Uk Supermarket Industry

Uk Supermarket Industry

The UK supermarket industry is mainly composed of Tesco, Asda, Sainsbury, Morrison those four companies. According to figure 1 the “big 4” had taken up 75.3% market share of the UK grocery market until may 2008.(UK Market Share 2008) It means that there are no regional supermarket in the UK, only a few small Convenience stores provide Services for customer. The description of oligopoly is a market in which relatively few sellers supply many buyers, and each seller recognizes that price can be controlled to a certain extent and competitors’ action will influence profit. (Anderton A. 2004). An oligopoly, which has four most essential characteristics, occurs in most of market. (Anderton A. 2004). First and the most important, it includes a few firms, particular major firms which have high production. It can be seen in figure 1 In the UK supermarket industry, the four main firms have Contributed 3/4 of the market share to the whole supermarket industry. Secondly, the firms produce branded product, which have another name called homogeneous supply. It is easy to find that all the supermarkets sell similar product such as daily food. Thirdly, barriers to entry make the market stable. Last but not least, there is no price competition in oligopoly because the firms are highly interdependent. This feature makes one firms act because of the behavior of other firm quickly. Consequently, there is no sense of changing, particularly decreasing; the price of these products has not too much difference in the two major firms (Anderton A. 2004). Instead of this, other competitions such as advertising are discovered in oligopolistic market. The supermarket industry has its own advantages, particular the non-price competition. In spite of the advantages of this market structure for consumers, disadvantages of the UK supermarket industry is customer cannot get better products or services even they have enough money
The advantage of oligopoly is that each firm has similar...

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