Impact of COVID-19 on Penny Market in UK

This article discusses the impact of COVID-19 on Penny Market in the UK. It explores the increased demand for essential items, the challenges faced by the store, and the strategies adopted to meet customer needs. The article also highlights the opportunities and risks associated with investing in the supermarket business during the pandemic.

Contemporary business
environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................4
Q.2.1 Explain various structure of market?................................................................................4
Q.2.2 Describe different economic factors and how it makes impact on Penny market are also
describe in details? .....................................................................................................................5
Q.2.3 On the Penny market's business what are the likely impact of Brexit in United
Kingdom?....................................................................................................................................7
Q.2.4 Impact of Covid 19 on Penny market in UK? .................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment can be defined as a collection of entities, individuals and various
other factors that may or may not be under the control of the company but it can make impact on
their growth, survival, profitability and performance. All the organisation runs their business in
different environment as it cannot exist in isolation. The r3espective environment make influence
business and with its activities it gets affected. The company that was choosen in this report is
Penny market. It is a grocery based retail organisation based in Germany. In many different
European countries it operate their business. It has its headquarters in Cologne, Germany. It was
founded in 1973. In the project market structure of Grocery industry is explain in detail. Various
different economic factors and how they will affect the market of Penny is describe in this
assignment. Impact of Brexit on Penny's businesses market is also cover in this. Describe
immediate & long term impact of COVID-19 will have on penny market it makes investment in
UK(Atteridge, 2018)
TASK
Q.2.1 Explain various structure of market?
 Perfect Competition: There are huge number of buyers & sellers in such type of market
structure. In the market small sellers are present and high level of competition are exit
between these small sellers. No big sellers are present in the market. Therefore all the
companies are price takers in such type of market.
 Monopolistic Competition: In this form of competition there are wide range of buyers
and sellers present in the market but their products are not homogeneous. The purpose of
the products are similar but the features are slightly differentiated. The seller are
responsible to charge higher price as per their wish for their item. In this sellers are the
price setters(Becher, 2018)

 Oligopoly: In this type of market there are large number of buyers and few number of
sellers. So in this type of business organisation set the prices and customers are the price
takers. In the market there are various entry barriers exist and it is very difficult for the
company to establish themselves in the market.

 Monopoly: In this market structure the single seller control and capture the whole
market. As per their wish they can set the price for their products. There is no
competition among the firms because there is only seller. As a result customers don't
have any options and must pay the unreasonable cost that was charges by the
organisation(Brejning, 2016)
UK's grocery industry market structure
Oligopolisation: The market structure adopted by grocery industry is oligopoly. The grocery
market in UK has increased rapidly in the past few years. Its a best example of oligopoly for
becoming most competitive. To add interest, pound shops are gaining market share & nibbling
away at the big supermarket margins. It is also a good news with low profit margin, rafts of
incentives, low prices from supermarkets trying to hold on to market share. Penny market is most
successful supermarket introducing their model in United Kingdom. It has good track record and
high margin supermarket that attracts large number of audience of different social backgrounds.
The brand plan for business expansion by opening various stores in different locations. As Full
range of price & non price strategies of competition are used by the supermarket for the purpose
to grow as well as to project the market share of the supermarket (Buckley, 2018)
 Discounting of price on various ranges that were selected.
 Schemes related to price matching providing discount coupons for consumers on next
purchase o0n the basis of price comparison of baskets that flow with checkouts.
 Differentiation of products like growth of those products that have their own label and
also to sold at a discount to premium brands, value items and movements in non food
sales(Coe, 2019)
 Bundling of product: At attractive prices and discounts bundle of products are offer.
 Open for long hours.
 With other retailers like catalogue stores, dry cleaning joint venture is to be done.
 Free services of bus and car parking provided(Garbarino, 2017)
Q.2.2 Describe different economic factors and how it makes impact on Penny market are
also describe in details?
Economic factors includes fundamental basis data of economy that affects the
performance of the business. To ascertain company and value of investment, various economic
factors are consider by the Investors, shareholders , creditors, guarantors etc.(Gbadamosi, 2019)

