets in the UK in 1960 when it had over 350 supermarkets (Burch and Lawrence, 2007, p. 3). The study further states that the supermarket share of the UK grocery market increased from a minimum 20% to a tremendous 80% between 1950 and 1990. This apparently advocates that supermarkets play a crucial role in the UK and other developed countries. Further, supermarkets have expanded into a wide range of product lines bonding strategic partnerships with myriad corporate arenas. Moreover, globalisation of business has brought together retail operations and supply chain management under one big umbrella. The ‘micro economic processes’ of global business have helped supermarkets to “secure favourable terms of purchase from supplier.” (Burch and Lawrence, 2007, p. 6) Supermarkets feature as powerful economic organisations in the sense that they can pressurise suppliers to lower product costs and/or reduce purchases from suppliers. The global market is changing itself as well as power relations in the marketplace. As markets are concerned about the society they are located in, corporate organisations are now considered as social mechanisms where coordination as well as stability is maintained in terms of interpersonal relations. Supermarkets are the most appropriate places to build that social relation and trust. Reference List 1. Burch, D. and Lawrence, G. eds., 2007. Supermarkets and Agri-food Supply Chains. Cheltenham: Edward Elgar Publishing. 2. Fox, T. and Vorley, B., 2004. Stakeholder accountability in the UK supermarket sector, IIED final report. 3. Seth, A. and Randall, G., 2001. The Grocers: The rise and rise of the supermarket chains. 2nd ed. London: Kogan Page. 4. Supermarkets: A report on the supply of groceries from multiple stores in the United Kingdom, 2000. Competition Commission report [Online] (Updated 10 October 2000). Available at: http://www.competition-commission.org.uk/rep_pub/reports/2000/446super.htm#summary [Accessed25 November 2009]. Read More