Are Supermarkets Competitive?
There is no doubt that supermarkets are competitive – not only amongst each other, but also when it comes to beating local shops. Such stores as Tesco and Sainsbury’s have revolutionised the way in which shop, making it easier to find more goods under one roof. But how much do you actually save by visiting such stores? And is it really worth it? To put together an investigation to compare prices between local retailers and supermarket chains would need a lot of time and effort. The competition between a small shop selling one good, and that selling a whole range of goods is variable.
The supermarkets know that if someone is going to shop at their store anyway, then they can price certain products at a cost that suits them. For nowadays, people tend to do the majority of their shopping at one store. It may be a hassle for them to travel to each individual local retailer to buy the goods (and would sometimes work out more expensive if counting travel costs) and so even if they have to pay a little extra, it works out as marginal in the whole scheme of things.
Many supermarkets claim that they are always cheaper than their counterparts but in reality, most stores have fairly equal prices. If I was going to carry out a survey to find out which stores worked out to be the best value for money, it would be necessary to select a wide range of products that I could price check. They would need to span from food through to CDs to ensure a fair test. Although prices vary on a national scale, they are usually fairly consistent in the local area.
I would start by checking prices of my chosen products at individual retailers (for example: market stalls, a baker, a butcher, a music store etc). I would also need to take into account the cost of fuel to travel from each shop as this plays an important factor if the retailers are sufficiently far apart. I would then go to a local superstore and buy near exact matches for the products. If necessary, I could visit other supermarkets to track their prices and then compare all the data.
In Winchester, I would visit Tesco on the outskirts, Sainsbury’s in the town centre and then independent retailers. On a national level, supermarkets have power over the consumers by rigorous advertising campaigns. It makes it a lot easier for retailers such as Tesco and Sainsbury’s to capture audiences and make them aware of their latest special offers through their television ads. It is impossible for such a thing to happen with a small independent merchant and so the superstores tend to win hands down.
For example, if for a limited time, Tesco were offering all their drinks with 25% off, it would only be a matter of days before people realise that it makes sense to shop at their stores if they were having a party. Although in the overall scheme of things, this may seem petty, it has the opportunity to make Tesco a lot of extra money. There is a popular belief that superstores charge less for their groceries because they buy them in bulk. However, it is actually the reverse and local retailers often work out a great deal cheaper.
But then again, we return to the argument about convenience. Most people are willing to pay that little bit extra if they can get all their goods and services under one roof and in one easy to find location. If someone were really interested in getting their groceries at the cheapest possible price, they would naturally go to the local and high street retailer. Prices could be compared again in a similar fashion to see which worked out cheaper if it was necessary to buy another commodity such as meat at the same time.
If there were no butcher near to the grocers, then it would definitely be cheaper overall to visit the supermarket. In the modern world thanks to ever-advancing technology, people now have the choice to shop online and have their chosen goods delivered to their home for a small fixed cost. Tesco, the world’s most successful online supermarket, don’t just sell their standard products on their website, but also books, CDs, videos and DVDs as well as a whole range of electrical and household products.
If someone so wished, they could check the price online before they travelled to the supermarket to buy their desired product. Or better still, they could do their weekly shop online, saving the fuel, hassle and time used up. In conducting an investigation to compare the costs between a high street shop and a superstore, it would be hard to find prices for the small shop on the Internet. However, it is extremely easy to call up the Tesco website in order to check and compare prices before setting out to shop.
Indeed, sometimes it works out cheaper to do a weekly shop online because some online retailers have special offers which are not available in-store. This creates an incentive to buy online which in turn promotes the company’s online services. Although supermarkets need to compete with each other, there is no real need for them to contend with local traders because as long as they continue to provide the quality of service that they do and their relatively low prices, people will continue to shop at their local superstore.