Case Study On The Retailing Industry Marketing Case Study (Case Study Sample)

Assignment-4IB004
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Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc417415978 \h 3Grocery Related Industry in United Kingdom PAGEREF _Toc417415979 \h 4Grocery Retailing Industry in China PAGEREF _Toc417415980 \h 7China’s Consumer Market PAGEREF _Toc417415981 \h 8Food Perception PAGEREF _Toc417415982 \h 8Convenience PAGEREF _Toc417415983 \h 9Regional Complexities PAGEREF _Toc417415984 \h 10Market Challenges in China PAGEREF _Toc417415985 \h 10Conclusion PAGEREF _Toc417415986 \h 10References PAGEREF _Toc417415987 \h 12
Executive Summary
The retailing industry is the most demanding business in every corner of the world. Whether, the food is required for necessity or for luxury, the consumer always have to visit the super market and this is the only reason that the food supply chains are becoming more international. The adoption of different techniques has influenced both positively and negatively on the consumer circle. United Kingdom and China are two powerful economies and the food supply chain has been observed to be increasingly at a rapid pace. The main reason behind this is the demands of the consumers and the population factor is also important in this regard. This report discusses the influence of the socio and economic factors on the trends of the super markets of both countries and with the help of information gathered, the increasing or the lessening buyer power could be analysed. These elements could help in reducing the prices, so that the consumer could conveniently purchase the required food items without being much bothered due to the price raised due to the competition among the market (Burn and Barnett, 2010)
Grocery Related Industry in United Kingdom
The grocery retailing industry dates back to 1800 century. Super markets are the accounting for more than 40% share in the economics of the country. The suppliers have not only thoroughly worked on increasing the quality of the products but the displays are enhanced as well, which are capable of attracting the consumers to purchase the product. Another factor which has enhanced the shopping experience is the direct marketing techniques adopted, with the help of whom the consumer sector is directly targeted and the awareness created among them pursues to make the purchase. The super markets emerged as colonial stores in the beginning of 1920 but as the economic scale was stabilized after the World War II, A huge merger trend was observed with the help of whom the brands were developed and many super markets under the single brand name begin serving in United Kingdom.
A rapid increase in the number of super markets was observed in till the 2000. The first registered brand was launched by the name of Tesco in United Kingdom, with the passage of time; Tesco was able to establish both nationally and internationally. Besides, Tesco many other brands also jumped in the super market business and are considered as the name of quality for the consumer sector within United Kingdom and in other countries too. The top companies dominating the super market are Tesco, Asda, Sainsbury, Morrison and Liddle. The grip of these market has grown much strong that they are in the position of changing the market trends in the country now. The competition has been observed to be rising day by day and the consumers are forced to purchase expensive products which could have been available in reasonable prices. But as these companies are spending more on the marketing techniques or on the packaging, due to this the additional price has to be added in the total price of the product (Connor, n.d.)
Due to the economic crunch and the increasing inflation rate by 5.1% every year, the purchasing power of the consumer has been affected as well. The potential consumers are not able to make the purchase at the same rate, on which they use to three years back. According to a recent survey, on average, the employment rate is increasing by 3.7%. The un-employment rate has also affected the purchasing power directly because the consumers are uncertain about their income and are cutting down even on the necessity items. The increasing inflation directly affects the unemployment rate in the country because every little investment is coming and due to this the economic sector has either cut down on their job appointments to maintain their profit ratio or they have to offer average wages to the employees. The average salary offered to every employee could only help them to meet the ends with difficulty. Also, due to inflation the exports are reduced and this may cause and increase in the unemployment rate in the country.
The decrease in the purchasing capacity of the consumers has been subjected to the increase in the prices of the products due to increasing competition between the brands. The grocery retailing industry has been led by the top names and the prices they target are being followed by the other super markets too. The only differentiating factor which distinguishes the purchase from a local super market and a branded super market is the experience the shopper can gain and the quality of product being offered. This factor helps these brands to lead the industry and is creating inconvenience for the buyers from every sector to purchase the required goods (Duke, 2009)
Many new brand names in the grocery industry have been emerged over the period of time, which specialize in offering discounted rates such as Lidl and Aldi. Many people encouraged their approach and the Liddle is able to give a tough competition to all the established brand because due to a recent survey it has been observed that the branches of Lidl is increasing with an average rate of 4.6% in the United Kingdom and has able to grab the market share of around 7.5% every year. Liddle has been able to reshape the shopping trend of the UK grocery retail industry and has offered the premium quality products within reasonable prices. The discounted market has been supported by majority of the consumers and due to this reason the discounted brands has been able to sneak through the tough competition and establish their position in the industry. The discounted stores like Lidl and Aldi has able to squeeze the sales of Morrison’s and Tesco and these two brands have significantly loss their profit margin by 45% to these discounted stores. When this loss in market share was observed by the other top names such as Sainsbury, Waitrose and Asda, they significantly changed their business trend and adopted the discounted strategy to keep up the loyalty with the consumer sector. The discounted rates to be offered by these brands have no doubt decreased the profit ratio, as they have to cut down on their own investment and offer quality goods within reasonable prices to the consumer sector. This approach has affected the profit ratio of Sainsbury too (Killen and Lees, 2011)
The main reason behind the decrease in the profit and growth ratio of these established brands is that the income of the buyers is decreasing, due to the increasing unemployment and inflation rate. This element is feared to establish because more and more people are supporting this approach of offering quality goods but in reasonable and reduced prices. The top names, in order to, sustain the pressure for discounted prices has been catered in a way like Morrison’s for regaining its market share has announced in a leading newspaper that the prices of their product would be reduced by 17%, so that the consumers who have been moved away could still purchase the quality goods in affordable prices. This evolution among the shoppers occurred during the year of 2007 to 2013 due to the economic crunch faced by the individuals and the businesses all around the world. Before, 2007, the grocery retail industry was led by the strategies adopted by the top names and people, having the capacity of buying what the desire to buy supported them to run along the trend but with the economic crunch this behaviour changed over the course of time and led the discounted companies like Lidl and Aldi to establish their standing among the consumers sector (Vaughan, 2010)
These discounted businesses are able to offer products on reduced prices throughout the year but the prices reduced by the brands are suspected to be timely and once they are able to get the market share back they will again raise the prices. The shoppers are now more vigilant towards the shopping trend and they are not ready to trust the immediate change from the brands over-night. The investors now have the less profit share and the retailers are trying at their own to maintain the promise made to the consumers regarding the quality goods in decreased prices. It has been observed that investor circle is not satisfied with falling sales of the brands as this will not support them in formulating the strategies and would not help them in leading the industry. Thus, now this is the race among the investors and the brands to sustain this pressure and to make reasonable sales, so that their brand name does not vanish from the market.
Due to economical turn-over, the shopping habits of the buyers is changing rapidly and the main reasons to be analysed behind this trend is the increase in inflation and unemployment which has reduced the purchasing strength of the buyer and they have to cut down on their necessities. This behaviour affected the brands and in order to, save their market share they had to reduce the prices which directly affect the profit share being generated before 2007.
Grocery Retailing Industry in China
The retailing grocery industry of China is evolving over the period of time. China being a populous country and having population of 1.4 billion stands as a strong economic country in the world. China has its own established super markets, which has been operate...