Supermarkest

Question 1

Describe the Uk retail grocery sectors in recent years

Answer 1

• contestable oligopoly
• dominance of Tesco, Asda, sainsbury and Morrison’s has been threatened by deep discounter chains headed by Aldi and lidl

Question 2

Combined market share of Aldi and Lidl

Answer 2

The two discounters now account for 17.8% of the market, with Aldi’s share at 10.1% and Lidl at 7.7%.

Question 3

Market share of Tesco, Sainsbury’s, Asda, Morrison’s, coop, Waitrose

Answer 3

Tesco: 27.1%
Sainsbury’s: 14.8%
Asda: 13.9%
Morrison’s: 8.7%
Coop: 5.7%
Waitrose: 4.9%

Question 4

Four firm concentration ratio

Answer 4

66.2 - Tesco, Sainsbury’s, asda, Aldi

Question 5

What does Aldi prove

Answer 5

Organic growth isn’t always slow - number of Aldi stores nearly doubled from 514 to 960 between 2013 and 2022

Question 6

Recent shocks or supermarket industry

Answer 6

• Pandemic accelerated switch to online grocery shopping which has consequences for supermarket costs and also for a number of occupational labour markets. Sales at city convenience stores has collapsed
• Ocado benefits from this
• online grocery shopping meaning demand is more elastic and more information widely available to the consumer

Question 7

Compare wages in supermarket industry

Question 8

What are wage pressures on uk supermarkets

Answer 8

• shortages of lorry drivers
• shortages of distribution centre workers
• record number of job vacancies in the uk labour market has shifted the balance of wage bargaining power back to workers
• most supermarkets now pay above NMW but only a few pay the NLW
• hence supermarkets are cutting on costs elsewhere
  + cutting back on 24 hour opening, more self service checkouts, removing layers of salaries staff management

Question 9

Why are Aldi and Lidl so much cheaper

Answer 9

• smaller range of times, bulk purchased from manufacturers
• most products are private label rather than branded
• branded goods tend to discontinued or overstock product
• smaller stores in cheaper rent locations to minimise fixed costs
• smaller ratio of staff to customers to higher MRPL
• relatively small marketing spend to minimise fixed costs
  -shorter opening hours to avoid unsocial hours payments

Question 10

How did Aldi and Lidl affect four firm concentration ratio

Answer 10

They reduced it by halting the rise of the big four

Question 11

Describe pay in the supermarket industry right now

Answer 11

• nationally, Lidl and Aldi pay the highest at £11.40 followed by Asda at £11.11 and Tesco at £11.02, Sainsbury’s £11, M and S are £10.90, Waitrose at £10.50 and Morrison’s £10.42

Question 12

Describe prices in the supermarket retail industry 2023

Answer 12

Since July last year, we have seen double-digit price growth on food and non-alcoholic beverages, far outstripping the price growth for all consumer goods and services, which itself rose at the fastest rate in four decades in 2022 (Consumer Price Index (CPI) – figure 3).

Question 13

How are firms competing in the supermarket industry

Answer 13

• Tesco has committed to prioritising investment in its customer offer and attempting to relieve cost of living challenges with its ‘Aldi Price Match’, ‘Clubcard’ offers and ‘Low Everyday Prices’.
• Sainsbury’s has invested as much as £560m over the last two years in both its ‘Food First’ strategy and, most recently, the launch of ‘Nectar Prices’ to help shoppers save