Wednesday, April 3, 2019

Competition and Performance in Supermarket Industry

emulation and Performance in Super commercialise IndustryAnalyse the management aspects of competition and execution in the extremely dish out industry, based on the case study given in the attachment.What role exact the hawkish strategies of super foodstuffs had in their success? In evaluating the sources of sustainable competitive receipts, which seem closely important securities industry limiting, high-pitched levels of commercialize former, or high levels of indispensable efficiency?Taking into consideration the quad current dominant supermarket chains in the UK Tesco, Asda, Sainsburys and Morrisions, whilst ack right awayledging the slightly sm altogether popular grocery sellers such as Waitrose and Marks and Spencer an analysis of their comparative degree individual strategic frame take shape is non dissimilar in galore(postnominal) ways.Certainly in terms of the top four providers they have change magnitude their market sh atomic number 18 by relentl ess buy up of sm either topical anaesthetic convenience stores and chains, in plus to undercutting local suppliers, making them more(prenominal) cost effective.This has resulted in the retail food industry becoming an Oligopoly market, where that a few firms dominate the market by way of high levels of branding, brand loyalty, stable prices and a strong interdep terminalence between the star(p) stores in relation to their let strategic movements. The emphasis is on advertising campaigns and tough barriers for each unsanded competitors to overcome. They are all benefitting considerably by their economies of sale.1Tesco controls over 30% of the general British grocery market. A market position which provides it with the strength and confidence to succeed against its rival competitors.Not just now is positioning integral to the strategic success of the supermarket giants. It was Wal-Marts massive buying power which ultimately enabled Asda to become the second highest ret ailer in the market, usurping Sainsburys in 2003 from its number two spot. An different key area of its successes how ever grew prohibited of its ability to offer a mental image of non-food items, such as costume and kitchen ware. By expanding and diversifying its harvest-tides in this way it was able to gain its overall market power. In 2002 Asdas Chief Executive Tony DeNuzio confirmed, two thousand lines have been sourced jointly with Wal-Mart and these delivered prices unheard of in the UK market.2Similarly Sainsburys business success came under threat several classs ago when its market position was threatened and eventually commandeered by Asda. It needed to append its competitive advantage quickly and one of the main ways it achieved this was by expanding and improving its own internal communications systems. Following the worsen in sales and competitive defeat to Asda it responded by initiating the Making Sainsburys Great Again scheme. A of import four year conval escence plan which included terminating the outsourced spotting of its IT infrastructure to the caller Accenture. It shifted instead to the development of its own in-house IT systems saving the company millions of pounds.3 This internal efficiency was further enhanced in 2006 when Sainsburys introduced new schemes such as Try Something New Today which became their motto for some(prenominal)(prenominal) customers and employees with a new emphasis on training and development and accomplice communication. The supermarket chain also introduced a comprehensive monthly employee survey, called Talk gage providing them with an indication of the level of staff satisfaction and feel of overall service being provided to the customers. During the analogous year Sainsburys launched an apprenticeship scheme for qualifying its in-house bakers, together with a attracters scheme for its branch and regional managers, designed to improve the level of spirit of its management team, in additio n to empowering its own staff. A combination of new stores, new lines and internal enhancement enabled Sainsburys to increase their profits signifi cornerstonetly over the last few years. In 2008 these have been confirmed as 488 million, before tax. A rise of 108 million compared to 2007. And an overwhelming profit increase of 380 million for Sainsburys since 2006.4All of the factors relating to market position, market power and internal efficiency burn determine the strategic effectiveness of a self-make supermarket giant in terms of how they inter-relate and require shifting or reviewing depending on the situation and motivation for change.What have been the marketing strategies of supermarkets? Evaluate these strategies. trade Strategies come along to be progressing away from the traditional 4Ps of Product, Place, Price and Promotion as securities industrying is beginning to become more virtually the relationship of the public to the composition itself. Markets are now so competitive that more innovative ways of attracting customers is becoming key to remaining successful. Perhaps one of the best examples of a successful marketing strategy in order to maintain its be customer focus, in addition to gaining more direct information closely them as individuals, is through Tescos Clubcard scheme. This scheme has enabled Tesco to create a retail strategy, to determine their customers and which market these customers fit into as well as what they are looking for from a