market shares of the leading supermarket food retailers in the uk (%) 1997

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Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997 C om pany M arketShare N o ofstores Tesco 15.2 586 JSainsbury 12.6 378 Safew ay 7.8 490 A SD A 7.2 213 Som erfield/K w ik Save 6.2 1481 M arks& Spencer 3.1 311 W illiam M orrisons 2.3 81 Iceland G roup 1.7 766 W aitrose 1.6 115 Co-op 1.3 273 Others 41.0 4969 Total 100.0 9663

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Page 1: 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

Page 2: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 3: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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%

Page 4: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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.

Page 5: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 6: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

L de Chernatony, M McDonald, 1992, Creating Powerful Brands, 2nd Ed. Butterworth-Heinemann

Page 7: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 8: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 9: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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.

Page 10: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Co-operatives’ shares of European grocery markets, 1985 (%)

Country %West Germany 9France 8United Kingdom 8Belgium 1Netherlands 1Austria 21Switzerland 40Sweden 28Norway 24Spain 3Italy 5

Page 11: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 12: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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.

Page 13: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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.

Page 14: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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.

Page 15: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Developing Core Retailing Strategy

• Steps in Gaining Strategic Marketing Advantage

Analyse the strategic situation

Determine competitive advantage

Specify strategic objectives

Page 16: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Steps in Gaining Strategic Marketing Advantage

Identify and evaluate strategic options

Select strategy for implementation

Evaluate performance

Page 17: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Analyse the situation

The organisation

The market structure

The industry structure (Porter’s 5 Forces model)

The environmental forces PEST, SWOT

Page 18: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Sources of Retail Competitive Advantage

Location Layout Merchandising Pricing Promotion Services Organisation and Personnel

Page 19: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 20: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Strategic Objectives for Retailers

• In terms of market position

Increase sales Increase market share Regain lost position

Page 21: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Strategic Objectives for Retailers

• In terms of performance

Market capitalisation Profit margins Profit contribution Return on Assets Sales per sq. metre per person

Page 22: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 23: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Measurements for Effectiveness

• For effectiveness of promotion/sales effort

Net profit margin Promotional costs as % of sales Selling/Distribution costs

Page 24: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 25: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 26: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 27: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 28: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

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

Page 29: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

The Strategy Clock: Bowman’s competitive strategy options

Page 30: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 31: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 32: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 33: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

The Value Chain - possible sources of differentiation and cost control

Page 34: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Ansoff’s product-mission matrix Ansoff 1988

Which Direction?

Page 35: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997
Page 36: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Linear growth Neil Glass, 1996, Chaos, Non-Linear Systems and Day-to-Day Management,European Management Journal

Page 37: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Chaos View of Growth Neil Glass, 1996, Chaos, Non-Linear Systems and Day-to-Day Management,European Management Journal

Page 38: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Example Sainsbury’s April11 1999 reducing jobs to cut costs

Page 39: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Example Sainsbury’s 1999 and John Cleese

Page 40: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Example Tesco April14 1999 taking on 3,000 staff for ‘One-in-Front’

Page 41: Market Shares of the Leading Supermarket Food Retailers in the UK (%) 1997

Criteria for Core Competences

There are 3 criteria to test Core Competences

• Value for money for customers.

• Better than competitors.

• Difficult to imitate.