Low prices have kept registers ringing as consumers turned to cheaper goods
London, United Kingdom (PRWEB) April 01, 2013
The performance of the Supermarkets industry is dependent on consumers' incomes and their willingness to spend. With expected revenue of £134 billion in 2012-13, supermarkets represent a sufficiently large share of national retail spending to be almost immune to the effects of a recession. Most products sold by supermarkets are considered non-discretionary – the kind of spending that consumers are unlikely to abandon unless faced with severe poverty. According to IBISWorld industry analyst Suzannah Rowley, “combined with the ability of large supermarkets to buy cheaply and sell at low margins, this means supermarkets can actually benefit from poor economic conditions like those that have been prevalent over the past five years”.
Over the past five years, the industry has taken revenue from convenience stores, department stores and specialised food retailers as consumers sought to minimise their household spending. Despite six quarters of economic contraction, the Supermarkets industry managed to continue growing over the period. This growth was low when compared with historical results, but a 0.6% revenue increase in 2009-10 and its forecast 1.3% annualised growth for the five years through 2012-13 demonstrate the industry's stability. Struggling consumers naturally gravitate to the lower prices offered by supermarkets, but they also spend less, which explains the lacklustre performance of the past five years in comparison with historical figures. Industry revenue is anticipated to grow by 2.5% in 2012-13.
The industry has already moved to capitalise on the shift of consumers to cheaper goods. Rowley adds, “the introduction of own-brand products has allowed supermarkets to retain higher margins on goods sold at lower prices”. The move of US warehouse group Costco into the UK market will give added momentum to the own brand movement. The economy is expected to gradually recover from the recession and supermarkets' revenue is likely to develop at a similar rate. Most industry activity will be focused on limiting costs by consolidating, installing self-service checkouts and attempting to exercise more control over supply chains. Therefore, the industry is expected to continue to grow over the next five years to 2017-18.
The Supermarkets industry has a high level of market share concentration with the four major companies accounting for over 80% of the market. Major companies include Tesco, Sainsbury's, Asda and Morrisons.
For more information on the Supermarkets industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
Supermarkets sell a range of groceries and foods including fruit and vegetables, bread, cigarettes, canned goods, toiletries, dairy goods and cleaning products. Alcohol retailers, specialised food and fresh food retailers, takeaway food retailers and convenience stores are not covered by this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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