supermarket.5Similarly its computers for school voucher scheme g spurning obtain into a means of providing equipment for schools, maintained loyalty amongst families with children, raising their visibility as a community conscious organization.Asdas marketing strategy has always focused heavily on mensurate. In 2006 it developed a new 45 million marketing strategy which killed off their always low prices slogan. A whole new begin to marketing its products now fell under the umbrella o f more for you for less, This was a result of Asdas market share decreasing to 16.7% and a recognition of Sainsburys reco actually success. Asda also wanted to accentuate the quality and freshness of its food and drink, as the low price concept had begun to have less and less trespass on its customers. It invested an enormous 45 million advertising campaign apply celebrities and even abandoned the familiar reassuring Asda Price jingle. 6 In 2007, tranquillise reeling from the repercussions of its multi-million takeover bid of Safeway Superstores Morrisons decided to vamp its image and market itself in a completely new way. It changed its logo and introduced the new strapline The food specialist for everyone. In a similar way to Asda, Morrisons made the decision to move away from the budget concept and value of lower costing food towards an angle that emphasized the quality of its products where they came from and how they were packaged and presented. 7 This straightway followed a particularly controversial geological period for Morrisons who were the first rootage exchange company to post their results after the charity Christian embolden announced it would actively expose and campaign against industries that were seen to be abusing the environment.8It the readerore becomes clean apparent from these few recent examples that many of the major supermarkets are counseling their marketing strategies around the current political climate of the country, alongside the ever fluctuating expectations of its consumers.Comparatively the supermarket chain Waitrose has logically delivered a reputation for stocking quality products, that are fair trade and organic. With the contentious strapline honestly priced Waitrose focuses limitedally on food and drink and has not diversified its products in line with the other major supermarkets. It has a very different socio-economic demographic for its market and their approach differs from other supermarkets in that they are all about brand loyalty. It has an notice card like many other stores but chooses not to levy it. Rewards include concert tickets or selected food items, again emphasizing its overall different audience. The same audience who utilisie the John Lewis brand, the controlling arm of the supermarket. And most importantly of all the Waitrose profits are ploughed directly back into the pockets of its employees, maintaining a holistic enterprise with a fair, honest and high profile image.To what extent should supermarkets take into reckon ethics and corporate social tariff when designing their competitive strategies and their relationship with suppliers? Do these responsibilities extend to protecting local communities and convenience stores? How should environmental questions be accounted for?By way of suppliers it is fair to fool from the media attention legitimate that UK farmers are often seen to be suffering the effectuate of the considerable pressureures put upon them to de liver high quality for lower prices, in addition to grimer grocers who find it continuously difficult to compete against the cost implemented by the supermarkets. The long-term impacts of battles between grocers and now non-food retail companies in the wake of the growth in expansion of supermarkets in new product areas, indicates that local based shopping facilities could decline further in future years.In response to the seemingly unending expansion and development of supermarkets crossways the UK, with smaller convenience stores moving into small townspeoples and liquidations the Office of Fair Trading, (OFT) publish the findings of an investigation into Britains four largest supermarkets, Tesco, Asda, Sainsburys and Morrisons. Primarily based on how they treated suppliers. The report discovered no issues with the relationship overall and the mop up was positive.However, since these topics were made public there remains an on passing observation of practices by supermarket s nationally and an increasing profile with regard to the social and environmental responsibilities these staggeringly omnipotent, profit hungry enterprises have become in recent years. incorporated Social Responsibility or CSR has become of significant importance to supermarkets, with nigh responding at higher levels than others. Marks and Spencer have introduced a five year eco strategy aiming to proactively tackle issues including climate change, waste reduction and ethical trading. And Sainsburys Active Kids initiative, allowing the 80% of all UK registered schools to redeem vouchers for sports equipment. Donating a generous 7 million of their own profits towards the campaign. 