Business Challenges and Sustainability in Food Retail and Wholesale

This report provides a comprehensive analysis of the food retail and wholesale sector, focusing on key issues and challenges impacting businesses. It begins with an introduction to the sector, defining its scope and highlighting the importance of understanding its dynamics. The main body of the report delves into critical issues such as digital disruption, the rise of e-commerce, and the importance of maintaining a loyal customer base in a competitive market. A PESTEL analysis is conducted to examine the political, economic, social, technological, legal, and environmental factors influencing the industry. The report categorizes the key issues within these factors, providing a structured view of the external environment's impact. Furthermore, it assesses the impact of these issues on the sustainability of businesses within the sector, emphasizing the importance of customer loyalty and its role in driving growth and profitability. A reflection report is included, which discusses the challenges encountered during the report's preparation and how these challenges were addressed. The report concludes by summarizing the key findings and implications for businesses operating in the food retail and wholesale sector.

Report
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Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Key issues impacting the chosen sub sector...............................................................................3
PESTEL analysis of sub sector along with categorising above issues in the sub sector\...........4
Impact of above mentioned issues on sustainability of business in chosen sub sector...............6
Reflection report..........................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION
An economy is made up of different sectors and these sectors are further divided intro
several sub sectors. This report is focusing upon the discussion regarding sub sector of “food
retailers and wholesalers”. This industry is focusing on dealings of supermarkets, food oriented,
convenience stores and other food retailers and distributors, includes retailers of dietary
supplements and vitamins. This report discuss various concepts like key issues confronted by
chosen sub sector, conducting PESTEL analysis of retail industry and categorising above key
issues in these factors and also the impact that these issues can have on the operations of the
business. In addition to this, there is a reflection report at the end of the report which focuses on
discussions of challenges that were confronted in preparation of the report, also there is mention
about how these issues can be resolved.
MAIN BODY
Key issues impacting the chosen sub sector
This chosen industry is dynamically changing due to various technological evolution in
the surroundings and also various alterations in the external environment. Various companies in
this industry has seen bankruptcy and some have seen tremendous growth. These all incidents
are just due the changes and alterations in the external environment. Furthermore, it can be stated
that company faces various issues and challenges due to these changes and because of there
incorporations in the place (Etemadnia and et.al., 2015). Two of the key issues that are faced by
this industry are explained as below:
 Digital disruption: There is an increased trend of e-commerce in the business world and
it is due to rapid changes in consumer behaviour. Due to proliferation in choices with
customers in purchasing section, it increases the bargaining power of customers. This in
turn results in making the customer on a upper position and they directly impacts the
marketing methods of the company. In the chosen industry, customers are having an
upper position and this is impacting the decision making process of the company.
Products and services offered by this industry are easily available on online platform and
this enable the customers to search for required products and services in an easy manner.
Company can also convert this issue in a opportunity rather than treating it always as a
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doom. It is a very known fact that company can easily expand their business in online
platform in an easy manner, rather than in physical mode.
 Maintaining your customer base: Today's environment is very competitive and
therefore, it becomes very important to form a loyal customer base in the company. This
will help the business to survive in the market in long run. This whole process is termed
as brand loyalty. In this industry, there is high intensity of competitiveness and this
makes the companies existing in the industry believer of the customer loyalty. Due to
availability of many substitutes and various options, it becomes a great challenge for
companies to thrive in the market. Businesses in this industry makes a common mistake
of making new customers, rather than, attracting old customers. This becomes more
challenging in the case, when, companies are not able to establish good communication
with customers. To sort this issue, company can attempt to take on the traditional
customer loyalty programs such as, special offers and promotions are still effective and
failure to adopt this technique can lead the industry to path to failure. Adoption of these
techniques can make the company to establish a growing trend of personalization. To
establish a loyal customer brand, it is important to evolve good communication skills and
with customer brands to make them loyal for the brand.
PESTEL analysis of sub sector along with categorising above issues in the sub sector\
Food retailers and wholesalers is marking its existence literally everywhere in the world
and this makes them more prone to impacts of external environmental factors. Scanning of
external environmental factors can be performed with the help of PESTEL analysis. Following is
the explanation of external environmental factors are explained as below:
 Political factors: Industry is greatly affected by the government policies and the
regulations that not only impact the serving patter of the industry, but also economy,
consumer buying habits and also international trade laws (Sheldon, 2018). Companies in
this industry are forced to follows these regulations and they are not having any other
choice. In case of the chosen industry, they are effected by the health guidelines proposed
by the government. If businesses in the industry are complying with governing laws, than
it may lead to legal troubles for that firm. This industry is operating in both modes,
offline and online as well, this brings the e- commerce businesses also under scrutiny. To
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make the operations smoother, it is important that political environment is stable in the
country.
 Economic environment: Economy is that segment which enforces the customer to
purchase the products and services offered by the companies existing in this industry. If
the company wants customers to be attracted more in the industry than, it will need to
attract customers to invest more in the profitability in retail stores. Various economic
trends that are impacting this industry are exchange rates, employment rates, trade
regulations, level of personal disposable income, etc. example of economic factor can be
if the economy is poor, it doesn’t matter how many products are offered. Because no one
can afford or justify the purchases. Unless the retail corporations react accordingly
(cutting prices), they’ll suffer profit loss.
