UK SUPERMARKET SECTOR

The Financial Data in UK Supermarket Sector In 1996

The Financial Data in UK Supermarket Sector In 1996

Introduction

The growth of supermarket in 1996 United Kingdom was immense which is due to customers increasing mobility. The consumers increasing affluence, increasing in the lifestyle of consumers, concept of one stop shop which provide ease to the consumers and the increasing preference of buying international products specially wine are also some other factors which increases the attractiveness of superstores in united kingdom. Although, the retail outlets reduced were in 1995 from 504,800 (1991) to 320,000 units; but still superstores had an impact on the retailing sector of UK significantly. The market share of the large superstores from 1990 to 1996 shows an increasing trend in which Tesco, Sainsbury, Safeway and Adas are the top superstores that perform good growth in their businesses. The market share of small retailers declines from 26% (1990) to 17.9% (1996).

Discussion

The increasing competitions among the superstores provide benefit to the customers. To compete, the superstores adopt the concept of low profit margin and earn the profit through mass sales. They offer different discount packages and membership service to attract their customers. This competition makes small retailers completely out of the market. The competition also arises due to introduce variety of international products, improved service by offering different products under one roof which impacts on the customer to visit superstore as this saves their time. They offer fresh product, as they have large cutting of sales (BURCH & LAWRENCE, 2007).

Tesco

Tesco became the leader of food retailing in UK market after it acquired a chain of wim low supermarket in Scotland. In 1996, Tesco had 545 stores all over the UK. The company had opened its operations in Europe by opening 109 stores in France and opens five franchises near channel ports. The company also had 51% stake in Hungarian chain namely Global and 36 stores in Poland. The companies divided its operations in four categories. Superstores, which posses wide range of products and parking facility over 25000 square feet of space. The second category is known as Compact category, which operates below 25000 square feet of the space. Metro, a new concept was introduced who operates in the main city on small scale and have limited variety of products. The express category, which contains limited products and operates with the petrol pump stations. Tesco expand its superstores by opening new stores on the average size of 30,700 square feet. The company also divided its warehousing into four categories. The regional ambient distribution centre which was for dry groceries products. Second was a bonded warehouse which was operating under HM custom and excise bonding, third was national centres which was for hardware and textile lines and forth was composite distribution centres and all fresh and frozen foods (BURCH & LAWRENCE, 2007). The EPS growth of the company in 1996 was increased by 23% as compare to the last year and the pre-tax margin on sales increased by ...