The strategic group formed by the four retail majors of the U.K. – Tesco, Sainsbury’s, and Morrison is characterized by the following features:
– Geographic coverage: Strategic group is primarily UK based retail chains eventually branching out to different parts of the world. The four companies enjoy the top four positions in the market with Tesco on the top followed by, Sainsbury’s and Morrison.
– Format: Each of them follows the format of a supermarket i.e. large retail market that sells food and other household goods and that is usually operated on a self-service basis.
– Product/service offering: The products offered are a range of food and non-food products. The products are not necessarily outsourced. some products are sold under the label of the store.
– Online shopping: All of the competitors provide online shopping and home deliveries thereby setting virtual shops for the consumer.
– Commitment to quality and offering value for money: While Tesco and Morrison have undertaken vertical integration to cut down expenses and increase reliability, Sainsbury believes in the integrity of sourcing to ensure quality
An organization cannot be free of the macro environment that persists and has to be resolved each time. The strategic group in consideration faces threat from the environment. Some of it is high impact some is not. Nonetheless, there exists an environment that needs to be analyzed and lived with.
– One needs to be in the good books of the government. There are influences the management needs to create through indirect lobbying. Forms of sponsorships, grants, political donations, etc. are to be made to keep the balance.
– To get easy access to the govt. former govt officials are hired by the retail chains.
– The retail chain has to be a member of various lobbies, for instance, Freight transport association, British retail consortium, Institute of grocery retailers, a confederation of British industry, labor groups, etc
– Environment issues need to be taken care of proper recycling of waste, use of recyclable poly bags, and no harm to the ever depleting natural resources.
Any changes in the govt/EU policies have to be addressed.
Changing economy is the biggest affecting factor. Consider the present situation where there is a worldwide slump and the market is seeing trends of salary cuts, the purchasing power of the buyer goes down and hence the revenues of the retail are getting affected.
– The changing exchange rates affect the imported product price. Needless to say, the buyer looks for value for money in the retail chains and thus will not be pleased with an expensive product.
– Raise at the global price for fuel affect transportation cost and in turn the cost price of the product.
– Increase in real estate increases the fixed cost thereby affecting the revenue model.