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Supermarket in UK holds importanium

   

Added on  2020-04-15

13 Pages2345 Words380 Views
Running head: INDUSTRIAL ORGANIZATIONS ECONOMICS.INDUSTRIAL ORGANIZATIONS ECONOMICSName of Student:Name of University:Author Note:

1INDUSTRIAL ORGANIZATIONS ECONOMICSTABLE OF CONTENTIntroduction:....................................................................................................................................3Discussion:.......................................................................................................................................3Structure of retail market in UK:.................................................................................................4Conduct:.......................................................................................................................................7Performance:................................................................................................................................8Entry and Expansion Strategy:....................................................................................................9Market Development Outlook:..................................................................................................10Conclusion:....................................................................................................................................10Reference:......................................................................................................................................12

2INDUSTRIAL ORGANIZATIONS ECONOMICSIntroduction: Supermarket in UK holds important position in the retail industry as it makes acontribution of almost 5% to the gross domestic production of the nation. The supermarket orgrocery market experiences annual sales of total value GBP 358 million. It provides employmentto almost 2.8 million population of UK (Hutchinson 2013). The supermarket sector is stronglydominated by four big players namely Tesco, Sainsbury’s, ASDA and Morrisons over the years.The recent trend shows turn toward emergence of low-cost retailers like Aldi that reduces thedomination as well as market concentration of the big four. The emergence of new firms inmarket indicates the growing demand and increasing proportion of retail purchase. Moreovertheir existence reshapes the market competition evoking importance for taking up properstrategies to conduct and survive.This report aims at presenting a structure, conduct, performance analysis of the UK retailgrocery market with substantial focus vested upon the strategies entering, expanding, and whatbarrier to entry poses challenges in the course of market development.Discussion:The supermarket sector undergoes annual growth rate of 3% indicating rising pattern inconsumers purchase. As per data, one third of the consumer’s spending goes to the retailpurchase that boosts the growth of supply and emergence of new firms like Lidi and Aldi .TheSCP paradigm is an analytical framework used by firms to assess the underlying relationship ofstructure of market with the conduct and performance it exerts on the market under certain

3INDUSTRIAL ORGANIZATIONS ECONOMICSindustry. Market structure has deterministic role in defining economic conduct of a firm, whichfurther influences how it performs.Structure of retail market in UK:The variables determining the operative structure of the retail supermarket are the numberof operating firms and their concentration in the local market. Number of consumers the firms faces monthly and yearly shapes up the demand that the retailer encounters. The composition of buyers and seller determine the market structure the firm operates in. Next important structural element is the cost pertaining to entry, exit and cost related advantages firm incurs (Fitzroy et al.2012). The differentiation of products or heterogeneity among firms also determines the popularity of the firms and detects the taste, preference and turnover of the consumers.Figure 1: UK Grocery Market Share (2016)(Source: Kantar World Panel, Jan 2016)

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