Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997.
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Transcript of Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997.
Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Company Market Share No of storesTesco 15.2 586J Sainsbury 12.6 378Safeway 7.8 490ASDA 7.2 213Somerfield/Kwik Save 6.2 1481Marks & Spencer 3.1 311William Morrisons 2.3 81Iceland Group 1.7 766Waitrose 1.6 115Co-op 1.3 273Others 41.0 4969Total 100.0 9663
Shop numbers 1971 and 1989 compared
1971 1989 Change(%)
Single-outlet retailers 338,210 215,736 -36
Small multiple retailers 83,966 67,760 -19
Large multiple retailers 87,642 66,520 -24
Total 509,818 350,016 -31
Food Retailers 1990
OutletNumbers
T/O MarketShare
Single-outlet retailers 59,238 8,100 16.8%
Small multiple retailers 14,333 3,319 6.9%
Large multiple retailers 11,514 36,752 76.3%
Total 85,085 48,171 100%
Mixed retail businesses 1990
OutletNumbers
T/O MarketShare
Single-outlet retailers 2.299 3.026 12.5%
Small multiple retailers 1,490 1,601 6.6%
Large multiple retailers 7,663 19,659 80.9%
Total 56,993 12,749 100%
Less than 80% of sales or 50% in the case of food retailing or hire and repair fall into the main broad kinds of business.
Retail Distribution of Organic ProductsShare by Value % 1994 1996 % change
£m % £m % 1994-96Grocery multiples 75 62 120 60 +60.0Direct sales/delivery/farmgate sales 19 16 40 20 +110.5Independents 16 13 24 12 +50.0Health/wholefood shops 5 4 8 4 +60.0Market stalls 6 5 8 4 +33.3Total 121 100 200 100 +65.3
L de Chernatony, M McDonald, 1992, Creating Powerful Brands, 2nd Ed. Butterworth-Heinemann
Decline of Independents
• Broad economic and social change (inflation, recession, buying behaviour)
• Competition from multiples and Co-operatives• Increased operating costs• Lack of capital for investment• Availability of supplies of goods (price, quantity, delivery,
etc.)• Urban renewal• Age of entrepreneur • Poor locations• Inflexible management attitudes
J A Dawson (1983) Independent retailing in Britain: dinosaur or chameleon? Retail and
Distribution Management vol. 11 (3) 29-32
Co-operative Movement
In 1844, 28 working men collected £28 and used it to open a shop in Toad Lane, Rochdale, Lancs.
Key Principles• Voluntary and open membership.• Democratic control.• Share capital should only receive a strictly limited
rate of interest.• Surplus should be distributed to members in
proportion to their purchases from their society.
Co-operatives’ shares of European grocery markets, 1985 (%)
Country %West Germany 9France 8United Kingdom 8Belgium 1Netherlands 1Austria 21Switzerland 40Sweden 28Norway 24Spain 3Italy 5
Results of large UK retailers for year ending 1992 (£m)
Turnover TradingProfit
Dividend Retentions Capitalexpenditure
Sainsbury 9,202 668 154 269 766Tesco 7,596 503 122 264 852Marks &Spencer
5,706 680 195 171 305
Argyll 5,039 331 108 154 442Asda 4,904 180 47 -475 238Boots 3,656 403 126 106 173Kingfisher 3,389 232 63 77 82J. Lewis 2,280 100 30 35 108Kwik Save 1,910 99 23 45 105Storehouse 1,180 10 21 -14 47Co-operatives 7,089 176 40 36 221
Decline of Co-operatives in UK
• 1950’s UK Co-ops accounted for – 12% of all retail sales– 20% of grocery sales
• By 1991 t/o fell by 65% profits fell by 81% (using 1957 prices)
What went wrong
• Abolition of RPM, allowed price competition, which in turn reduced profits.
Decline of Co-operatives in UK
• Insufficient funds to fund developments.• Co-ops not quoted on stock market
– limited access to funds.
• Co-ops not single entity – in 1957 - 936 societies– in 1991 - 68 societies
• Structure does not allow decisions to be made in the same way as plcs.
Environmental factors favouring multiples
• Access to funds via stockmarket and/or banks.
• Self-funding developments due to cash turnaround.
• Changes in 1970’s favouring out-of-town retailing.
• Changes in 1980’s favouring even bigger out-of-town developments.
Developing Core Retailing Strategy
• Steps in Gaining Strategic Marketing Advantage
Analyse the strategic situation
Determine competitive advantage
Specify strategic objectives
Steps in Gaining Strategic Marketing Advantage
Identify and evaluate strategic options
Select strategy for implementation
Evaluate performance
Analyse the situation
The organisation
The market structure
The industry structure (Porter’s 5 Forces model)
The environmental forces PEST, SWOT
Sources of Retail Competitive Advantage
Location Layout Merchandising Pricing Promotion Services Organisation and Personnel
Determine Competitive Advantage
Market Development Market Domination Differential Advantage Market Selectivity No Advantage
• Strategic Objectives for Retailers
• In terms of market position
Increase sales
Increase market share
Regain lost position
• In terms of performance
Market capitalisation
Profit margins
Profit contribution
Return on Assets
Sales per sq. metre per person
Strategic Objectives for Retailers
• In terms of market position
Increase sales Increase market share Regain lost position
Strategic Objectives for Retailers
• In terms of performance
Market capitalisation Profit margins Profit contribution Return on Assets Sales per sq. metre per person
Measurements for Effectiveness
• Overall effectiveness
Market Share Total sales volume/value Sales per employee Profit margins
• For effectiveness of promotion/sales effort
Net profit margin
Promotional costs as % of sales
Selling/Distribution costs
Measurements for Effectiveness
• For effectiveness of promotion/sales effort
Net profit margin Promotional costs as % of sales Selling/Distribution costs
Identifying Strategic Alternatives and Selecting Retail Strategy
New product development Market testing Market repositioning Productivity improvements Organisational design Exploiting special advantage Acquisition/Merger/Strategic alliance Divest
Lower Cost DifferentiationBroadTarget 1. Cost Leadership 2. Differentiation
NarrowTarget 3A. Cost Focus 3B. Differentiation
Focus
Competitive Advantage
Com
peti
tive
Edg
e
Porter,1980 Competitive Strategy The Free Press
Strategies of Differentiation
• Price Differentiation
• Image Differentiation
• Support Differentiation
• Quality Differentiation
Mintzberg & Quinn 1996, The Strategy Process, Concepts, Contexts and Cases 3rd Ed. Prentice Hall, p89
The Strategy Clock: Bowman’s competitive strategy options
The Value Chain - possible sources of differentiation and cost control
Ansoff’s product-mission matrix Ansoff 1988
Which Direction?
Linear growth Neil Glass, 1996, Chaos, Non-Linear Systems and Day-to-Day Management,European Management Journal
Chaos View of Growth Neil Glass, 1996, Chaos, Non-Linear Systems and Day-to-Day Management,European Management Journal
Example Sainsbury’s April11 1999 reducing jobs to cut costs
Example Sainsbury’s 1999 and John Cleese
Example Tesco April14 1999 taking on 3,000 staff for ‘One-in-Front’
Criteria for Core Competences
There are 3 criteria to test Core Competences
• Value for money for customers.
• Better than competitors.
• Difficult to imitate.