Consumer shopping in Britain
Consumer shopping in Britain has changed dramatically over the last fifty years in terms of habits and shopping trends. Prior to the 1960’s consumers would have needed to shop everyday, visiting a number of small different shops, such as bakers, butchers and so on, to buy the necessary ingredients for a day’s meal. However in the last two decades this shopping pattern has change dramatically.
This is due to a number of different factors, namely: The increase in the proportion of women working, the ability to store food longer, the growth of fridge and freezer capacity and the dramatic increase in car ownership. The single biggest influence, however, has been the growth of the multiple grocers such as supermarkets and out of town superstores in the last 5 to 10 years. This has shifted the concentration of grocery retailing to become the domain of the larger food retailers, such as Sainsbury’s, Tesco, Safeway and ASDA.
The buying power of these stores has allowed them to offer very low prices on a whole range of goods that directly competes with that provided by the food discount retailers. Related to this in particular is the Kwik-Save No-Frills brand which has become less competitive as compared to products such as Tesco Value and Safeway Savers which have become relatively cheaper. Similarly, superstores, with their ever-widening range of purchases, have become convenient one-stop outlets for groceries, personal care products, electrical goods, music and books.
These superstores also provide additional facilities such as free parking and on-site petrol stations as well as additional benefits to the customer such as customer loyalty cards. Kwik-Save was taken over by the Somerfield Group after a series of complex mergers in March 1988. The Somerfield Group is the fifth largest food retailer in the UK. The group has approximately 1450 stores (650 Somerfield and 800 Kwik-Save), making it Britain’s largest supermarket in terms of the number of stores that it holds.
However regardless of the fact that Tesco were outnumbered in terms of outlets, Tesco’s sales in1998 at i?? 21bn were five times bigger than Somerfield’s. The Somerfield group, by their own admission, took their eye off the ball and allowed their competitive edge to decline – this was particularly damaging to Kwik-Save which had a tradition of maintaining low-prices. Tesco – the leading chain – made a profit of i?? 1bn while Somerfield made a i?? 13m loss.
The group lost over 2% share over the course of the ‘1998 year’, mostly through its Kwik-Save stores. There are several reasons for the sharp decline in the Kwik-Save share. firstly in 1998 a program was started with the aim of converting Kwik-Save outlets into Somerfield stores, but more importantly are the ‘like-for-like declines’ which are calculated to be at around 10%. This caused the group to increase its prices on goods and to try and sell off as much as 500 of its stores.
They hoped to be left with only 850 stores in total, which would be run as a smaller, and more profitable organisation. However, only 46 of the larger Somerfield stores could be sold and the company still had 1400 stores in total. The result of this was an all time low share price for the Somerfield Group in the year 1998-1999 and serious concerns were raised about the future of the business.