Supermarkets Swot Analysis

1.1. RESEARCH BACKGROUND
Market Background
In Hong Kong, supermarkets have gained marked increase in popularity over the past forty years. In 1997, a research done by the Hong Kong Census and Statistics Department estimated that supermarkets took a share of around 50% of the territory’s food retailing business, amounting to some $21 billion.

As reported by the Hong Kong Consumer Council about “competition in the foodstuffs and household necessities retailing sector”, there has been a tremendous decline in the number of small-scale supermarket operators by approximately 41% from 1996 to 2001. This phenomenon is resulted from the fact that customers tend to shop in the supermarkets for packaged foodstuffs together with fresh meat, fish and vegetables

War-Mart and Carrefour are not popular at all in Hong Kong. Small supermarkets such as JUSCO, TASTE, YATA and city’s super are also well known in Hong Kong but with only a few branches.

Wellcome operates mainly three types of supermarket: express stores, ordinary supermarkets and supermarkets. Express stores are newly launched in recent years. They are generally mini-supermarkets but with 24 opening hours. Ordinary supermarkets are the conventional ones providing necessities such as food and grocery. Supermarkets, which are the type to be considered in the present research, are a combination of a giant supermarket together with a wet market to provide fresh meat, fish and vegetables.

Company Background
Wellcome was established in 1945 by Mr. Wu Chung-Wai, Mr. Lau Lim and Mr. Ko Yin-Yu. In 1940’s, Wellcome was the first supermarket to establish a Home Delivery Service division, and an average of 600 customers enjoyed this one-of-a-kind service through orders in person daily. Since 1964, the company has been wholly owned by Dairy Farm. With a staff of around 8,000, Wellcome’s network of over 280 stores in Hong Kong serves more than 16 million customers every month. Wellcome supermarkets sell several products under the generic brands No Frills and First Choice. They stock a greater variety of products, tailored to local

The two largest supermarket chain - PARKnSHOP and Wellcome is facing more difficulties in customer retention. Although PARKnSHOP and Wellcome are having the largest market share, it does not mean that the market is being monopolized. The supermarket industry has been facing more and more vigorous competitions in recent years, not only among the two chain store leaders but also some other new entrants. For example, 759Store and other convenience stores are new competitors in the same market, and they are considered to be substitutes. These small-scale supermarkets now can take the advantage of the mature logistics transportation networks for rapid development. Same as the chain supermarkets, small-scale one can also enjoy the lower operational cost and hence they can survive more easily than in the