Profitability of UK Retailers

The profitability of the UK Supermarket industry is a product of several different industry factors which will be analysed using the Porter 's Five Forces model . Each of these will be considered in turn . The first four all feed into the ultimate fifth force of competitive rivalry

Threat of Entry

The threat of entry in the UK supermarket industry is relatively low increasing the profitability levels for those within the industry . High capital requirements in terms of buildings and infrastructure for logistics and distribution make it hard for new competitors to enter

the market

Threat of Substitutes

Substitution options are also relatively low which means that UK supermarkets do not suffer considerable price pressure . One of the main selling points for the UK supermarket is that it allows consumers to do all food shopping in one place . Certain aspects of the shop such as meat can be substituted for example at the butchers , but the ultimate one stop convenience is not subject to substitution

Power of Buyers

Although there are a high number of consumers , buyers are able to swap their choice of supermarket very readily . Based on this the UK supermarket industry is in a constant position of trying to gain and maintain its customer base

Power of Suppliers

UK supermarkets have , in most cases got several supplier options giving the a high level of power . Certain key items however may be subject to pressure from suppliers and allow certain supermarkets to maintain a competitive edge over others

Competitive...