9However this does not take into account the lack of co-operation by the larger supermarkets to help prevent cheap intoxicant binge drinking. Frank Soodeen the Communications Director for Alcohol Concern verbalise earlier this year that Supermarkets have a responsibility to price intoxicant realistica llyThis is not an ordinary product and continuing to cynically market it below cost in order to increase footfall increases the risk of infection to the public healthIn the current climate of social and environmental awareness, a tough indemnity for corporate social responsibility (CSR) is worthy its weight in gold. 10Asda has since become the first supermarket to remove all of its super strength canned beers and lagers. In addition it has taken forward a new proof of age scheme titled Challenge 25. Customers who bribe alcohol must now produce some form of designation if they appear to look younger than twenty five.Furthermore the Federation of bitty Businesses claims around 2,000 independent retailers go out of business each year. Supermarkets selling items with no mark-up are subsequently pushing all other smaller independent traders out of business as they simply cannot compete.Fair trade is an ongoing concern, with cheap labour in foreign countries enabling the retail tra de to adopt low cost prices through exploitation. Earlier this year Martin Hearson from the campaigns organization Labour Behind The Label was quoted as reiterating In theory, all the main supermarkets are committed to this but in practice, we have seen very little ethics to live up to the promise to pay workers a living wage11It is abundantly apparent that supermarkets play a significant role in CSR issues and have a responsibility to maintain a level of standards across a number of areas that impact on both local communities and larger global matters.Tesco recently published their own incorporate Social Responsibility policy, which can be found on their website go with by the following asseveration Our Corporate Social Responsibility policy objective is to earn the trust of our customers by acting responsibly in the communities we serve. We recognise our impact on society at all levels and work to maximise the benefits we bring.Customers are at the heart of everything we do. CS R is secure for our business and good for the communities where we operate. By building good leave and trust with our customers, we can earn their animation loyalty, which is our core purpose.12To what extent is it inevitable that local convenience stores pull up stakes decline? Are there feasible strategic or marketing responses for sale to them?The University of Southampton having been carrying out research around the reaction of consumers to the take over and death of the local convenience store. The impact on communities who had recently been party to the addition of a Tesco Express in their local town or village within four different geographical areas of Hampshire were analysed over a period of one year providing the following conclusionsMany citizens moved away from traveling to the distant out of town supermarkets, preferring to use not only the local Tesco Express, but other local shops as well. The return of out of town shoppers brought about by the inclusion of a sm aller Tesco actually boost the concentration of increased local shopping trends, rather than having a damaging effect on the community.In response to the findings the research team leader Professor Wrigley commented It is clear that the introduction of the Tesco Express format to these communities helped bring about a major re-localisation of top-up shopping away from distant superstores towards local shops. If consumers can access code the same quality of fresh food and product ranges locally as they do in larger supermarkets, then increasingly it seems they will divert their top-up shopping back into their local neighborhood. This may have potential benefits for other traders, but more interestingly has considerable significance in changing the way we shop with more people walking and make pass to stores.13This conclusive positive influence of supermarket chain presence in local environments is reflected less positively in a topical piece of equilibrium from The Executiv e Chairman for the Association of Convenience Stores to the Inquiry Secretary of the Groceries Market Investigation Competition Commission in 2007.The letter documents an investigative outcome of Costcutter stores nationwide. Whereas the commission had found there to be no decline in the general consumer use of Costcutters. The outcomes of the evidence provided by the Association of Convenience stores enlarge a very different picture altogether, noting The case IGD I William Reed reports a decline of 5000 stores between the years of 2000 to 2006, and the decline of independents added to symbol group independents has declined by 4,611 stores in the same time period.The correspondence goes on to claim that a significant number of independent retailers are ratiocination regularly across the country. And those that have remained successful have been subjected to takeover bids by Tesco or Sainsburys. An example of one Tesco store opening in a market town in Yorkshire, demonstrated tha t the existing Costcutter nearby received a turnover of a 50% decrease.14Although it is clear that supermarkets are not able to meet all grocery shopping needs as more local convenience stores fall into decline, less choice will be available to the consumer. In addition minority groups and those unable to access large super stores out of town, who would ordinarily have completed their shopping locally are now being forced into taking the cheaper alternative the presence of a smaller convenience Tesco Metro or Sainsburys central provides, making the audience for independent and convenience retailers even narrower.How top executive suppliers respond to the pressure they face?Suppliers are consistently left with fewer choices in terms of providing produce at an economic level consistent with act growth resulting from the lack of profit made impossible from value Supermarket trading. Not only are they reduced to having to cut their costs, but they are under pressure in other areas li ke having to accept long-acting payment plans and cut prices sometimes even further by having to leave to special supermarket promotional activity. 