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Structure of the UK Supermarket Industry - Term Paper Example

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This essay explores the supermarket industry of the United Kingdom that is an extremely profitable and lucrative industry. The industry is mainly dominated by four major players, Tesco, Asda, Sainsbury's and Morrisons which account for almost 75 percent of the market share…
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Structure of the UK Supermarket Industry
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Download file to see previous pages The UK grocery market has increased to 133.3 billion pounds in 2007, which accounts for a 4 percent increase from that of 2006 (Nicholson, 2008, p. 3-4). The major supermarkets that occupy the bulk of the market share (almost 75 percent) are Tesco, Sainsbury’s, Asda (owned by American retailer Wal-Mart) and Morrison’s. These are commonly known as the “Big Four”. The other retail chains include Marks and Spencer (UK’s biggest clothing marketer), Waitrose, Somerfield, Budgens, Netto Iceland, Aldi, and Lidl. Tesco is the largest non-food market chain in the UK which includes outlets like Extra, Homeplus, Metro, and others. Each of these retailers focuses on some particular market section. Tesco, for instance, marks the middle market offering economy as well as expensive products. Compared to Tesco, Sainsbury’s targets a little up-market while, Asda, a Wal-Mart chain and Morrison’s focus a little down-market. Even Somerfield operate at the same level as Asda and the others namely, Budgens, Iceland, Aldi, Netto, and Lidl are all price-focused retailers. Waitrose, a John Lewis Partnership, is, however, the most up-market retailer among all. Discount retailing has become a growing division of the grocery retailing in UK and Tesco ad Asda contest a strong competition in this field.
Among them, the top position is occupied by Tesco, with a market share of 31.4 percent which is quite ahead of the other retail chains. Second to Tesco is Asda with a market share of 17.1 percent followed by Sainsbury’s occupying the third position. It covers 15.7 percent of the total market. Morrison’s rank last among the four with a market share of 11.2 percent (Nicholson, 2008, p. 6-7).
The market structure exhibited by the supermarket industry in the UK is oligopolistic in nature. This is characterized by the dominance of few firms (the big four supermarkets) and the firms produce highly differentiated products (branded products). 99 percent of Marks and Spencer sales comprise of own-label goods. ...Download file to see next pagesRead More
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