Supermarket Power Essay

1174 Words Jan 26th, 2013 5 Pages
In this essay I will be outlining the nature of supermarket power and how it affects competing retailers and the impact this has on us as consumers. I will do this by drawing heavily on the learning materials provided to underpin the factors involved.
It is useful to describe what is meant by the term supermarket power. In the last twenty years, supermarkets have played a pivotal role in redefining our shopping habits. This is due to many factors like convenience, freedom of choice and value for money but it is also down to the economic domination of supermarkets themselves.
The big 4 (Asdas, Morrisons, Tesco and Sainsburys) control
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This demonstrates the imbalance that this creates at the expense of the local small scale trader.
The effect on UK farmers has been evident, farmers state they have been forced to take the supermarket price for their produce. This factor has been a catalyst in many smaller farms simply being unable to turn over a profit and, as a result of this subsequently going out of business. UK farmers have been very vocal in pointing out the difficulties faced due to the big 4 and their stranglehold in the market. the Observer reported that producers are complaining of being crushed by the big supermarket chains which, under pressure themselves, are running an unprecedented number of promotions.( Insely, 2012, p41) These promotions may give the consumer a good deal, but it is clearly at the expense of the producers, who have to absorb the costs themselves. It stands to reason that their profit margin will decline due to this. This eludes to the buying power of these large retailers and raises the issue of supermarket domination having a negative effect on much of the UK growing market. This is strong evidence of the zero-sum scenario . GLOBAL MARKET IMPLICATIONS
There are direct parallels here with the UK marketplace, but naturally this is on a much grander scale.

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