Essay on The Current State Of The Uk Supermarket
In this essay I plan to focus on the current state of the UK supermarket industry and the conditions that are in place. Through this I will analyse the market structure and discuss the levels of concentration along with the current barriers to entry and exit present in the supermarket sector. Following this I will discuss the case of the Safeway acquisition enquiry that occurred in 2003. This will look at the UK competition commissions view at the time and focus on who benefited from this acquisition.
It is clear that in the UK supermarket industry there are a few main players each taking a very large percentage of the market share. This leads to the market being dominated by a small number of firms. In the case of the UK examples would be Tesco, Asda, Sainsbury’s and Morrison’s. (Oligopoly market structure in UK supermarket industry and benefit of consumers, 2015) This position of the UK supermarket industry strongly demonstrates a market in oligopolistic competition. An oligopoly is a five firm concentration ratio greater than 50% (Oligopoly | Economics Help, 2016).
The data shown above sourced from ‘Kantor world panel’ illustrates the dominance of the top four firms in the UK with Tesco gaining 28.47% of the market share. Followed by Sainsbury’s(16.78%), Asda(16.18%) and finally Morrison’s at 10.79%. In recent time low-cost retailers such as Aldi and Lidl have limited the increase in concentration of the main four firms (Supermarkets,…