UK FOOD RETAILING INDUSTRY
... - Non-stop opening times - Rising proportion of UK households that can access internet at home. All the major multiples are expanding their online. - Home delivery - Demographic changes – eating out is now the UK’s favourite leisure time pursuit. - The increase in disposable income among Britons has let to more sophisticated customer preferences and demands for greater choice and comfort in the shopping experience. TECHNOLOGICAL FACTORS - The Grocery retail sector is a major user of new technology. The increasing use of electronic data interchange, laser and self-scanning and other point-of-scale equipment has been a feature of recent innovations by retailers. - On line shopping - Faster building technology allows speed up the building time of the stores - Faster checkouts, e. g. price scanners - Future technological innovations, e.g. smart shelves – to interpret data recording stock levels and the notify store managers through the Internet when products are low. - Loyalty cards and provision of financial and other services have also involved the introduction of sophisticated computer-based systems. LEGAL - Government legislation – makes it increasingly difficult to obtain planning permission for building out of town stores where land is cheaper. - European Commission INDIVIDUAL SWOT ANALYSIS FOR RETAILERS The market leaders are continuing to compete fiercely on price, loyalty, range and location to attract customer and to build or maintain market share. By looking at the individual SWOT analysis we can see the differentiation between the companies. TESCO STRENGTHS - Tesco retains the top spot with 27% of the overall market share - Largest grocery retailer in the UK – 779 stores including a number of small stores recently acquired from T&S stores - Operates in 10 countries across Europe (including the UK) and Asia, producing worldwide group turnover of over &26 billion in its most recently reported year. - Own label - Expanded into retailing services and exploited eCommerce successfully - Club Cards – Tesco has engendered significant levels of customer loyalty through its very popular Club Card. - Strong reputation and popularity - On line shopping & CD ROM based catalogue – First in the UK to set pu a transactional website. - First to launch a serious price war with Operation Check Out; first to introduce a card-based loyalty scheme; the first to add financial services, and first to launch an electronic shopping operation. - Rapidly growing business in Eastern Europe. - Convenient shopping hours – 24 hours a day WEAKNESSES - Expansion is difficult due to existing store coverage - Opportunities for domestic expansion are limited – difficulties to obtain permission to build new stores - Euro change - Still scope for improvement in many non food areas - Vulnerable to concerted price campaign from competitors emanating from the much trumpeted Wal-Mart of EDLP (Every Day Low Prices) effects. - Heavily criticized for commercial exploitation of UK farmers and food producers. OPPORTUNITIES - To expand more non-food products - Further development of on-line shopping - Further development overseas - Further “Ready meal development” THREATHS - Overseas groups entering the market - Legislation - War and terrorist alerts - Stiff competition between the supermarkets - Change in the customer tastes, demands - Global recession - Changes in planning regulations can stifle development - Food scares (B.S.E. beef crises of 2001) - Rationing - Hyperinflation - Price wars - Rapidly changing technology - Increasingly sophisticated consumers and competition - It also has to overcome its own management shortcomings - European retailers form continental Europe such as Aldi and Netto SAINSBURY’S THREATHS - Second largest GROCERY retailer in the UK - Good reputation – Family business - Loyal customers - On-line shopping - Home delivery - Good quality foods - Own Label - Wide product range and services - Has many smaller stores - Large advertising budgets WEAKNESSES - Sainsbury’s failed with many strategies in order to become no. 1 supermarket again - The stores don’t have a space for non-food products. One factor that the competitors have in common that helps them drive share is larger stores. This not only gives them the space to offer consumers the ever increasing choice of grocery products that they demand, it also provides the space for a range of non foods in order to meet the demand for ‘destination’ shopping trips. Sainsbury’s doesn’t have this space. The average store size is enough to enable them to offer a good range of grocery products but not much more. - Its not innovate with customer’s lifestyles – they want a shopping under one roof man! - OPPORTUNITIES - Further development overseas - New range of products and services - Opportunity to overtake Safeway - Retail partnerships - Further development of on-line shopping - Further exploiting of the Non-food products THREATHS - Cheap-chains targeting the high end market - Overseas groups entering the market - Competitors fighting for the market share (Tesco, Asda, Safeway, Morrisons) - UK legislation - EU Competition Laws - Change in customer preferences – loosing loyalty - War and terrorist alerts SAFEWAY Strengths: - Fourth larges grocery retailer in the UK - Operates 481 grocery stores across the UK - 50% interest in a joint venture with BP - 25 % increase in turnover, from £7.0 billion to £8,6 billion - Own brand - “Healthy living” – own brand concentrates on low diet, low fat food - Wide range of services Weaknesses: - Operating profit decreased by 15% - Not keeping with competitors by clothes retailing - Long accused of underperformance Opportunities: - Clothes retail - Further expansion of non-food products - Further development of on-line shopping Threats: - Stiff competition for market share and customer loyalty - Takeover from its rivals: Tesco, Sainsbury’s, Wal-Mart - Competition Commission - UK Legislation - Change of customer tastes - War Porters Five Force Analysis Threat of New Entrants - Economies of scale – Larger stores can stock and sell ...