Supermarket: The Marketing Place that Malls Cannot Replace

It is the 21^st century and we all know what a supermarket is. A “supermarket” can be defined as a large store that sells a variety of food, clothes and household items. It can also be regarded as a self-service shop organised into sections and shelves. It has separate aisles for meat, fresh products, dairy based, baked products, etc. There is a myriad of non-food products equally necessary for our daily lives.

The concept of the self-service grocery store was developed by entrepreneur Clarance Saunders. The name of the first supermarket is Piggy Wiggy stores. The first store opened in 1916 that left everybody awestruck. Saunders was awarded many patents for this unique idea that led to many strong businesses later. Over the years, some of the businesses just came up as supermarkets and expanded as business chains all over the world.

4 Best Supermarkets and their Brief History

Some supermarkets are famous business chains that are spread across the globe. Here are the top 4 supermarkets that remained essential to their respective communities. Read on to know the brief history.

New Seasons Market: The headquarters of this supermarket is in Portland, Oregon Metro area. The parent organisation is Endeavour Capital Inc. It was founded in 1999 by Eileen Brady, Stan Ami and two more partners. New Seasons Market is the first supermarket to introduce processed or canned foods. Before that, customers were not interested in buying canned beef or pork. However, when New Seasons Market introduced the concept of canned food, it became famous within a few days. Since then, their business has been booming. Currently, it operates in 18 stores in Portland, Vancouver and other metropolitan areas.

WinCo Foods: It is a privately helped majority employee-owned American Supermarket chain based in Boise, Idaho. The retail stores of the chain are situated in Arizona, California, Oklahoma, Texas and Washington. The original name of the company is Waremart which was founded in 1967. Later, the name was changed to WinCo Foods in 1997. This supermarket is a famous one, and it has a lot of foreign products in it. The supermarket gained popularity, and now it has more than 100 stores all over the world.

Aldi: This German supermarket is very famous for the fresh food products they supply. Aldi was set up in 1962 and soon became a good brand for food. The main attraction of this place is the different flavoured ice cream that they used to sell. They have business chains from Abu Dhabi to Germany.

Walmart: This is an American multinational retail corporation established in 1969. This is one of the biggest grocery shops that have spread all over the world now. The company keeps changing its branding and store design to cope with the changing marketing trends. Walmart has 100 outlets across the globe.

These are the 4 most essential supermarkets all over the world.

Analysis of the Community Impact of Supermarkets

Different theories highlight facts regarding the development of different supermarkets. According to many theorists, supermarkets play a vital role in building communities. In the last fifty years, the concept of good neighbours or communities has changed. It has been found that people believe in a neutral family more than joint families. With the up gradation of technology, there have been significant changes in the thinking of people. Apart from that, it has also been found that people are keener to chat in WhatsApp than indulge in real life conversation.

According to many theorists, supermarkets play a significant role in bringing people together. Community life goes well with the opening of multiple stores to offer free space for the people of the local area to come together and shop together. The supermarket organises different community venturing programs that help the people of a community to come together and find ways to build a good bond.

However, there are different opinions about the impact of supermarkets in different communities. There has been a drastic impact on the development of supermarkets in local areas. It has been found that people in local communities find it too difficult to go to a supermarket and get their monthly groceries. It is important to know that people who are rural area based are not very accustomed to urban habits and trends. To them, the concept of the supermarket is a vague thing altogether. They are more used to buying vegetables from the local vendors at the bargained rate.

However, the report ‘Revisiting the Impact of Large Foodstores on Market Towns and District Centres’ which was commissioned by Tesco, revealed many new realisations. The reports prove that community impacts of supermarkets have a new dimension altogether. Some of those are discussed below:

With multiple supermarkets in district or rural areas, people need not go outside their zone to get food. They can get every necessary item in the supermarkets situated in their adjacent areas.
Job opportunities increase when supermarkets are set up in the district areas. Local people work as staff, helpers, etc. Apart from that, different coffee shops and snacks centres are built outside the supermarket. This also turns out to be a huge business that employees a significant number of people.
Supermarkets allow local traders to sell their products. The impact of the development of a supermarket in the community is mostly positive. The economic statistics also show that the development of the local communities is high in comparison to the other sectors.

The analysis says that the establishment of the supermarket is indeed an essential leap in the history of economic development.

