Benefit for consumers of supermarkets in the UK

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Benefit for Consumers of Supermarkets in the UK

According to the BBC news (2006), the number of supermarkets in the UK has 278,630. However, there are four colossal supermarkets dominate the whole supermarkets in the UK, which are Tesco, Asda, Sainsbury and Morrison. They have more than 70% market share (Hannaford, 2007). As a result, various shops are out of business. An oligopoly market means permitting merely few companies rival themselves (Anderton, 2008:322). In terms of Anderton (2008:322), oligopoly market has chiefly three characteristics, the first one is several firms command of the whole market, the second one is the firms exist by each other, and the third one is there are some obstacles while merchants desire for joining. Yet, every thing has two sides. On the one hand, the supermarkets provide a lower price, a superior service and convenient systems. On the other hand, shopping on the internet is inefficient and consumers cannot purchase on the lowest price.

Consumers will have a lower price in the supermarkets. The price in the supermarkets may shift everyday; hence, they will not compete with others on the price, in other words, non-price competition, reported by Supermarketownbrandguide (n.d.). It can be seen in Figure D4-3, the price begins at the P1, the price above the P1 is elastic, and one of the supermarkets raise the price, other firms will not alter the price, thus, this firm will has market share and revenue lost, by contrast, the price below the P1 is inelastic, one of the firms declines of the price, other firms will follow, and otherwise, they will lose their consumers, however, they both lose revenue (eco-understanding, n.d.). Furthermore, Tutor2u said that some products will have a discount, for instance, new products and petrol, thus, it will attracts more consumers. Moreover, it can be known from Supermarketownbrandguide (n.d.) that the supermarkets will provide some organic and Fair-traded food. Overall, the price in the oligopoly market cannot be concerned.

From starting buying to the end, the supermarkets have provided an admirable service. At the beginning, it provides free trolley, which can reduce the weight of goods. Supermarketownbrandguide also said that it can be seen several service desks around the supermarkets, they are used to provide advice and answer questions. Beside that, they have their own branded goods, which can easy to see the nutritional and allergen introduction, it is one of the four PS of marketing mix, that is, the product can be differ from others or keep the same with others. After shopping, the supermarkets have home deliver system; they are for free. At the end, some fast food stores and restaurants around the supermarkets in the UK. To sum, the service in supermarket is an entire system.

Consumers will have sense of convenience. Supermarketownbrandguide reports that in one of the four supermarkets in the UK, consumers can pay money by cash, credit cards and debit cards. In Asda, they possibly can use Asda store cards. Even buyers can purchase on the Internet. Each supermarket set their own website for consumers, not only buys products, but also bestows some advices. In addition, according to Tutor2u (n.d.), the supermarkets also prolong the time that they open, hence consumers can purchase for longer time. Around the supermarkets, there are some banks and post offices, which benefit the consumers. In belief, the supermarkets bring convenient to people.

Every coin has two sides, despite of advantages; oligopoly supermarkets have disadvantages as well. Shopping on the Internet is convenient, however, Supermarketownbrandguide (n.d.) contends that it is inefficient because the price on the Internet will not alter everyday, and consumers will pay money, which is the same with the supermarket, hence, it will lead to conflict. And the deadline for the products has reached; consumers will buy them without noticing. Furthermore, Supermarketownbrandguide (n.d.) states that some products on the Internet are different from the real goods; thus, consumers will feel dissatisfied. Totally, buying on the Internet is inefficient.

Consumers will not have the lowest price. Anderton (2008: 323) declares that the four supermarkets will collude with each other in setting the price together to obtain profit and most of the collusion is illicit. However, the price at there is lower than other small shops, therefore, they can become oligopoly. Consumers cannot buy the products at the lowest price. All in all, consumers will not gain the lowest price as the supermarkets collusion.

By way of conclusion, the benefits of the oligopoly supermarkets to the consumers are undeniable in the UK, as it provides a lower price, a fantastic service and convenient facilities. On the contrary, shopping on the internet is not efficient and it colludes with each other that the consumers cannot receive the lowest price. As far as I am concerned, the active issues are perfect than the passive. The government should prohibit the illegal collusion. Hence, consumers can purchase the lowest price in the supermarkets. Subsequently, the supermarkets are capable of completing the internet system, making it more efficient.

REFERENCES:

1. Anderton, A. (2008) Economics (5th Edition). Harlow: Pearson Education (Access date: 29th Jan. 2010)

2. BBC News (2006) (On Line) why are supermarket causing concern? [Available at]http://news.bbc.co.uk/2/hi/business/4785544.stm (Access date: 29th Jan. 2010)

3. Eco-understanding (On Line) Market Structure [Available at]http://www.eco-understanding.co.uk/market_structure.html (Access date: 29th Jan. 2010)

4. Facweb.furman (On Line) Figure D4-4. Asymmetrical Price Leadership for Price Increases and Decreases [Available at]

5. Hannaford(2007) (On Line) British groceryoligopoly [Available at]

6. Supermarketbrandguide (On Line) The advantages for Asda shoppers [Available at] http://www.supermarketownbrandguide.co.uk/asda.php (Access date: 29th Jan. 2010 )

7. Supermarketbrandguide (On Line) The advantages for Sainsbury's shoppers [Available at] http://www.supermarketownbrandguide.co.uk/sainsburys.php (Access date: 29th Jan. 2010)

8. Supermarketbrandguide (On Line) the advantages for Morrisons shoppers [Available at] http://www.supermarketownbrandguide.co.uk/morrisons.php (Access date: 29th Jan. 2010)

9. Turtor2u (On Line) THE IMPORTANCE OF PRICE AND NON-PRICE COMPETITION [Available at]http://tutor2u.net/economics/content/topics/monopoly/oligopoly_notes.htm (Access date: 29th Jan. 2010)