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INTRODUCTION
As food retailing organizations move towards a new millennium, they are being confronted with a heterogeneous range of forces jostling for prominence which are set to change the competitive terrain of the industry within which they operate. As a consequence, past strategies which bestowed competitive advantage may no longer be viable.
This article seeks to:
* outline the dramatic changes which have transformed food retailing in Britain over the last three decades;
* explore the multitude of forces which currently signal the need for strategic change within the sector; and
* highlight future strategic directions for retailers.
FOOD RETAILING IN BRITAIN
The last 30 years have witnessed the meteoric rise and market dominance of large multiple corporations within food retailing. This has resulted in the simultaneous demise of many other forms of food retailing, primarily middle-sized supermarkets. Small independent retailers and contractual chains have been able to survive by focusing exclusively on either "top up" purchasing or specialist purchasing requirements. It would seem that large multiples, with their greater working capital and advantages achieved from economies of scale, have suppressed the ability of smaller sized organizations to compete on low costs; thus, as a viable alternative, they have sought niches in the marketplace.
The market dominance of the large supermarket chains is evident from their large share of the food retail market. For example, Martin[1] reports that in 1989-90, out of a total household food and drink bill worth L72 billion in Britain, the two largest trading groups--Sainsbury and Tesco--were reported to share 30 per cent of the total market. More recently, the Corporate Intelligence Group reported that the top six grocery retailers account for 75 per cent of food sales in the UK[2].
Traditionally, competition between the large multiples has been viewed as price based, with few chains being perceived as competing primarily on the basis of "quality". More recently however, it would seem that in Britain a number of larger chains are pursuing strategies of differentiation enabling them to command premium prices for goods and services. Indeed, many food retailers are choosing to combine low cost plus differentiation either through advocating high quality by virtue of brand name, hence the well known slogan, "good food costs less at Sainsbury's", or by improving...