Theories Relating to the Supermarket Sector

There is no denial of the fact that a few firms led by Tesco, Sainsbury, ASDA and more, increasingly dominate the UK grocery supermarket sector. According to many marketing theorists, the supermarket sector is oligopolistic. Apart from that, the pricing strategy of supermarkets can be deciphered by using game theory approach. The game theory of oligopolistic pricing strategies related to supermarkets is the best way to understand the economic stand of this sector.

Many farmers and growers are suffering as a result of the increasing monopoly power of the major supermarkets. According to many studies, oligopoly does not allow determining the pricing strategies through proper statistical analysis. Oligopoly wants real-world experiences to assess the strategy. Theorists suggest implementing the game theory to understand how oligopolistic firms set their prices.

Game theory is a field of study that concentrates on human interactions within specified rules of play and choices. The language of this game includes different concepts such as coalitions, markets, payoffs and votes. These are concepts that permeate our everyday lives and help us to shape our real-world experiences. However, the mathematical harshness of game theory together with its many solutions has limited its appeal to mainstream economists. Apart from that, it has also caused some critics to question the ability of the game theory to identify human behaviour accurately.

A widely used aggregate measure of the state of retail food modernisation is the market share of retail food sales captured by supermarkets. It is proven that the development of supermarket is the primary way to make economic growth a constant one. This can also lead to the development of other business progressions in the long run. According to the game theory, the pricing strategy of the supermarkets is determined by implementing the theory of ‘Prisoner’s dilemma’.

The two characters of this theory named Stella and Bennie are in a dilemma while taking a decision. The decision of one depends on the action of others. Similarly, in case of determining the pricing strategy, the supermarkets need to do research while finding out the decision of other retailers while fixing the prices. There is always a risk of loss if the prices are not fixed according to the assumptions of the firms. The firm can often fail to anticipate things. To sail through these moments, they need to make a correction in the production schedule. In a nutshell, the game theory indicates that the marginal cost should be equal to the marginal revenue.

There are many instances in which the game theory was successful in the supermarket sector. Until 2012, the emergence of the low-cost retailers Aldi and Lidl has halted to 72.3% (down from 75% in 2011). The other supermarkets remained in the top position by applying the game theory.

Advantages & Disadvantages of Supermarkets

There are different advantages and disadvantages of supermarkets. Some of the familiar pros and cons are discussed below.

Considerable saving in labour cost: A supermarket is all about self-service, which helps to save labour cost. This is the most significant advantage of supermarkets that function with a decidedly less amount of labour cost.

Reasonable prices of goods: Supermarkets also keep their costs moderate. Therefore, people tend to buy necessary items from supermarkets every month. Apart from that, supermarkets also offer different jaw-dropping discounts to appeal to the customers.

Everything under one roof: The best thing about supermarkets is finding everything under one roof. Customers do not have to go to different places to buy different products. Thus, it saves a lot of time and hassle.

Freedom of selection: Supermarket is a place where customers can find a wide variety of options. Customers get the freedom to choose products according to their choices.

These are some of the advantages of supermarkets that have helped the business to gain popularity among the customers in a very short span.

However, there are certain disadvantages to supermarkets, which are as follows:

Requires substantial financial resources: To set up a supermarket, one needs to make a considerable investment. In most of the cases, entrepreneurs have a hard time collecting the funds to establish the business.

Lacks personal attention: In a supermarket, there is no scope to provide personal attention to the customers. It can lead to dissatisfaction among the customers.

Requires large and extensive premises: A supermarket needs a vast area to set up. Therefore, it may be difficult to find a large plot to build a market.

Nonetheless, supermarkets are the number one choice for the customers. Over the years, supermarkets have changed the shopping patterns of the customers.

Do Supermarkets Cause a Decline in Convenience Stores?

According to reports, by 2021, dollar share for the traditional grocery channel will drop 0.7 percent to 39.1 percent. It is reported that the number of traditional or convenience stores will decrease by 24.6 percent.

There is no denial of the fact that convenience stores are an increasingly important player in the food market of the UK. However, with the rapid development of supermarkets, the business turnover of different conveniences store has witnessed a huge downfall. Theorists say that in the coming years, convenience stores are likely to decline with the rapid growth of supermarkets. The decline of the convenience store due to the development of supermarkets is inevitable.

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