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MMC report Oct 2000 report on restrictive trade practices within the industry. Planning report 1995/6 restriction of planning on out of town supermarkets. Pressure from declining agriculture industry to increase prices. See fig 1.1
The price of livestock in the uk has dropped in the last few years and in cash terms to the customer has fallen even more. For example, for pig meat, the farmer gets 38 per head less than in 1996, the processor gets 2 per head less than in 1996 and Sainsburys gets 4 per head less than in 1996. Prices to Sainsburys customers however are equivalent to 44 per head less than in 1996.
Brutal Price Competition Increased competition within industry Expansion and Acquisition. e.g Sainsburys bought out Star markets and opened stores in Egypt. Asda bought 60 Gateway stores in 1994. Non price / Brand competition e.g reward points, advertising Competition from European discount stores. E.g. Lidl Competition from independent, small chain, specialists Fall in return on net assets/profits across industry compounded by price promotions. Cost of groceries falls below rate of inflation in real terms 9.4% since 1989 Product Life Cycle Supermarkets saturated industry
Car ownership increase easier access to out of town centres. Supermarkets major employer, especially female & part time e.g Sainburys directly employs 140,000 people nationwide People have les leisure time, therefore supermarkets offer more convenience Supermarket shopping voted no.1 favourite family Sunday past time. In store events such as single nights & fancy dress dress days. The first person to marry as a result of these receives reception at cafeteria and marriage in store. Change in consumer taste increased demand for organic produce & ban of GM foods. Health concerns eg BSE outbreak precipitated ban of British beef. Increased out of town locations implies a change in customers because you need a car to get to them.
Threat of substitutes
Product for product substitution within industry Smaller chain / independent retailers loyalty cards.