An Analysis Into The Uk Food Retail Industry Marketing Essay

An Analysis Into The Uk Food Retail Industry Marketing Essay The analysis will begin with a presentation of the food retail industry and a highlight of its significant features. Furthermore, to assess the remote environment of the industry a PEST analysis will be conducted, analysing the political, economical, social and technological factors that affect the industry. Furthermore, a Porter’s 5 forces analysis will be used to evaluate the operating environment and the nature of competition. Moreover the major competitors and their competition strategies will be identified. Additionally, the effect of the remote and operating environment on the players of the industry will be highlighted. Also, a critical analysis of the industry’s strength and its future will be presented. Finally, a critical evaluation on the used business analysis techniques will be illustrated. 2 .Industry profile The UK food retail industry is an established sector of the UK economy. During the last thirty years the food retail corporations expanded their act ivities to serve various consumer needs. The products that are provided to the public include food and its sub-products, but also alcohol, tobacco, health and beauty products, clothing, electrical products, homeware, fuel and financial services. However, according to the Mintel report 2009, more than half of the total sales in 2008 were assigned to food. Furthermore, concerning the size of the industry an increasing trend of sales can be observed of about 4% per year from 2004 to 2008 and a total amount of 108.1 billion pounds in 2008 (National Statistics – Mintel report 2009). The food retail industry is mainly controlled by large supermarket chains that possess the overwhelming majority of the industry’s market share, as it will be analysed further in the report. Concerning the size diversification of the retail stores, the majority are large units like hypermarkets, supermarkets and discounters with a percentage of 62% of the total number of stores. Furthermore, sma ll units as convenience stores and gas stations represent the 21.2% and food and drink specialists the 11.3%. The minority are drug stores, warehouses and cash and carry stores (Datamonitor 2009). 3. PEST analysis Macro-environment To analyse the macro-environment or otherwise known remote environment of the food retail industry, a PEST analysis will be used to specify how Political and legal, Economical, Social and Technological issues affect the industry. 3.1 Political There are many political and legal factors that affect the food retail industry. Future political decisions concerning taxation or the retail industry legislation will definitely have an impact in the industry competitors’ policies and strategies. The current legislation and regulation concern competition, employment, environmental, food and grocery safety, financial services and health issues. Specifically, the UK food retailers are obliged to follow food hygiene legislation set by the Food Standards Agency and the equivalent European Union regulation such as the General Food Law Regulation. In the UK the food safety act of 1990 was enacted to set the food safety requirements for food intended for human consumption. The Food Standards Agency was created in 2000 after the food standards act of 1999, which was enacted to further secure the public health related to food safety (Office of Public Sector Information, 1999). The UK food retailers are obliged to follow the above regulations in conjunction with the General Food Regulations 2004 that set the rules about the transportation, distribution, quality, hygiene, maintenance, advertising and selling of food and its substances.