Wednesday, April 29, 2009

Customers in search for a bargain and the large Supermarket Chains Thrive

I was browsing the Internet for some interesting articles and came across a very interesting achievement. Last week, Tesco's annual results were published and it revealed that it had passed the £1bn sales per week milestone. This has made it the company which achieved the all time highest profits to date for a UK retailer.

One might ask how come Tesco managed to achieve this milestone in the current economic climate? Are shoppers actually spending more? The answer is that shoppers are in search for bigger bargains so that they can make their money last longer. There are only two ways how this can be done; either by shopping in smaller quantities or else find better prices and who more than the biggest supermarkets can offer cheaper prices?

Tesco, Asda, Morrison and Sainsbury are amongst the supermarkets which saw the biggest growth in sales during the last quarter...however it was more interesting to note that Tesco was actually the supermarket which had the smallest growth with a 3.3% increase whereas Morrison and Asda managed to register growth figures of 6.9% and 6.7% respectively.

Both Asda and Morrison have actually increased their ad spending in order to further highlight their lowest price proposition. In fact it's not difficult to come across moneysupermarket surveys and other ads that claim that Asda is cheaper than any other supermarket (especially Tesco) in the UK. This strategy is especially important during this period as customers everywhere are feeling the economic strain. Supermarket giants are responding to customer changing needs in lower further their prices....however how is this impacting the supermarket suppliers? Some suppliers are facing difficult times as they want to keep their big supermarkets business, however they are facing the difficult challenge of making ends meet.

Some people and local organisations are opposing the growth of large supermarkets as this is threatening the survival of smaller family-run businesses. Will this result in an ultimate survival challenge? Let's wait and see how the market will continue to evolve and whether the rich will continue to get richer and in this case the small will continue to get smaller (or actually has to close the business).

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