University:
London School of Economics and Political Science
Course:
L400 | International Social and Public Policy
Academic year:

2023
Views:

198

Pages:

2
Author:

Prerna T

SUPERMARKETS Firms and their Market Shares As of Jan 2022: Tesco -27.9% Sainsbury's-15.6% Asda-14.4% Morrisons-9.9% Aldi-7.8% 5 firm concentration ratio is 75.6%, 10 firm concentration ratio is 96.8%. Market Structure Oligopoly 'Big 4 firms' High barriers to entry Interdependent (if Tesco lowers prices the rest are affected) Price wars Non-Price competition (e.g. loyalty via Clubcard, service e.g. self-scanning machine, branding and product differentiation e.g. Taste the Difference range) Effects of Covid More deliveries (searches for food delivery hit a record high in April 2020) Physical shops less important, order online via apps (growth of Ocado and 30% of Sainsbury's orders done on app) - More investment in technology Due to pubs being closed, alcohol sales increased by 22% Safety and cleaning costs (hand gel) Staff layoffs like-for-like sales (excluding fuel) across listed retailers grew by 11.1% on average during the second to fourth quarter of 2020, up from just 1.6% sales growth for the same period in 2019.44 The surge in sales growth is evident across all listed supermarkets Labour Issues Automation (self-scanning machines) means lower wage bargaining power as capital investment becomes cheaper Online deliveries still popular despite fewer restrictions Sainsbury's new barcode scanner 'SmartShop' only requires one employee to supervise many tills instead of one working at each Majority of jobs are minimum wage and temporary 22% of supermarket workers earn below the living wage and require extra gvt support e.g. benefits Main products provided Food and drink Clothes (Asda George) Banking (M&S) Externalities in Industry Plastic packaging Transport of imports is energy intensive Industrial agriculture causes environmental degradation and relies on monocultures which are susceptible to disease the production of 1kg of beef releases greenhouse gases with a warming potential equivalent to 36.4kg of carbon dioxide Asymmetric information e.g. horsemeat scandal? Top Challenges for Firms Inventory loss: leftover food goes bad, packages break, long journey form manufacturer to store Injury to employees: lots of industrial equipment in storerooms etc. Growing lack of trust for large chains? How many products exported Tesco in Spain, Murcia M&S available online in 100 countries How reliant on imports Very reliant on imports e.g. blueberries from Morocco only 17% of fruit and half of vegetables are grown locally Regulations The CMA blocked the Sainsbury's/Asda merger after finding it would lead to increased prices in stores, online and at many petrol stations across the UK Food: labelling, origin, ingredients (DEFRA), customs (import regulations) alcohol (check 25 policy, licensing, legal limit for content, excise duty) Benefit from Subsidies UK agricultural subsidies Covid-supermarkets receive a $3bn business rates handout TAX e.g. VAT and excise duty