Competitive Strategies Employed by Retail Supermarkets in the Uk: a Comparative Study.

1. Proposed working title: Competitive strategies employed by Retail Supermarkets in the UK: A comparative study. 2. Research Background: This research background focuses on competitive strategies employed by retail supermarkets in the UK. This background will give a general idea as what to anticipate in the report on strategies approach of leading retail supermarkets of the UK. Retail strategy is an overall plan or the agenda of action that has to follow by the retailer to get the success in the retail supermarket competition. (Barmen, B. & Evans, J. 2006). The retail supermarkets environment has become tremendous competitive in recent years . Top supermarkets like Tesco, Asda, Sainsbury and Morrison are heavily investing in infrastructure to bring higher quality product then their rivals. Retail supermarkets industry in UK has high development in their service by using advance technology, increasing product range, speed and quality. (Harvey, 2000). (Source: BBC news, 9 March 2006) Above diagram shows the market shares occupied by top retail supermarkets and other grocery markets in the UK on 9 march 2006. According to above diagram top four retail supermarkets of the UK hold 74. 4% shares of total grocery market on 9th march 2006. Tesco is the number one retail supermarket by griping 30. 4% market shares in the UK. Asda, Sainsbury and Morrisons are the main competitor of Tesco by holding 16. 6%, 16. 2 % and 11. 2% shares respectively. We can see very tough competition between retail supermarket in UK and Tesco looks more successful to overcome its competitor. Today these top retail supermarkets dominates grocery retailing in the UK. The industry construction is characterized by many attributes such as greater store size, lowering prices of goods and adopting different formats to satisfy the consumers’ expectation. (Andrew Holingworth, 2004) According to me retail supermarkets in UK are highly competitive which is good for consumers because aim of some organisations is to increase sales so they need to keep low price and in this competitive environment all organizations must be alert about changing needs of consumers and strategies of rivals. 3. Oraganisation Background: Tesco PLC: Tasco is number one retail supermarket in the UK now, which is founded by Jack Cohenin 1919. The first store-brand product sold by founder was Tesco-Tea. Tesco has spread its business all over the world of which 2,184 retail supermarkets are in the UK. Tesco’s UK supermarkets are divided into various formats differentiated by size and the range of product such as Tesco extra, Tesco superstore, Tesco metro, Tesco express and one stop where it offers fresh food and non food product like DVDs, books, clothing, health, garden furniture, electrical, home entertainment and also pharmacies. Tesco also has its other businesses like garden centres, Tesco personal finance which offers credit cards, loans, mortgages, saving accounts and insurance of car, home, life and travel. It also operates ISP, mobile phone, home phone and VoIp businesses. Tesco has its petrol pump at many places in UK. It offers lot of facilities like online shopping from its web site i. e. www. tesco. com at low price and club card scheme to its customers. (Tesco, 2008) J Sainsbury plc: J Sainsbury is UK’s longest retail supermarket chain of 509 supermarkets, 276 convenient stores and Sainsbury’s bank. It was founded by John James and Mary Ann Sainsbury in 1869. Bacon was the first own-labeled product of Sainsbury. That time it has department of dairy, bacon, hams, Poultry and games, cooked meats and fresh meats. Now it has around 30000 fresh food and non-food products. Apart from this Sainsbury also has its Sainsbury’s bank which offers car, life, home, pet and travel insurance also offers loans, credit cards and saving accounts. (J Sainsbury, 2008). J Sainsbury was the UK’s leading retail supermarkets up to mid-1990s until it was overtaken by Tesco. (EL-Amir, A. nd Burt, S. 2008) 4. Rationale for the chosen topic: It is decides to select this research proposal topic competitive strategies employed by retail supermarkets in UK. This is first time I came to UK for my study. It was the big challenge for me to adjust and understand the circumstances over here because no one from my family and relative were with me and I have to manage everything like shopping, cooking, etc myself. On the first day I have to do shopping to get some goods & services so I was thinking from where can I get cheap, qualities and varieties of it? Many people gave me different suggestions but most of them were telling me to do the shopping from Tesco, Asda, Sainsbury, and Morrison which are the famous retail supermarkets in UK where I can get lot of commodities. This motivates me a lot and on a personal note I would like to do my personal experience which drove me to choose this as my research topic. 