British Grocery Market-market structurre, supply & demand curves & economies of scale

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        The grocery market in the UK is driven by 4 main Players: Tesco, Asda, Morrison’s and Sainsbury (based on TNS till roll data each have overall market shares of more than 10 per cent)- their marketing policies determine the way  consumers buy and want. The first part of the paper focuses on the description of the British grocery market and its structuture. There is a wide variety of different types of grocery retail operator. The CC () report in 2000 is based on publicly available information, supplemented by data provided by the supermarkets and other retailers. The CC describes the market dividing it  into 4 groups:

  • Supermarket multiples – including Asda, Morrison’s, Sainsbury's and Tesco; smaller chains such as Summerfield, Waitrose and Marks & Spencer; and 'discounters' such as Aldi, Lidl and Netto
  • Symbol groups – can be loosely defined as multi-store chains where there is a single fascia, but where ownership can be fragmented: examples include Musgrave, which operates the Budgens and Londis fascias, and Spar
  • Co-ops – that is, co-operative stores, which usually operate in a similar way to symbol groups, and
  • Independents – stores which are independently owned and are not operated under a wider 'symbol'


        This paper aims the four largest supermarkets- Asda, Morrison’s, Tesco and Sainsbury’s- as they have an extremely important part of the market. Perfect competition, imperfect competition, oligopoly and monopoly are some of the most common market structures, but what is the British grocery market structure? Throughout the social science of economics the definition of Perfect competition according  to Ison (1996) ”refers to a market structure where firms have no power over the market”  (p.83) .  In this type of market structure, firms are price takers, free to enter the industry and produce identical products (Sloman & Sutcliffe, 2001). There are a number of companies operating within the industry, however there are major companies that dominate the sector so UK grocery market cannot be considered as a perfect competition.

        Imperfect competition is in some ways similar to perfect competition as it is also characterized by several operating firms and freedom of entry. However, the firms in an imperfect competition offer differentiated products; this feature then allows each firm to set the prices of their products.

        Oligopoly is one of the prevalent market structures in the business industry. In this structure, there is a small number of firms in the market, competing each other (Ferguson, 2002).  Oligopolies can compete by:

  • Price competition or
  • Non-price competition- N-P comp often to avoid price competition.

        Businesses within an oligopolistic structure produce goods and service which are slightly different from competitors: may either produce an identical or differentiated product (Ison, 1996). This means that when the companies produce identical goods/services, the competition is limited to the price factor. That is why oligopolistic companies are interdependent. Anderton (2006) specifies that

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        The actions of one large company will directly affect another company. In oligopoly structure, ,if one large firm decides to pursue policies to increase sales, this is likely to be at the expense of other firms in the industry, so in an  oligopoly structure, each member is subjected to inter-company rivalry, which prevents others from owning the market demand curve        

        To conclude since there are a few members or participants in this market form, each member is interdependent of the actions of other members- interactivity. Based on these mentioned features, the market environment of the UK grocery market ...

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