EIS supermarkets

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By Mariyam Zohra & Alvin James

Supermarkets

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The supermarket industry is a competitive retail sector focused on selling a wide range of food and non-food products. Characterized by large chains and local stores, supermarkets play a crucial role in meeting consumers' daily needs. Key trends include a growing emphasis on online sales, sustainability, and health-conscious offerings. With constant innovations and evolving consumer preferences, the industry remains dynamic. Overall, supermarkets are vital contributors to the retail landscape, adapting to market shifts and technological advancements to stay relevant.

supermarket overview

Supermarkets work with suppliers and distributors to ensure a steady and reliable supply of products. The supply chain involves sourcing products, transporting them to the store, and managing inventory to meet customer demand.

SUPPLY CHAIN

Products are strategically placed based on consumer behavior and the layout of the store. Essential items like milk, bread, and eggs are often located at the back of the store to encourage customers to pass through other sections

Product placemnt

Each item on the shelves has a price label indicating its cost. Supermarkets often use promotional pricing, discounts, and sales to attract customers.

Pricing and placement

Supermarkets are organized into different sections or departments, such as produce, dairy, meat, bakery, frozen foods, and more.Products are typically arranged on shelves or in refrigerated cases, and there are clear aisles for customers to navigate.

Store layout

Customers use shopping carts or baskets to collect the items they wish to purchase. These are typically available near the entrance of the store.

Shopping carts an basket

Supermarkets are large retail stores that specialize in selling a wide variety of food and household products. They operate on a self-service model, allowing customers to browse the aisles and select the items they want to purchase. Here's an overview of how supermarkets typically work:

How do supermarkets work

1. Online Shopping and Delivery - Over the past decade, there has been a significant increase in online grocery shopping. Many supermarkets have developed or expanded their online platforms, allowing customers to order groceries and have them delivered to their doorstep. This trend saw a notable acceleration, particularly in response to the COVID-19 pandemic. 2. Technology Integration: - Supermarkets have increasingly embraced technology to enhance the shopping experience. This includes the use of mobile apps for loyalty programs, online ordering, and personalized promotions. Some supermarkets have also implemented technologies like self-checkout kiosks to streamline the payment process. 3. Focus on Health and Wellness: - There has been a growing consumer interest in health and wellness. Supermarkets have responded by expanding their offerings of organic, natural, and health-focused products. Many supermarkets have also started providing nutritional information and highlighting healthier options. 4. Expansion of Private Labels: - Supermarkets have been expanding their private label or store brand offerings. These products often provide higher profit margins for the stores and can offer customers a more affordable alternative to national brands. 5. Sustainability Initiatives: - Consumers have become more environmentally conscious, and supermarkets have responded by implementing sustainability initiatives. This includes reducing plastic usage, sourcing locally-produced goods, and adopting more eco-friendly practices in their operations. 6. Focus on Fresh and Local: - There has been an increased emphasis on fresh and locally sourced products. Supermarkets have sought to provide a wider selection of fresh produce, often highlighting partnerships with local farmers and producers. 7. Convenience and Ready-to-Eat Options: - Supermarkets have expanded their offerings of convenience foods and ready-to-eat meals. This caters to the changing lifestyles of consumers who are looking for quick and easy meal solutions. 8. International Expansion: - Some supermarket chains have expanded internationally, entering new markets or acquiring existing chains. This globalization has allowed certain brands to reach a broader customer base. 9. Community Engagement: - Supermarkets have increasingly focused on community engagement and social responsibility. This includes supporting local charities, reducing food waste, and participating in initiatives that benefit the communities they serve. 10. Adaptation to Changing Consumer Habits: - Supermarkets have been quick to adapt to changing consumer preferences and habits. This includes adjusting product offerings, store layouts, and marketing strategies to meet evolving demands.

how supermarkets work

Sustainability has become a significant consideration for businesses, including supermarkets. Various factors related to sustainability can impact supermarkets, influencing their operations, strategies, and customer perceptions. Here are key sustainability factors that may affect supermarkets:

The impact of these sustainability factors on supermarkets is dynamic and evolving as consumer preferences and global priorities continue to shift towards more environmentally and socially responsible practices.

Carbon Footprint Reduction

• Transportation Practices

Supermarkets are working to optimize transportation logistics to reduce the carbon footprint associated with the delivery of goods. This may involve using more fuel-efficient vehicles or exploring alternative transportation methods.