5. RESEARCH QUESTIONS: Following question came in my mind during my research: ? What combination of competitive strategies makes retail supermarkets of the UK like Tesco and Sainsbury so successful? What are the impacts of strategies of Tesco and Sainsbury on retail supermarket of the UK? ? How are retail supermarkets in the UK evolving to meet changing customer needs? ? How can they stand out in a highly competitive environment where consumers have so many choices? 6. RESEARCH OBJECTIVE Main objective of my research will be: ? To recognize and compare the competitive strategies employed by the Tesco and Sainsbury. ? To classify t he impact of strategies employed by the Tesco and Sainsbury on consumers and share market. ? To identify profit margin strategies of Tesco and Sainsbury. An attempt to identify which of them are most beneficial for the consumer. 7. LITERATURE REVIEW: My research is on competitive strategies employed by the retail supermarkets in the UK. The information on this topic has been published all over the books, news papers, online journals and web reports. I would like to review some of the most striking opinions given by some authors and my views on it. â€Å"We do not vary our retail offer in line with levels of local competition. We and all the other major grocery multiples have national strategies on pricing, branding, advertising, quality, range and services. Commented by Tesco (Press association, 2007) I also agree with the author’s view above. Tesco which is number one retail supermarket in the UK decides their strategies by comparing their strong rival’s strategies. Now day’s customers have lot of choice to do shopping because of the competition between retail supermarkets in the UK. Most of the people choose to do shopping on the criteria of pricing, looking at brand and quality of goods and also service provided by the retail supermarkets. I also use same criteria to do my shopping. â€Å"Tosco’s attack on Sainsbury’s southern stronghold reflected a more aggressive store opening programmer. But he also said that Sainsbury, which will this week release interim results, could begin to feel the effects of the credit crunch if consumer worries about weekly shopping bills push them into the arms of cheaper rival such as Aldi, Lidl or Asda. † Commented by Paul Langston associated director for location strategy at CACI. (Elizabeth Rigby, 2008) I completely have the same opinion with the author’s view stated above. Tesco observes strong areas of Sainsbury and opened its aggressive stores it that area to overcome its strong rival and to attracts the customers by giving better service and choice for shopping. This is also the part of the competitive strategy employed by Tesco to capture the powerful areas of competitor Sainsbury. This is period of credit crunch in the UK. It becomes extremely necessary for the people to cut redundant expenses so it is very tough time for all retail supermarkets to think about it and keep their customers constancy. According to some authors the increased competition between retail supermarkets in UK has led them to expand their product categories and extend their retail format to get profit. (Hackney, Grant, & Birtwistle, 2006). It is obvious that as competitor enhance every organization must think to raise their sales and consumers loyalty by using different strategies if all are in homogeneous business. Many supermarkets offers consumer to do online shopping at low prices. This is also part of strategies of the retail supermarkets to stick consumer with them. And authors view is that Tesco is the more successful retail supermarket which gets huge profit by implementing internet strategy. Such a way every retailer try to act in accordance with their consumer by using new technology , reducing ransaction cost or extending their business to different formats. 8. METHODOLOGY: My research topic on competitive strategies employed by the retail supermarkets in UK is an always on going topic. Retail supermarkets have to decide their strategies depending on the market situation and studying their rivals’ strategies. In my proposed research I have to identify strategies of Tesco, Sainsbury and it impact. It c an be recognized by understanding, observing and in-depth study of each retail supermarket. Hence this proposed research is descriptive in nature. This will give clear thought and understanding. Descriptive research means the research which serves a variety of research objective to understand its phenomena or characteristics connected with it. For further in-depth study and to participate in the observation and to know what is happening I have chosen this method. (Donald, R. & Pamela, S. 2006). 