Strategic Analysis of Supermarket Industry

The assignment requires a comprehensive analysis of the supermarket industry in the UK, including identification of various strategies to gain a competitive advantage. It involves understanding different customer segments, diversification strategies, cost leadership, differentiation, cost focus, and differentiation focus. The document also provides a reference list with relevant sources.

Running head: CASE STUDY ANALYSIS
Case Study Analysis
Name of the Student
Name of the University
Author Note

1CASE STUDY ANALYSIS
Table of Contents
Introduction......................................................................................................................................2
Major issues.....................................................................................................................................3
Industry............................................................................................................................................3
Product/market.................................................................................................................................4
Five Forces analysis.........................................................................................................................4
Bargaining power of suppliers.....................................................................................................5
Bargaining power of buyers.........................................................................................................5
Threat of new entrants.................................................................................................................5
Threat of substitutes.....................................................................................................................6
Rivalry among competitors..........................................................................................................6
SWOT analysis................................................................................................................................7
PEST analysis..................................................................................................................................7
Value chain analysis........................................................................................................................8
Ansoff matrix...................................................................................................................................9
Generic strategies...........................................................................................................................10
Conclusion.....................................................................................................................................11
Reference List................................................................................................................................12

2CASE STUDY ANALYSIS

3CASE STUDY ANALYSIS
Introduction
The major issues that are present in the supermarkets of Britain is that the price of the
products are being reduced to a great extent due to the rise in a large number of discounts.
Supermarket such as Aldi and Lidl are increasing their profits by offering a large amount of
discounts to the customers for purchasing the products. Some of the experts are of the view that
the rise of these companies has allowed them to take control over 20 percent of the shares that
were present under Asda and Sainsbury (Heasman and Lang 2015). The major impact on these
stores is that they are losing out on their sales and have been forced to offer discounts on daily
items such as bread and milk. This has affected their ability to increase their profits in the market
and as a result is facing stiff competition from the new supermarkets that are paving their way in
to the market (Fernie and Sparks 2014).
There has been a rise in the number of discounted chains in the market of United
Kingdom, which has affected the sales of the supermarkets. The discount chains are expanding
on a rapid manner due to the increased rate of profitability, which has been causing trouble to the
supermarket chains that are present in the country (Ferniew, Pfab and Moore 2013).
There has been an increase in the shopping lists of the customers on a weekly basis,
which has been helping the local shops that are smaller in nature. Shopping frequently but at a
little amount has been increasing among the customers, as they are looking for the stores that are
situated closer to their place. This is due to the fact that most of the customers wants to drive less
and are of the thought that they want to reduce the wastage of food products (Ellickson 2016).
There has been an increase in the shops near the small neighborhood so that the sales can be
increased to a great extent. The opening up of the stores in the high streets by the supermarket

4CASE STUDY ANALYSIS
chains will help in boosting up their sales, as it will tempt the shoppers in buying the fresh
produce and not the ones that are distributed from the mills. The shift of the supermarkets in the
high streets will help in the opening of the shopping parks, which will help in attracting a large
number of visitors as well. It will also allow the new sites to be turned in to shopping malls,
which will help in boosting the economy of the place (Seaton and Waterson 2013).
The shift to the high streets has helped Tesco in increasing its sales revenue to around
23.2 percent, which is almost double the amount from its rival that is Asda. The company has
around 165 new sites under them and has got the permission to plan their stores in almost 60 of
the sites (Heasman and Lang 2015).
Major issues
The issues with the supermarkets are the competition that they are facing from the other
small stores that are offering discounted price to the customers for the products that are being
bought from those stores. The discounts are also being given on daily products as well. This has
led to the fall in the profits of the major supermarkets that are in operation in the UK market. this
has led the supermarkets to built their shops in the high streets so that it can help the customers
by making it convenient for them to purchase the products from the nearby locations. It will also
result in less travelling by the customers that will help in increasing the chances of the stores to
attract the customers towards them (Sparks 2014).
Industry
The supermarkets are operating under the retailing industry, which is also facing stiff
competition due to the other stores that are present and the discounts that they are offering the

