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Critical Assessment and comparison of the Competitive and Profitabbility of UK food retail Sector and the UK Oil and Gas Sector - Essay Example

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Critical Assessment and comparison of the Competitive and Profitabbility of UK food retail Sector and the UK Oil and Gas Sector

Even due to the economic downturn, it is still predicted to increase by 15% over the next five years in the future (SAS, 2011). It is still considered to be an impressive figure despite the fact that it represents a slow growth. Over 9% of GDP of UK is generated by the retail industry which is the success factor of retail companies overseas. With the increase of e-commerce, the products are able to reach through millions of consumers. Hypermarkets have become competitive in offering diversified products to their wide customer base. The major players in the market, Tesco, Asda, J Sainsbury and Wm Morrison accounts for 80% of the total market share (Lloyds Bank, 2012). London is considered to be a strong market for consumer shopping and many people including tourists are inclined towards purchasing in London. It beats out other developed cities including New York, Tokyo and Paris with total spending of ?64.2 Billion (GAIN, 2010). The recessionary periods have hit the retail sector of UK which is very disastrous for the sector, but from a wider perspective, the major players in the market have not undergone major changes which might reveal that the market is running smoothly for the longer term. This also means that the big players did not change their strategies for competition and did not find a need to undergo major changes. The UK retail sector provides biggest revenues to their companies which in turn increases the GDP growth of the nation. The presence of major players indicates that the sector is strong with major assumption of future growth (GAIN, 2010). Weaknesses: The UK retail market is a mature market which is not intended to grow in volume terms. The margins and earnings from the retail sector are threadbare and mostly the earnings are coming from the online stores. As the economy suffers from recession global downturn, it has been tough going for the UK retail market. According to Verdict research, 2012 growth rate of the UK retail sector would be 1.2% which is the third lowest growth in the history of UK retail in 49 years (SAS, 2011). It has been forecasted that the non-food items in the retail sector would decline for consecutive fourth year as it would have a decrease of -0.5% (SAS 2011). Food is an essential item in our lives, but since the recession period it has allowed people to spend more but for the same quantity. The greatest weakness is the rising food prices over the world which is affecting sales of the major companies and is resulting in slower growth. The grocery section has been badly hit by the downturn which has decreased the consumers spending and now the industry is termed to be as ‘recession-resilient’. The major price drop has resulted in the industry which has hauled Tesco to provide promotional strategies which is the biggest player in UK retail. Asda did not carry out the move to lower its price and insisted that it was the cheapest provider of consumer goods. The rivalry is intense in the sector and has accounted for low profit margins and growth (GAIN, 2010). Opportunities: Even though the margins are threadbare in UK retail sector, the big four of the retail sector, Tesco, J Sainsbury, Asda and Wm Morrison are planning to buy 4 million of retail space which is equivalent to 130 average supermarket stores (SAS, 2011). This proves that the big players consider a growth in the sector in the future which provides an opportunity to grab market shares. According to the UK economy ...Show more
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SWOT Analysis for UK Food Retail and UK Oil and Gas Industry SWOT Analysis for UK Food Retail and UK Oil and Gas Industry The paper attempts to discuss SWOT Analysis for UK Oil and Gas industry and UK Food Retail industry…
Critical Assessment and comparison of the Competitive and Profitabbility of UK food retail Sector and the UK Oil and Gas Sector
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