8. 1. DATA COLLECTION: In this proposed is always ongoing topic and lot of articles and information published everyday in news papers, magazines, journals and books and research of other authors which can be collected from library and internet. The information about Tesco and Sainsbury can be collected from their own web side. It will give lots of analysis of other authors, writers and researcher . I will get lot of option to understand and obtain objective of my topic. (Kothari, C. 2005) 8. 2. DATA ANALYSIS: Most of the data will be analyse predominantly from the internet. My personal observation, understanding and input will be integrated. The data will be gathered by the supermarket as part of internal organizational project relating paper and internet. The data analysis will be based on the performance of two retail supermarkets over the past years. Time series analysis will be use to get the objective of research. Quantitative data will be supplement with qualitative data obtain from all possible sources. (Kothari, C. 2005) 8. 3. RESOURCE REQUIREMENT: All the resources will be available from internet and the review of literature will be obtained from college’s library and private library. Internet is the most genuine source which is easily available today where I can search out e-books, Journal published by other authors and also information about Tesco and Sainsbury on their own web site which can save my time and cost of research. Updates of newspapers, Journals, articles, others research reports are also available on the internet. 9. TIME SCALE: | |October 2008 |November2008 |December2008 |January2008 | |Activity | | | | | W1 |W2 |W3 |W1 |W2 |W3 |W4 |W1 |W2 |W3 |W4 |W1 | |W/K Commencing |X | | | | | | | | | | | | |Search information | |X |X |X |X | | | | | | | | |Read & understand information | | | |X |X | | | | | | | | |Finalized Objectives | | | | |X | | | | | | | | |Prepare & Submit proposal | | | | | |X | | | | | | | |Compile necessary data | | | | | | |X |X | | | | | |Device Research strategy & method | | | | | | | |X | | | | | |Get Feedback | | | | | | | |X | | | | | |Gather Data | | | | | | | |X |X | | | | |Analyses Data | | | | | | | | |X | | | | |Update literature Read | | | | | | | | |X | | | | |Prepare rough draft | | | | | | | | | |X | | | |Draft to supervisor for feed back | | | | | | | | | |X | | | |Edit unwanted information | | | | | | | | | |X |X | | |Make final draft | | | | | | | | | | |X | | |Print | | | | | | | | | | |X | | |Submission | | | | | | | | | | | |X | | 10. BIBILIOGRAPHY/REFERENCES: 1) Berman, B. and Evans, J. (2006), Retail Management a strategic approach, 10th edition, New Delhi, Prentice-Hall of India Private Limited. 2) Holingworth, A. (2004), â€Å"Increasing retail concentration: Evidence from UK food retail sector†, British Food journal, [online], vol. 206, issue 4/5, Pp. 629-638, Available from URL:http://www. emeraldinsight. com/Insight/viewContentItem. do;jsessionid=2D1F750288725BD25CCEDCE906588E78? contentType=Article&contentId=870774, [Accessed 7 November 2008] 3) Donald, C. & Pamela, S. (2006), Business Research methods, 9th edition, New Delhi (India), Tata McGraw-hill Publication. 4) Kothari, C. 1996), Research Methods and Techniques, 2nd edition, New Delhi, Age International publisher. 5) El-Amir, A. and Burt, S. (2008), â€Å"Sainsbury’s in Egypt the strange case of Dr Jekyll and Mr. Hyde? † International Journal of retail and distribution management, [online], vol. 36, Pp. 300-322, Available from UR L: http://www. emeraldinsight. com/Insight/viewContentItem. do? contentId=1714594&contentType=Article, [Accessed 8 November 2008] 6) Harvey, M. (2000), â€Å"Innovation and competition in UK supermarkets†, Supply chain management: An international study, [online], vol. 5, Pp. 15-21, Available from URL: http://www. emeraldinsight. com/Insight/viewPDF. jsp? Filename=html/Output/Published/EmeraldFullTextArticle/Pdf/1770050102. pdf. Accessed 10 November 2008] 7) BBC news, 6 March 2006, â€Å"Q&A: supermarket competition concerns†, [online], Available from URL: http://news. bbc. co. uk/1/hi/business/4785544. stm. [Accessed 11 November 2008] 8) Press association, (2007), â€Å"Tesco fights monopoly accusations†, [online], The Guardian, Available from: URL:http://www. guardian. co. uk/business/2007/apr/02/supermarkets. tesco. [Accessed 11 November. 2008] 9) Elizabeth Rigby, (2008), â€Å"Sainsbury losses strongholds to Tesco†, [online] Financial times, Available from URL: http://www. ft. com/cms/s/0/74abaa68-af75-11dd-a4df-000077b07658. html. [Accessed 12 November 2008] 10) Hackney, Grant & Birtwistle, (2006), â€Å"UK grocery