The UK grocery market is “more competitive than ever,” says a study by retail analysts Verdict Consulting, ahead of the publication of a UK government probe into the sector.
The UK Competition Commission is set to publish its findings amid claims that a supermarket watchdog will be created to police the sector and ensure that the big four retailers do not abuse their power.
Verdict Consulting claims competition between the big four – Tesco, Asda, Sainsburys an Morrisons – will only intensify in the next five years to encourage “fickle” consumers to shop at their stores more often.
“There is a common belief that because food retail has a number of very large dominant players, consumer choice is somehow stifled,” Verdict director of consulting, Neil Saunders. “In truth, it isn’t – the biggest battle grocery retailers face is how to hold onto increasingly fickle customers who are able to transfer their custom elsewhere.”
Despite claims that some towns in England have become known as “Tesco Towns,” Verdict argued that all the “big four” are stronger than in recent years.
“Sainsbury and Morrisons were both much weaker than they are today. Both were focused on sorting out internal issues rather than on actively growing their market share,” the report said.
But, it said that this “has now changed: both retailers are fully focused on trying to attract new customers and that ultimately, means a much more competitive environment.”
The researchers also claimed that with growing consumer interest in the “ethical” consumption will fuel the growth of “alternative players” like farmers markets and food box delivery schemes.