5CASE STUDY ANALYSIS
customers. This has resulted in providing competition to the supermarkets that are already
present in the UK market, as their sales are dropping to great extent that is affecting their level of
profits as well (Balta-Ozkan, Boteler and Amerighi 2014).
Product/market
The market in which they are operating is highly competitive, as there are many
supermarkets that are operating within the industry. This has resulted in increasing the
satisfaction of the customers in an overall manner so that it can help in attracting them towards
the stores (Braun, Altan and Beck 2014).
Five Forces analysis
The Five Forces analysis of Porter helps in analyzing the factors that are present within
the industry in an external manner, which influences the competition within the industry.
Bargaining
power of
suppliers
Bargaining
power of
buyers
Threat of new
entrants
Therat of
substitutes
Compertitive
rivalry

6CASE STUDY ANALYSIS
Bargaining power of suppliers
The supermarkets have the power to change the regulations that are present within the
industry. They are the major players within the industry and the entire chain of supply for the
products is managed by them. Most of the suppliers are at the managerial levels that help them in
demanding a certain price from the retailers so that the goods can be supplied to them. The
retailers need to pay the price failing which may lead to no supply of the goods to their stores.
Therefore it can be stated that the power of the suppliers is very high in the grocery industry
(Lambie-Mumford and Dowler 2014).
Bargaining power of buyers
The buyers also have a higher power of bargaining in the UK market, as they are
sensitive to the changes in the prices that are being made in the grocery industry. Most of the
customers are attracted to the stores that will be offering them the products at a cheaper price so
that it can help them in increasing the volume of purchases at a particular budget. The cost of
switching to a different company is also very low for the customers, which helps them in
changing the brands once the cost increases. Thus it can be stated that the bargaining power of
the buyers are very high in the market, as they tend to influence the market by switching over to
a new brand if the price of the particular product increases (Beske, Land and Seuring 2014).
Threat of new entrants
The retail industry within the UK market is subjected to many rivalries and the threats
that they are facing from the other supermarkets that want to gain entry in to the market. The
rivalry in the pricing of the products has led to the level of competition to increase in the market.
This has made it very difficult for the retailers to become strong players in the market, as their
survival in the market has also become difficult. The investment in entering the markets by the

7CASE STUDY ANALYSIS
new companies is huge, as they need a strong financial position so that they can be able to attract
the customers by providing the prices at an attractive price. Therefore it can be stated that the
companies who are trying to enter the UK market in a new manner has a low power due to the
strong financial positions that they require in competing against the existing companies
(Hattersley, Isaacs and Burch 2013).
Threat of substitutes
The supermarkets offer a wide variety of products to the customers, which help in
satisfying all their needs and demands. This has resulted in increasing the switch of the
customers to different brands who are offering better quality at a cheaper price so that they can
reduce the amount that is spent on a particular product. The customers do not stick to a particular
brand for a long period of time, as they increase in the price of the products may lead them to
switch over to some other products that are offering the same benefits. Thus the threat of
substitutes is high in the supermarket industry (Braun, Altan and Beck 2014).
Rivalry among competitors
The rivalry among the competitors is very high in the retail market, as they want to attract
the customers towards them for increasing the revenues. The grocery industries use most of the
latest technologies such as e-retailing so that it can help them in satisfying the customers by
delivering the products to their doorsteps. The transactions that are done online and the intense
advertisements that are done by the companies help them in satisfying the wants and demands of
the customers so that they can be loyal towards the company. Thus the level of rivalry among the
competitors is very high in the market (Neske, Land and Seuring 2014).

8CASE STUDY ANALYSIS
SWOT analysis
Strengths
1. Provides discounts to the customers
2. Large stores that offer all range of
products
3. Includes private brands, which
increases brand equity
Weakness
1. Not present in major locations
2. Controversies leading to negative
coverage by media
3. Mostly in debts that is affecting profits
Opportunities
1. Needs to increase sales of non-food
products
2. Increase sale of private brands
3. Open stores in major locations
Threats
1. Increased cost of raw materials
hampering profits
2. Competition from smaller stores
3. Low operating cost, which affects
profit
PEST analysis
Political
1. Needs to maintain quality according to
the Food Standards Agency and
General Food Law
2. Needs to follow food Hygiene
Regulations and Hazard analysis
Critical Control Point (HACCP)
Economic
1. Rate of taxes need to be followed so
that the product prices are not increased
2. Competition in price leads to increased
expenditure by the consumers
3. Rate of foreign exchange also affects
the food prices, which needs to be
checked so that it can help in supplying