15One of the options remaining is for suppliers to consider moving their industries oversea or carrying out more overseas trading. Alternatively by changing their products to meet the demanding needs of consumers to be greener, more organic and free range and finding new ways in which production costs can be consequently reduced in the process to impart expose profits would be advantageous. Adapting to new methods of meeting the demands of the supermarkets are a continued necessity for suppliers to survive in the current market.Some suppliers may end up trading overseas, with the supermarkets forced to then buy the same product abroad at a higher cost, but with the profits going back into the pockets of the supplier. This will have a consequent knock-on effect to how all global supply and demand is met in the future.Alternatively the creation of Stockless centres through an enhanced supermarket internet home delivery service would enable goods to take directly from the supplier to the consumer door-to-door with no over-head costs. This would help reduce any transportation or logistic costs or monetary implications incurred by the suppliers.Some supermarkets are now co-operating at a much more intensive level with their suppliers by recruiting specialists employed to work directly as a point of liaison to collaborate with the supplier in specific matters relating to the quality of the product they are providing, as well as financial advice and support with storage, refrigeration and logistical problems. 16There is perhaps potential then to increase this level of support and develop a closer working relationship between retailer and supplier in order that both are satisfied.BibliographyEbrahimi, H, 14 May 2006, Financial fooling Mail article Britains top competition watchdog has say it is ready to see small su ppliers squeezed out of business by powerful supermarkets so long as savings are passed on to consumersGummesson, E (1999) Total Relationship selling From the 4Ps Product, Price, Promotion, Place of Traditional merchandising Management to the 30Rs the Thirty Relationships of the New Marketing Paradigm Butterworth-HeinemannJuniper.T, April 24, 2006 A not so super market, shielder NewspaperKnights, D, and Wilmott, H (2000) The Reengineering Revolution? Critical Studies of Corporate Change sensibleKnights, M (2005) Sainsburys calls time on IT outsourcing contract, Computing cartridge holderUniversity of Southamption press release, 03 November 2005, Consumers Respond to shift key in UK Convenience Store Sector, ref 05/191Letter from Colin Graves to Tim Oyler, 23 November 2007 http//www.competition-commission.org.uk/inquiries/ref2006/grocery/pdf/responses_prov_findings_main_party_costcutter.pdf, appointment accessed 12/09/08(2002) Asda fuelled by Wal-Mart power victuals Retai ling, Eurofood article7 March, 2006, Asda plans marketing revamp, Yorkshire Regional Development Agency articlewww.retail-vision.co.ukhttp//www.j-sainsbury.com/ar06/overview/groupperformance.shtml/ Chairmans statement (2008)http//www.j-sainsbury.com/ar08/chairman/index.shtml, Date accessed 10/09/081Footnotes1 Juniper.T, April 24, 2006 A not so super market, Guardian Newspaper2 (2002) Asda fuelled by Wal-Mart power Food Retailing, Eurofood article3 Knights,M (2005) Sainsburys calls time on IT outsourcing contract, Computing magazine4 http//www.j-sainsbury.com/ar06/overview/groupperformance.shtml/ Chairmans statement (2008) http//www.j-sainsbury.com/ar08/chairman/index.shtml, Date accessed 10/09/085 www.retail-vision.co.uk6 7 March, 2006, Asda plans marketing revamp, Yorkshire Regional Development Agency article7 Johnson, B (2007) Morrisons has sterling(prenominal) strategy, Advertising Marketing article8 Johnson, B (2007) Morrisons has sterling strategy, Advertising Marketing artic le9 http//www.j-sainsbury.co.uk/files/reports/cr2005/index.asp?pageid=9010 Gough,V, 04 July 2008, Article from mycustomer.com, http//www.mycustomer.com/cgi-bin/item.cgi?id=133794u=pndm=phnd, Date accessed13/09/0811 Gough,V, 04 July 2008, Article from mycustomer.com, http//www.mycustomer.com/cgi-bin/item.cgi?id=133794u=pndm=phnd, Date accessed13/09/0812 http//www.tesco.ie/csr/index.html, Date accessed 13/09/0813 University of Southamption press release, 03 November 2005, Consumers Respond to transformation in UK Convinience Store Sector, ref 05/19114 Letter from Colin Graves to Tim Oyler, 23 November 2007 http//www.competition-commission.org.uk/inquiries/ref2006/grocery/pdf/responses_prov_findings_main_party_costcutter.pdf, Date accessed 12/09/0815 Ebrahimi,H, 14 May 2006, Financial Daily Mail article Britains top competition watchdog has said it is ready to see small suppliers squeezed out of business by powerful supermarkets so long as savings are passed on to consumers16 Knights, D, and Wilmott, H (2000) The Reengineering Revolution? Critical Studies of Corporate Change Sage

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