Report on a supermarket

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About ASDA

ASDA, which became part of Wal-Mart Stores Incorporated in July 1,was founded in 165 by a group of farmers in Yorkshire as Associated Dairies. The first ASDA store opened the same year, and since then has specialized in bulk selling at low prices. It expanded in the South in the 170s and 180s, and in 1,the company was sold to Wal-Mart � the world’s largest retailer.

The company now employs 10,000 colleagues, who have a reputation for being the best and the friendliest in the industry, and we work with over ,800 suppliers. Our stores are “stores of the community”, playing a positive part in all aspects of local life. Employees are given shares in the business free of charge. ASDA has the largest Colleague Share Ownership Plan in Britain, with a considerable number of “colleagues” having share options in Wal-Mart.

ASDA Mission Statement




We offer Britain’s best value weekly shop with prices 10-15% lower than our main competitors and an unmatchable mix of fresh food, grocery, clothing, home, leisure and entertainment goods.

Environmental Analysis Report

STEP Factors (Macroenvironment)

· Social Factor

· People’s lifestyles changed

· Growth of convenience food � frozen, chilled, tins and packets

· Increase in the number of working women � increasing take-away, convenience food and going to restaurant

· Interest in physical fitness � resulting in a demand for low fat and diet foods

· Higher standards of living � with an increasing amount of leisure time (going to restaurant and reducing cooking at home)

· Demographic trends

Its distribution by age, gender, or geographical location can affect the demand for goods and services ( ie. The birth rate is low � less nappies) � changes in demand

· Technological Factor

· Development E-commerce � home shopping and home delivery

· (WAP) wireless application protocol � which allows the transfer of data between the Internet and mobile phones. Key to the success of the service are delivery times and points of delivery. Most people cannot waste hours sitting at home, or at work, waiting for a delivery.

· Economic Factor

· The UK economics growth � some slowdown will occur (impacting on total consumer spending)

· Recession � not expected recession may affect growth by only 1-%

· Political Factor

· Food Standards � more concern of food safety, food quality and health issues, banning genetically(modified GM ingredients)

· The BSE (bovine spongiform encephalopathy)

· Food-and-mouth disease

· (GM) genetically � modified ingredients

· Planning Regulations

The Labour Government in 17, planning permission for out-of-town or edge-of-town supermarkets to develop (-tight planning restrictions following the government’s refusal to support new out-of-town shopping centers and greenbelt development )

Five Forces Analysis

1. The threat of new entrants to the industry(high entry barriers)

· Legislation or government action

Planning restrictions on out-of-town development (-new site availability has been limited, pushing up land and building costs)

· The capital requirement of entry

A high initial investment cost in the technology required for point-of-sale scanning and stock control systems

· Economies of scale

To be gained in purchasing, distribution, sales and marketing which a new entrant would not have immediate access to

· Cost advantages independent of size

The profitable area of selling own-brand goods would not be available to a new entrant until it could buy in a volume that would interest manufacturers

· The resistance offered by existing businesses

Competition among existing retailers is intense, with the top five retailers having over 50% of the market, making entry more difficult and requiring a disproportionate amount to be spent on marketing to gain market presence

. The bargaining power of buyers(strong buyers)

· The cost of switching to suppliers are low(easily switching suppliers)

· Backward integration by the buyer if satisfactory prices or quality from suppliers cannot be obtained

· The component or material cost is a high percentage of total cost(“shop around” to get the best price and “squeeze” suppliers

- strong pound

- Internet shopping customers can compare with other competitors’ prices on Internet and choose the best price

. The bargaining power of suppliers(strong suppliers)

· The brand of the supplier is powerful(switching cost is high)

· “differentiation” the specialist product of a supplier(“switching costs” from one supplier to another are high)

4. the threat of substitutes(many possible substitutes)

· product-for-product substitutes

- organic foods

- chilled convenience food(home meal replacement , food to go)

· Substitution of need

- healthy-eating ranges

- own-label sub-branding

- home shopping and home delivery

- non-food in the food retailer’s product mix

5. the intensity of rivalry among competitors in the industry(high)

· the acquisition of weaker companies by stronger companies results in the provision of funds to improve the competitive standing of such firms, their ability to compete more effectively may be enhanced

· the industry is mature and the industry is subject to “shakeout”, then competition is more intense

· “differentiation” (switching cost is high) is difficult to stop customers switching between competitors

· high fixed costs in the industry result in competitors cutting prices to obtain the turnover required(price wars and very low-margin operations)









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