• Renewable Energy

Some supermarkets are investing in renewable energy sources, such as solar panels, to power their operations and reduce dependence on non-renewable energy.

• Plastic-Free Initiatives

Supermarkets are increasingly focusing on reducing single-use plastic. This involves initiatives such as offering reusable bags, encouraging customers to bring their own containers for bulk items, and finding alternatives to plastic packaging. -

• Innovative Packaging

Some supermarkets are exploring innovative and sustainable packaging solutions, such as compostable materials, to address the environmental impact of traditional packaging.

Packaging and plastic reduction

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Environmental Impact:

• Energy Efficiency

Supermarkets are adopting energy-efficient technologies to reduce their carbon footprint. This includes the use of LED lighting, energy-efficient refrigeration systems, and overall building design improvements.

• Waste Reduction

Supermarkets are working to minimize waste by implementing recycling programs, composting organic waste, and finding ways to reduce packaging materials. Some supermarkets are also exploring zero-waste initiatives.

• Sustainable Sourcing

There is a growing emphasis on sourcing products from environmentally responsible suppliers. Supermarkets are working to ensure that their supply chains adhere to sustainable practices, including responsible agricultural and fishing methods.

Sustainability factors that may effect super markets

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In this presentation, we will be outlining and discussing how Tesco has been successful and how it is environmentally sustainable. Tesco is a British, multi-national supermarket, it is one of the world’s largest and most successful supermarket chains founded in 1919 by Jack Cohen. Tesco operates a diverse range of businesses such as supermarkets, hypermarkets, convenience stores, petrol stations, banking, and insurance companies. Tesco is headquartered in Welwyn Garden City, Greater London, the UK. The retail sector is highly competitive, there are several businesses within this sector that are competitors with Tesco, such as Sainsburys, Asda, Aldi, Lidl, and Morrison. However, Tesco is the U.K grocery market leader, with a 27% market share as of April 2023. Tesco is so successful due to many factors such as: a diverse range of products, being sustainable, being environmentally friendly, providing alternative products, pricing strategies, and having multiple sectors of generating revenue.

tesco

Economic­

Economic factors would affect Tesco’s overall market share because they are likely to influence supply and demand, costs, and profits. If customers have less disposable income, naturally profits will decrease, and supply would get lower for elastic (non-essential) products. for example, in this cost-of-living crisis in the UK, Tesco’s have experienced a huge drop in profits to almost half (now being £753m) due to soaring inflation. According to the guardian, customers that shop at Tesco are putting fewer products in their baskets and buying own brand products due to having less income; Shoppers spent 14.5% less online and 0.7% less in Tesco’s big supermarkets. Although Tesco does provide its own value, cheaper products, it still isn’t enough to regenerate previous revenue.

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Political

Tesco now operates in six countries in Europe in addition to the UK: the Republic of Ireland, Hungary, Czech Republic, Slovakia, Turkey, and Poland. It also operates in Asia: in South Korea, Thailand, Malaysia, Japan, and Taiwan. Tesco’s performance is highly influenced by the political and legislative conditions of these countries, changes in these can affect Tesco’s market position. For example, for employment legislations, the government encourages retailers to provide a mix of jobs for all types of people (students, adults, elderly). Tesco has many different departments employees could work as such as dotcom, checkouts, self-service, order packing etc. They welcome people of any ages from working age (16), to work for them and are disability friendly, reinforcing the equality at work act and bringing a more positive brand image.

factors affecting tescos performmance

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Technological-

It can be argued that technological advances would affect any businesses, as advancements in technology can disrupt traditional business models and create new opportunities for growth. Within the past 30 years, Tesco has heavily invested in various technological initiatives: self-checkout, trolley self-checkout, mobile apps, Clubcard, online shopping etc. Technology is a main factor as to why Tesco has become so successful because these technological investments resulted in greater customer efficiency.

Social/demographic­

Tesco have taken several initiatives in recent years to adapt to social changes and demands. For example, due to high demands, it sells branded halal meat for Muslim customers and has independent meat counters in some stores in the UK. Consumers are becoming more aware of health issues and their attitudes towards food are changing. Tesco have adapted to this by increasing the amount of organic products. Fashion, styles, and trends are always changing so Tesco’s update their clothing department with varied and more fashionable products that consumers are more likely to be interested in.

factors affecting tescos performmance

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• As of 2003, there has been as increased pressure for all businesses to become more environmental and sustainable and act in a way that benefits society. There are several environmental factors that would affect Tesco, such as climate change, waste management, biodiversity conservation etc. Tesco acknowledges that there business depends on the world around it, so being sustainable is very important to the company and decision making and strategies are always considered to maintain the sustainable image they have.