9CASE STUDY ANALYSIS
3. Environmental law needs to be
followed so that pollution can be
controlled
products in a stable manner
Social
1. Increase in old age and retired people,
as they consume less
2. Online shopping preferred, as it is easy
for them
3. Ready meals are available that makes it
easy for the consumers to prepare
Technological
1. Online shopping is being provided
2. Catalogues are present on the portal,
which helps in comparing the prices by
the consumers
3. Use of advanced software so that
operational cost can be saved
Value chain analysis
Inbound logistics Operations Outbound
logistics
Marketing and
sales
Service
1) Complex and
involves various
supplies
2) Increased
investment so that
economies of scale
can be subjugated
3)Unnecessary use
of supply chains
need to be identified
1) Retail sector
needs to operate in
metros and
superstore
2)Manufacture the
products so that
value can be
present in the
private labels as
1) Cost-effective
methods of
delivery needs
to be taken in to
account
2) Home
deliveries need
to be
encouraged
1) Competition in
prices will help in
increasing sales
2) Trust from
stakeholders
needs to be
present so that it
can help in
increasing sales
1) Loyalty of
customers needs
to be given
priority
2) Cost
leadership
strategies need to
be taken up so
that market
penetration can

10CASE STUDY ANALYSIS
well
3) Banks need to
be considered so
that financial
activities can be
understood
properly
3) Online
grocery stores
need to be
opened
3) Online and
offline sales
channel needs to
be encouraged
increase
Ansoff matrix
Market penetration- Penetrating the market needs to be done by the supermarkets so that it can
help them in gaining a upper hand within the British market. They need to decrease the prices so
that it can help in attracting the customers who are living in the high streets.
Product development- The supermarkets need to provide their own brands so that it can be
available to the customers at a cheaper price.
Market
Development Diversification
Market
Penetration
Product
Development

11CASE STUDY ANALYSIS
Market development- Pricing of the products need to be done in such a manner so that it can help
in getting the other customer segments as well.
Diversification- Apart from food products, the supermarkets need to provide electrical goods to
the consumers as well so that they can meet their demands from the same store.
Generic strategies
Cost leadership- The supermarkets need to give the products at a competitive price in the high
street locations.
Differentiation- Different products need to be provided to the customers so that they can get a
wide variety of options to choose.
Cost focus- This will help in increasing the rate of profit for the supermarkets by attracting more
number of customers.
Cost
Leadership Differentiation
Cost Focus Differentiation
Focus

12CASE STUDY ANALYSIS
Differentiation Focus- The different products that will be supplied by the supermarkets needs to
be unique in its characteristics so that it can add value for the company.
Conclusion
Thus it can be concluded from the case study that the major players in the supermarket
industry needs to identify various strategies that will help them in gaining a competitive
advantage over the new firms that are entering in to the markets. The opening up of the stores in
the high street in the UK will help them in attracting the customers so that it can help in
increasing the revenues as well. The Five Forces analysis shows that the rivalry is very strong in
the market, which needs to be tackled in a strategical manner. The adoption of the new strategies
will help the present companies in providing stiff resistance to the new companies that are
present in the market.

13CASE STUDY ANALYSIS
Reference List
Balta-Ozkan, N., Boteler, B. and Amerighi, O., 2014. European smart home market
development: Public views on technical and economic aspects across the United Kingdom,
Germany and Italy. Energy Research & Social Science, 3, pp.65-77.
Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and
dynamic capabilities in the food industry: A critical analysis of the literature. International
Journal of Production Economics, 152, pp.131-143.
Braun, M.R., Altan, H. and Beck, S.B.M., 2014. Using regression analysis to predict the future
energy consumption of a supermarket in the UK. Applied Energy, 130, pp.305-313.
Ellickson, P.B., 2016. 15 the evolution of the supermarket industry: from a&P to
Walmart1. Handbook on the Economics of Retailing and Distribution, p.368.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new
challenges in the retail supply chain. Kogan page publishers.
Fernie, J., Fernie, S. and Moore, C., 2013. Principles of retailing. Routledge.
Fernie, J., Pfab, F. and Marchant, C., 2013. Retail grocery logistics in the UK. The International
Journal of Logistics Management.
Hattersley, L., Isaacs, B. and Burch, D., 2013. Supermarket power, own-labels, and manufacturer
counterstrategies: international relations of cooperation and competition in the fruit canning
industry. Agriculture and human values, 30(2), pp.225-233.