The UK food industry is one of the most important and well established sectors in the UK. It has been growing rapidly and very competitive. Because of the competitive market the retailers have developed good deals to UK customers, especially during the recession when people’s life style trends changed and started to consume more products from supermarkets. PEST ANAYSIS
Food industry in the UK provides many political and legal factors that can have affect on the food industry. The food retail in the UK have the legislation based on food hygiene that they restricted to follow, which were set by European Union General Food Law Regulation and also the Food Standards Agency. Health and Safety is an important duty that the supermarkets need to follow in condition such as use of machinery, transport of good and electrical equipment. These regulations had been set mainly by Health and Safety at Work Act 1974 and Workplace regulation 1992. The Competition in food industry is conducted by two government bodies, such as the competition Commission and The Office of Fair Trading. Their role is to control and observe the market in order to avoid monopoly, oligopoly. These two bodies have to make sure that these companies such as Tesco meets specified legislation to ensure that there is fair trade by following human rights. There are a significant number of people who are employed in retail industry. These companies are obligated with UK and EU legislation scheme Employment Act 2002, as it covers conditions of employment, such as to provide equal access to employment, treat everyone fairly and ensure that people who are disabled work in appropriate positions.
Supermarkets industry stays dominant in the UK, especially with the revenue growing even during the recession. This is because consumers changed their trend on instead of eating out they started to eat food at home as it is a cheaper way during the financial crisis. There have been an increase in sales of own brands as a results that customers turned to cheaper products. The Bank of England maintains a low level of interest rates of 0.5% in order to protect the rise in prices. Therefore consumers will be willing to spend more than save and the food retailers are able to borrow more money in order to cover their liabilities in much lower costs. The UK supermarkets chains also play role in gas station market – Tesco has 440 gas stations, ASDA 173 gas stations and Sainsbury’s 247 petrol stations. They considerate to sell cheaper petrol to encourage people to go to their stores, and it doesn’t matter for them if their profit margin is low because they will still make profit on selling groceries.
As the generation lives longer the percentage of retired people are rising, and this trend has many implication on this industry, as they consume less, this is probably because their income is much lower therefore they buy their food from cheaper retailers such as Aldi and Lidl. By this their market share will increase against other supermarkets in the industry. During the recession, low prices were and are still important as they are being more careful, trading down and cutting on waste but still look for good quality and value of money. They like special offers more than before the downturn. (mintel2012) The supermarkets adapt new trend of organic food as consumers demand it, to replace their existing products to healthier products such as low fat and low sugar. The supermarkets have been also targeting their food for specific groups who suffer from diabetes, allergies and heart diseases. The food industry will increase their income and improve social image. Because of the huge number of immigration, supermarkets started to provide goods from all over the world in order to target and serve need to this consumer groups as they may have different habits and different food preferences. Technological –
Supermarkets implicated online way...