However, on the back of the economic recession, rising food prices and tightened belts, the market has been shaken by British consumers' search for value. InIGD valued the grocery retail market at billion British pounds, predicting this figure to rise annually up to Additional figures from the Office of National Statistics show that despite an increase in the value of grocery store salesthe volume of goods purchased by consumers shows negligible change. According to figures from Kantar Worldpanel, all of the leading four supermarket brands have lost market share in the three months to August
For the purpose of this analysis I have chosen to do a PESTEL analysis of the industry looking into the most relevant factors that have an impact on the industry e.
This should give a broad understanding of the effects of the external environment on the industry. I have chosen the UK supermarket industry because, as presented in this paper, there are a great deal of external factors influencing this industry.
It is also a very large and steadily growing industry offering vast amounts of information on the single companies competing in it. In addition to that the industry is very competitive and consumer driven, making the analysis very interesting and insightful.
Mintel, This table illustrating the UK supermarket industry including online sales excluding sales from convenience stores currently est. This increase is set to continue according to the Mintel forecast shown in the table above. PEEST Analysis Political The political factors influencing the UK supermarket industry are issues resulting from actual politics that can have an impact on the entire country.
The first of the political issues is the possibility of Scotland becoming independent. UK retailers have already responded to this with concern stating that it could lead to issues with the supply chain, pension laws and the added administration costs that would be needed would result in higher prices for consumers Groom, This would be less of an issue if UK supermarkets were not already present in Scotland.
An independence of Scotland would therefore mean increased prices and possibly a loss in profit for supermarkets. This may however be prevented through a reformed Scottish tax system to make the switch more seamless for supermarkets because generally Scotland does offer lower land and labour costs which could be profitable for UK supermarkets operating in Scotland Groom, This could have a rather large impact on the industry since leaving the EU also means leaving the trade zone.
All the countries currently importing goods to the UK to be sold in supermarkets could become more reluctant to sell their goods in the UK due to tariff.
It could also mean an increase in cost when purchasing from other European countries. This could only be avoided if the UK government would allow the import of goods to continue as though the UK had not left the EU trade zone which would also mean no major changes to the UK supermarket industry.
Economic The economic factors influencing the UK supermarket industry are largely resulting from the current economic state of the UK. Despite the economy gradually recovering and thus boosting average income, there has been a noticeable food price inflation throughout Mintel, This inflation is outpacing wage growth thus making the effect of the economic recovery rather unapparent for both the UK supermarket industry and UK households Felsted, Jan An increase in fuel prices has also had an effect on UK supermarkets because it keeps customers from shopping at larger out-of-town stores to save on fuel prices Mintel, Though it may be argued that consumer buying behaviours are social factors, this behaviour is a direct result of the economic situation and is thus listed as an economic factor.
Another factor influencing UK supermarkets is the high value of real estate held by supermarket retailers. Numbers show that this leaves major supermarkets such as Tesco trading below the value of their property.
Selling property and leasing it back would free up more cash to help make their business more competitive Mintel, The following graph shows the employment rates of the UK since the start of Looking at the most recent years there is a severe drop in showing the effects of the global financial crisis on employment in the UK.
However, it also shows the gradual recovery of the UK economy with the employment rate rising again to Just one percent short of the highest percentage ever reached. Unemployment rate being measured at 7. This is a vicious cycle that can only be broken through encouraging consumer spending, which supermarkets can reinforce through better offers and incentives for their customers.
One of the factors that fall under the category general buying habits is tradition. Tradition can play a big role for customers in deciding where they do their food shopping.
For example if your family has always gone shopping at Tesco then you might continue to only go shopping at Tesco. For some people where they shop might be a form of status symbol.About tranceformingnlp.com tranceformingnlp.com is a collaborative research and analysis website that combines the sum of the world's knowledge to produce the highest quality research reports for over 6, stocks, ETFs, mutual funds, currencies, and commodities.
Seminar paper from the year in the subject Business economics - General, grade: 73, Loughborough University, course: Business Analysis, language: English, abstract: This paper looks into the UK Supermarket Industry in with an in depth PESTEL analysis of the external factors influencing the Supermarket Industry.
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