In the United Kingdom the big four supermarkets of Tesco, Asda, Essay

In the United Kingdom the big four supermarkets of Tesco, Asda, Sainsbury's and Wm Morrison have gained a steadily increasing - Essay Example In recent time some of the retail giants of United Kingdom like Sainsbury, Asda, Morrisons and Tesco have been accused of swindling the suppliers by paying them the bottom prices or finding some other way by which they can pressurise the suppliers to pay the cost of the unsold or perished goods. There are also other ways by which the suppliers are exploited that includes paying lower than the agreed price after the delivery of the order, delaying to pay them, make changes in the order at the last moment, making the suppliers to bear the cost, forcing the supplier to use certain specific expensive hauliers for delivering their goods and often ruining the supplier due to lack of cash flow. The supermarket retailers even pressurised the suppliers to pay for the shoplifted goods and making their profits to rise high, when they are expected to be lower. The study focuses on this issue. Supermarket competition Relentless rise in the supermarkets has given rise to the concern regarding thei r holdings over the suppliers and the customers. A research conducted by TNS Worldpanel, the market research group has concluded that the big four retail giants of UK Morrisons, Sainsbury's, Asda and Tesco holds almost three quarter of the grocery market that amounts to about 74.4%. Tesco is the leading supermarket that holds the biggest share. The report suggests that for every ?8 the consumer spends ?1 goes towards the business of Tesco. In 2004 it has been recorded that the retail sector of UK amounts to almost ?246bn, which is more than the amount if the economies of Ireland and Switzerland are combined together. This implies that the retail sector offers quite a significant amount (BBC News, 2006). (Source: BBC News, 2006) According to the reports of the All Party Parliamentary Small Shops Group, almost half of 278,630 shops in UK are managed and owned by a sole trader. These small local stores are losing their market because of the growth of the supermarkets that are gradually moving towards the convenience store format. As per the report of Association of Convenience Store for the last twelve months till June of 2005, 2000 independent convenience stores closed their operations owning to the growing competition of the supermarkets. The Office of fair Trading (OFT) has been investigating the two main issues firstly the competition that surrounds the worries regarding the competition in the supermarkets and abusing relationship between the supermarket and the suppliers. The OFT has claimed that there is no restriction on the grocery market, which prompts a widespread scorn from the action group and the local shops. OFT further states that there is no need of incorporating any type of reform in the ways the super markets are operating; though there are claims regarding application of bullying tactics by the four big supermarkets. According to the recent declaration of OFT there are significant indications regarding increase in the purchasing power of the cu stomer of the supermarket (BBC News, 2006). Area of Concern The corner and local shop areas are becoming the potential places for the growth of the supermarkets. The four big supermarkets face certain restrictive measures that pave the pathway for expanding their operations by following the convenient store format. This also helps the supermarkets to target the customers who are cash rich