Uk Retail Industry

Use the industry analysis framework to explain the profitability of the main supermarket chains in the UK

 Market leader Tesco, occupies the largest market share and targets the middle market offering value to consumers, providing both economy and up-scale products at very competitive prices.

 Market challenger ASDA is slightly down-market of Tesco competing closely in price and focuses on delivering low prices to customers.

 Morrisons competes at much the same level as ASDA.

 Sainsbury’s, also a market challenger, is pitched slightly up-market of Tesco, targeting the premium end of the middle market, the consumers who appreciate good quality products for a slightly higher price.

 Waitrose is a market nicher and the most up-market of the leading chains, catering to upper-middle class consumers who are prepared to pay premium prices for higher quality products and excellent service.

1. Bargaining power of buyers.

2. Bargaining power of suppliers.

3. Threat of new entrants.

4. Threat of substitutes.

5. Competitive Rivalry

1. Bargaining power of buyers.

 Bargaining power of buyers is low.

 The supermarket chains have a wide variety of potential customers which weakens buyer power.

 The switching costs are low

 There are few alternative sources of supply

 There is a large concentration of buyers

 There is almost no chance of backward integration.

`2. Bargaining power of suppliers.

 Bargaining power of suppliers is low

 Due to the large size of the supermarket chains their buying power is large

 Suppliers of the UK retailing industry are farmers, food manufacturing companies, food processing companies, wholesalers.

 Switching costs for suppliers are relatively high as they are doing business on such large scales

 There are a large number of suppliers and substitute products available.

 Low potential for forwardintergration.

3. Threat of new entrants.

 Threat of new entrants is low

 The power of the...