 Social factors: This is the main factor that is effecting the business of this industry and
and bargaining power of customers in this industry is very high. As there are large
substitutes available for the products and services offered by companies in this industry
and it makes the customers shift on regular basis. Furthermore, taste and preferences of
customers also confronts continuous changes and this makes industry more vital to
impacts of social factors. One of the key issue explained in the first part comes under this
category and it is issue of maintaining loyal customer base. This issue is also confronted
by the industry due to the reason that there are several substitutes in then market and
continuous changes makes it more difficult for companies to form a loyal customer base
(Surathkal and Chung, 2017).
 Technological factors: Today's world is becoming techno savvy and it is impacting the
business world also. This up-gradation in the market place is also making the business
even more profitable. This is also proved as a challenge for businesses in the industry.
Above mentioned key issue that is digital disruption is making the business more
disturbing. Furthermore, regular improvements in the industry is making the adoption of
these techniques very expensive and also difficult to incorporate in business. Companies
finds it difficult to align employees with incorporated changes of new technologies.
Retail industry has greatly benefited because of the internet. Not only to streamline
services, but also to reach audiences worldwide. Most companies have a business
website. It’s basically a digital catalogue for their products. Big name companies are able
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to offer a selection online. The products are either shipped to the customers’ home or the
closest store for pickup.
 Legal environment: This industry is in continuous check of legislative authorities at all
times of business line and it includes pre, during and also post the business time. This
industry includes such business line in its width which involves direct interaction with
ultimate customers and therefore, it becomes important that governmental authorities
keep a check on activities of business existing in the industry (Hamilton, Liaukonyte and
Richards, 2020).
 Environmental factors: Retail shops are offering food products. The state of the
environment affects the quality of the product and the selection. It also means having to
abide by more economic and political factors. For instance, corporations fear a “soda”
tax; it’s an increased tax for selling soda in stores. Likewise, some shops in other
countries have to pay a tax for offering fatty foods.
Impact of above mentioned issues on sustainability of business in chosen sub sector
Customer loyalty impacts every business. As without happy customers business won't
survive. It is necessary to create customer loyalty because :
 strong customer loyalty helps company to grow: as to grow in food retailers and whole-
sectors, customer loyalty is must. Because in this sector there is more competition. So it
is not easy to grow and earn customer loyalty. Losing customers called churn, and creates
a large impact on business. It is said that new customers cost five times more to convert
them into existing customers. Loyal customers also recommend their family and
relatives. This helps in company to grow. So If there is no customer loyalty, then it leads
to decline in sub sectors growth.
 Customer loyalty creates increased in profits: as profit is the reason for which company is
running. Customer loyalty leads to higher in profit margin of the company. If the
customer experience is bad then there will be loss for the company. In food and whole-
sectors, there are many supermarkets, so people can easily shift to those companies. This
is the strong reason why company needs to build its loyalty towards its customers. This
increasing of loyalty can take place when company provide quality of product and some
discounts to them(Chalak, Abou-Daher and Abiad, 2018).
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 Customer loyalty helps in Product improvement: customer loyalty provides product
improvement through there feedback and experiences. If feedback will be bad, then
company tries to improve that service or product. And it creates customer loyalty. If
company doesn't provide quality of product then it losses its customers. As by above
reading, this sectors contains of many supermarkets. So, If other sub sectors provide
good quality product then people easily shift to their brands.
Reflection report
From this report, I learned various lessons and it includes how to incorporate various
changes and impacts that external environment may have on the business. One of the important
challenge that I encountered in preparation of this report is to establish good communication
relationships with employees and also their customers. I learnt how to establish good
communication skills.
CONCLUSION
From this report, it can be concluded that there are several challenges that are affecting
the business of food retailing and wholesalers industry. To study these impacts, PESTEL
analysis can be carried out and it will be helpful in taking the consideration of impacts that
external factors are having on the business of this industry.
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REFERENCES
Books and Journals
Etemadnia and et.al., 2015. Optimal wholesale facilities location within the fruit and vegetables
supply chain with bimodal transportation options: An LP-MIP heuristic approach.
European Journal of Operational Research. 244(2). pp.648-661.
Sheldon, I., 2018. Industrial organization of the food industry. The Routledge Handbook of
Agricultural Economics. p.50.
Surathkal, P. and Chung, C., 2017. Retail price responses to changes in wholesale prices in the
US beef industry: differences among quality grades and primal cuts. Applied
Economics. 49(54). pp.5512-5522.
Hamilton, S.F., Liaukonyte, J. and Richards, T.J., 2020. Pricing Strategies of Food Retailers.
Annual Review of Resource Economics. 12.
Chalak, A., Abou-Daher, C. and Abiad, M.G., 2018. Generation of food waste in the hospitality
and food retail and wholesale sectors: Lessons from developed economies. Food
Security. 10(5). pp.1279-1290.
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