The Supermarket Industry

Paper Summary:

This paper explains that of Porter's Five Forces Model, as they directly affect the grocery industry, the most important forces are rivalry and buyer power. The author points out that rivalry in the supermarket industry is extremely high because of the number of various companies, which exist within this industry; locally-owned supermarkets are always on guard against chains moving into their town and threatening them with lower prices. The paper relates that buyer power is high among supermarkets because of the vast number of branded and generic products that are available to its customers, thus increasing potential profits.

From the Paper:

The industry of the supermarket began in the 1930s as a particular retail form in the United States of America. "The American merchant Michael Cullen is credited with originating the first supermarket, which he called King Kullen, in the borough of Queens, New York City, in 1930. Grocery stores became a significant force in food distribution during the depression in the 1930s by combining self-service with low prices, and they experienced an immediate growth." These low prices produced more customers which brought on more profit. Soon grocers around the nations were determining how they could best lower costs while keeping customer satisfaction high enough to maintain the highest profits possible."

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