Retail power, competition and local consumer choice in the UK grocery sector

Abstract

Focuses on the changing nature of retail competition and the way it affects local consumer choice in the UK grocery sector. Integrates relevant literature on the economic aspects of competition with work on the changing corporate geographies of retailers. Links vertical market power (relative to suppliers) and multiple retailers' ability to compete horizontally (relative to other retailers) in a given trading locality, and argues that this interaction has fundamentally altered the nature of competition. The increase in retail power that has resulted has served to redefine local consumer choice. Smaller retailers are disadvantaged by this shift because it has directly affected the store and product choices of consumer groups depending on their relative mobility. Argues for empirical work to ground and validate these assertions.

Weaving new retail and consumer landscapes in the Scottish Borders

“…These analyses of retail change have recently been complemented by studies of consumer choice and behavioural change of consumers over longer time-spans (Clarke, 2000Jackson et al, 2006). Retailing and consumers have changed.…”

The economic and social role of small stores: a review of UK evidence

“…It has also led to conjecture as to whether supermarket private/own label branded products lead to lower prices for the customer, because of the countervailing power they provide in relation to the manufacturers of branded products with which they compete (Gabrielsen and Sørgard 2007;Omar 1996). As a number of studies have observed, these economies make the power relationship between large supermarkets and consumers highly asymmetric, since compared to the retailer, the customer is small in terms of purchasing power and relevance to the retailer, relatively immobile in terms of being unable or unwilling to travel long distances to purchase food, and uninformed in that they do not tend to know which products are available where, and at what price and quality (Clarke 2000;Gaysford et al 1997;Lennard et al 2001;London Economics 1997). Allied to this, it has been suggested that multiples buying and selling power has been redefined and reinforced through the practice of category management, which has enabled each retailer to develop bespoke approaches (Free 2008).…”

“…However, regarding the organization of their activities, small chains and independent stores do not have either the economies of scope or the economies of scale that are characteristic of multiples. As a result, it has been argued that supermarket operators that benefit from such vertical supply linkages and buying power can lead to exploitation of the consumer in terms of price (Delgado and Waterson 2003), giving them a powerful trading advantage within local markets (Burt 2003;Clarke 2000). Research suggests that such economies have been central to major multiples ability to develop an organizational brand presence (Burt 2000), develop new products (Francis 2006), and gain from supply chain efficiencies as the main ways of increasing value to the customer and reinforcing their dominance (Fernie 1999;Potter et al 2007).…”

What’s local? Access to fresh food for older people

“…The growth of large edge-of-town supermarkets has been predicated on this assumption, on the basis that ease of access to a single retail point that offers consistent quality at low prices will address all that the economically-rational individual requires (Clarke, 2000). This has been borne out in practice, with the four main supermarket chains dominating retail food sales by volume and geographical distribution (Guy, et al, 2004;Hollingsworth, 2004).…”