Economic factors are those that makes positive as well as negative impact on the
economy. It includes tax rates, interest rates, wages, policies, government activities and laws. It
does not directly link with business but these economic factor influences value of investment in
future. As these factors make impact on business and also influence business drive for example
labour & its cost affects the economy. Most of the countries have started labour outsourcing from
countries. Various economic factors are describe in details and their impact on company ''Penny
market'' are explain in the below mentioned paragraphs as these are as follows:
Income Level: It means the earning capacity of the person, firm. The income level help
us to move away from categorising person as rich, poor and middle class (Hutchison, 2018)
Positive Impact on Penny market: If the income level increase for poor and middle class
people they easily purchase the things from this supermarket that tends to increase sales which
leads to increase profitability and help the Penny market in business expansion and growth.
Negative affect on Penny market: If the income of middle class and poor people is
decrease. Then they are unable to purchase the products from supermarkets because they do not
have sufficient money to purchase. It make negative impact on Penny market sales due to which
revenue of company is also affected that increases the chances of business failure and creates
difficulty to run the business smoothly (Kirton, 2017)
Inflation rate:In this GDP of the country is increase and purchasing power of the people
is decrease. Because all the products become expensive (Lahiri, 2018)
Positive affect on Penny market: If GDP rate is raise, the buying capacity of public is
decline due to this people can not afford to do shopping from supermarkets so it reduces the
margin of Penny market sales and negatively affect the profit so it creates a threat of heavy
losses are face by the supermarket company(Moritz, 2020)
negative impact on Penny market:On the other hand, if GDP rate decrease it can
increase the purchasing capacity of the Penny market business that results to raise their sales
which leads to increase profitability that helps for Penny market business to survive.
Taxes:It plays an important role in the economy. Cost of goods are affects the most due
to change in taxation rate due to this Penny market sales are also be affected favourably or
unfavourably which makes impact on economy.

Positive impact on Company Penny market: If the taxation rate is low then less part of
income is deposited to government in form of taxation that leads to increase profit which help the
Penny Market business to expand and can easily face the challenges that are exist in the
competitive world (Newson, 2017)
negative affect on penny market organisation: In case the rate of taxation is increase
than most of the part of revenue is paid as tax to government so it reduces the income of Penny
market that makes negative impact on business growth and development.
Recession: It affects the audience purchasing power, it forces the organisation to
decrease the cost of goods & services. Examples of some economic factors that makes impacts
on economy are land, technology, science, unemployment, capital. Organisation should be stable
for effective functioning of the organisation. In macro level the affect of that can be seen with
stable business through competitive earnings (Rapoport, 2016)
Positive impact on penny market: if purchasing power of customers is decrease than they
are interested only to purchase from that place who provides goods at reasonable price so in that
case Penny market increase their sales by providing discounts and offers on purchase. In this
manner it attracts large audience and capture the large customer base.
Negative impact on Penny market company: Due to recession the buying capacity of
public is decrease that affects the business of penny market because people are not to purchase
products. It decreases the sales that leads to increase the chances of business failure.
Forex rate, demand& supply, recession, Level of income are some another examples of
economic factors.
Q.2.3 On the Penny market's business what are the likely impact of Brexit in United
Kingdom?
Impact of COVID on UK economy after Brexit
In retails, shoppers feel safest from COVID -19 at supermarket. Most of the audience and
grocery shoppers select and prefer online mode to purchase the business during crisis of corona
virus. It adversely affect financial market, affected travel, business of industries, shipping,
financial markets etc. Several individuals began to raise funds for charitable organisation to
provide support to those who are affected most by the pandemic. Online retailer reported
consumer placing large number of orders in this way it captures the large market area. Some
supermarkets & shops responded by maintaining the stock of popular items that every consumer

