Swot Analysis Of Supermarket
Industry analysis for supermarkets in Ireland:
An industry refers to a group of companies that are related in terms of their primary business activities and are substitutes for one another. It is any general business activity or commercial enterprise that can be differentiated from others, such as the airline industry or the automobile industry.
The industry that this report focuses on is the supermarket industry in Ireland. We will be focusing on the five main competitors in this industry which are Tesco, Dunnes, Supervalu, Aldi and Lidl. Smaller convenience stores and other niche markets are part of this industry in a wider context but for the purpose of this analysis it is more prudent to focus on the direct competitors in the industry.
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With a recent recession in Ireland there has been a significant importance on the value of market share in the industry, as the decrease in disposable income has meant people will think more about how much they spend and more importantly, where they spend it. In the past people may have been inclined to stop by a supermarket or go to the nearest store, but as ‘belts have tightened’ more emphasis has been put on value for money. Trends recently have shown an increase in the amount of people shopping in ‘discount’ stores rather than the traditional supermarket of Tesco, Dunnes and Supervalu. [2]
Porter discusses the importance of the industry structure as the driver to profitability and competition, and suggests using the five forces model to determine these root causes for profitability and competition. He says that a good industry analysis does not just determine the attractiveness or unattractiveness of an industry but is a tool to help make good strategic choices in the future (Porter, 2008).
Threat of potential new
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Due to the high volume of people who shop in supermarkets one individual does not hold much power. However, as a group, individuals can hold greater power. Supermarkets must be aware of their customer needs and be responsive to changes in the market. Due to the low switching costs and the availability of substitutes, it is easy for customers to move from one shop to another. This has been even more prevalent since the start of the downturn in Ireland as people are more price-sensitive and more likely to look for bargains and competitive prices. The stigma of shopping at discount stores has fallen in Ireland, with more and more people willing to do their shopping at Aldi or Lidl. This contributed to the increase in buyer power in the industry as people are very sensitive to any changes and have no problem changing if needs
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