Sustainability:

• Tesco was the first business to set a zero-carbon goal back in 2009. Since 2015, Tesco have reduced group scope 1 and 2 emissions by 55%.
• Tesco aim to be carbon neutral by 2035.
• Tesco have supports tens of thousands of community projects with more than £100m in grants.
• Tesco have donated over 52 million meals via their food bank.
• Tesco have removed over 71 billion calories from the food they sell since 2018. They promote eating more healthy foods and reduce fatty foods in consumer diets.
• 2 billion pieces of plastic has been removed since 2019.
• 45% reduction in food waste since 2016/17
• 100% of electricity used in renewable.
• Tesco had an increase in both profits and sales during its first half year in 2023, as well as raising its full-year profit guidance, as its investment in value and quality pays off. Tesco reported adjusted operating profit of £1.4bn for the 26 weeks to August 26, 2023, up 14% from £1.3bn in the previous year.

Sustainability factors that may effect super markets

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27.2%13.8%15.2%9.7%7.6%8.7%

market share for supermarkets

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Competitive Position: 1. Market Share: - Asda historically had a significant market share in the UK grocery sector, competing with other major players like Tesco, Sainsbury's, and Morrisons. 2. Pricing Strategy - Asda has been known for its emphasis on low prices and a commitment to offering value for money. The company has often engaged in price wars with competitors to attract budget-conscious consumers. 3. Product Range - Asda typically offers a broad range of products, including groceries, clothing, electronics, and household goods. Diversification of product offerings allows the company to compete across multiple retail segments. 4. Private Label Products - Like many supermarket chains, Asda has a range of private label products. These products often provide higher profit margins and allow the company to offer exclusive or budget-friendly options. 5. Online Presence - Asda has invested in its online retail capabilities, offering customers the option to shop online and have groceries delivered to their doorstep. This has become increasingly important, especially with the growth of e-commerce in the retail sector.

asda

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- External factors such as changes in consumer behavior, economic conditions, and industry trends can impact Asda's performance. Adapting to these trends and addressing challenges is crucial for sustained success.

5.Market Trends and Challenges:

- The efficiency of Asda's supply chain, including inventory management and distribution, influences its ability to provide products at competitive prices and respond to changing market demands.

4. Supply Chain Efficiency:

- Customer satisfaction and loyalty are crucial for a supermarket's success. Asda's performance can be gauged by customer feedback, surveys, and reviews regarding the quality of products, services, and overall shopping experience.

3. Customer Satisfaction:

- Retailers often assess their store portfolio based on market demand. Asda's performance may be reflected in decisions related to opening new stores, renovating existing ones, or, conversely, closing underperforming locations.

2. Store Expansion and Closures:

- Asda's financial performance is a key indicator of its overall health. This includes metrics such as revenue, profit margins, and overall profitability. As a private company, specific financial details might not be publicly disclosed.

1. Financial Performance:

asdas performance

Therefore, it is evident that superkmarkets have got many factors they have to consider when building their brand image, such as customer satisfaction, effective pricing strategies, sustainability plans, online presence etc as well as external factors such as the economy, social needs, legislation etc. Tesco and Asda are well established because they consider all the factors listed above and devise strategies for changes in the market.

Reference list

Reference list‘Asda.com - Online Food Shopping, George, & more’ (no date) www.asda.com [online]. Available from: https://www.asda.com/creating-change-for-better/environmental.‘How do the supermarkets work? Here’s all about this business.’ (2020) OkCredit Blogs - Business Ideas, Tips, Government Schemes & more. 11 September 2020 [online]. Available from: https://okcredit.in/blog/how-do-the-supermarkets-work/.PESTLE Analysis (2019) PESTLE Analysis for Tesco discusses its Business Environment PESTLE Analysis. 6 October 2019 [online]. Available from: https://pestleanalysis.com/pestle-analysis-tesco/.‘Sustainability Reports’ (no date) tescoplc.com [online]. Available from: https://www.tescoplc.com/sustainability-reports.Tesco (2019) Sustainability Tesco PLC. 2019 [online]. Available from: https://www.tescoplc.com/sustainability.

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