Despite what appears to be a saturated marketplace., each week witnesses new store openings and additional product lines appearing in stores. The supermarket food-retailing sector remains highly competitive, with the leading multiples vying closely for market share and customer loyalty. The market has become even more concentratedin the hands of the ‘big four’ competitors with share moving away from low cost supermarket chains and independents. A brief outline of the main four market leaders is given below.
Asda
It takes its name from Associated Dairies. Its first store opened in 1965 (the GEM store in Nottingham) and specialised in no frills bulk selling at low prices. It now operates 241stores nationwide and boosted its presence in the southeast of England by buying 60 sores fromGateway in 1988. The company was rrelaunched in 1992 by Archie Norman after amassing crippling debts. In 1995 it originated a 3 year ‘Break out@ program to becoe the best operator in value for money fresh food (the Roll-back pricing system), and clothing (with its George range). A proposed merger with Safeway was abandoned in 1997 and the group was eventually boughtin 1999 as a major UK arm of the mighty US operator Wal-Mart. This prompted concerns from competitors that Asda would adopt WalMart Strategy of Pile High and sell cheap. Asda’s most redcent development is the launch of its own brand ‘Smart Price’ that sells products at a particularly low price.
Safeway
This store was formally part of the Argyll Group and is one of the original big four supermarket chains in the UK. It has nearly 500 stores and is a major own brand player in the market and also manufactures and processes many of its own lines. It operates a loyalt card called Added Bonus Card (ABC). It’s currently linked with British Petroleum (BP) developing a new convenience store format
Tesco
It was founded in 1924 by TE Stockwell and Jack Cohen (TESCO). The first store was opened in Edgeware in 1929. The business grew between the wars and immediately post WW2 in 1947 TESCO stores (Holdings) ltd was floated on the stock Exchange. In 1998 Tesco operated in 586 stores and had taken over as largest food retailer in the UK in 1995. Tesco operates a ‘Clubcard’ loyalty card with also being linked to Scottish Widows flexible pension plan and Royal Bank of Scotland Plc offering visa cards and savings accounts. The expansion of Tesco products into ESSO petol stations is their most recent development.
Sainsbury’s
Sainsbury’s is the UK’s oldest major food retailing chain, which began trading in 1869 in a dairy in London’s Drury Lane. They opened their first supermarket in the 1960’s and the success with this format led to its floatation on the stock exchange in 1973. In the 1990’s Sainsbury’s had expanded with 391 stores nationwide. It is a leading own brand supermarket based on sales and income percentage but lost its overall market leadershipto Tesco in 1995.
It introduced its ‘reward card’ and operates Sainsbury’s Bank in link with Bank of Scotland.
2 Current approaches taken by Asda
Market concentration
This table shows fragmented Market Share (%) of UK Supermarket 2000
Key success factors
Source: Company Information, Keynotes
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2.1
the supermarket industry is segmented