could purchase. As Penny market introduce shopping hours for disabled and elder customers and
also give customers priorities to buy online. The Governor of England give package of economic
stimulus to prevent the British economy to fall into recession. On 28 March Fitch rating down
graded the United Kingdoms Government debt rating from AA to AA- as it is happen due to
corona virus borrowing, economic decline, lingering uncertainty over Brexit. The rating agency
believe that UK's government deficit for 2020 might equal 9% of Gross Domestic product,
compared to 2%the previous year. It is predicted by the bankers that the economy can be recover
in 2021. IN the second half of 1 March unemployment rose to 2.1 million and GDP decline by
20% in second quarter as it is the worst economic pull back. In the pandemic women and young
people are like to be working in shutdown business sector. COVID-19 also makes positive
impact because it increase the demands of food items and health related products. If Penny
market invest in UK it gives positive impact in the long run because it increase the sales and
revenue which help the organisation to expand their business by opening various stores or
supermarkets in different location of the world. On the other hand it has negative affect because
demand increase but supply of items is decrease. Shortage in availability of many commodities
are face by the stores. Due to fear of infection people avoid to go on stores it also make impact
on sales. Because many old people or village do not understand how purchase through online
mode so in this way it reduces the customer base and sale also (Schaltegger, 2017)
Q.2.4 Impact of Covid 19 on Penny market in UK?
Impact of COVID- 19 over Penny Market
COVID -19, lethal & contagious virus has shaken the world. Due to daily increment in
the cases, audience have become aware. Due to this people started to buy daily essential through
online marketplace. Major increment in the online sale of grocery articles were noticed as
shoppers try to make stock at highest level. Due to increase in the demands for pantry items and
various household staples it leads to stock shortage in most of the stores(Selden, 2016). Due to
COVID- 19 demand for the products as such as mast, sanitizers, disinfectants, hand sanitizers &
packed bottles of bottles are increase rapidly that results supplies minimising. So it makes
positive impact because it increase the sales and revenue. But shortage in availability of many
commodities are face by the stores. It increase online sales but reduce the offline purchase.

Supermarket penny market face difficult time to manage shoppers and it disrupt supply chain.
The fear of infection is increase. Organisation make large stock for the product and increase e
commerce grocery business to satisfy the demands of customers. Yes it has great opportunity to
invest in this business in United Kingdom. Because everyone need food to survive. And for
preventive purpose all the necessary items like sanitizers, mask, are purchase by audience in
large quantity so it is great chance to invest in these items (Searle, 2016)
Due to COVID-19 it makes positive impact as it globally increase the demand for food
because due to lock down people do not come from their homes. Aldi has taken some initiative
to hep and support community across country. These steps will boost customers perception of the
brands, boosting sales in the long term in this manner it makes impacts in future. If Penny market
invest in UK it gives positive impact in the long run because it increase the sales and revenue
which help the organisation to expand their business by opening various stores or supermarkets
in different location of the world(Schaltegger, 2017)
CONCLUSION
From deep evaluation and analysis it is to be conclude that in every business market
structure is differ. In United Kingdom Oligopolisation structure is adopted by grocery industry. It
also noticed that it necessary to do analysis for external factors that makes negative as well as
positive impact over business. The impact of COVID-19 in Penny market is positive because it
increase the demand of sanitizers, mask, food items etc. that help the supermarket in making
large stock to fulfil the demand. It is also noticed that audience are not interested to go to store to
purchase the necessary items in this pandemic because it is impossible to maintain social
distancing in such stores or supermarkets as they are interested to purchase through online mode.
So the sales and profit of the organisation is increase easily. After considering all the factors it is
conclude that it is beneficial to invest in this industry as business growth is definite in this
business because every one need food to live. The impact of Brexit is Penny market is done in
the assignment to understand the business models.

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