As Asda and Tesco continue to expand their traditional territory into markets that have nothing to do with food it is becoming clear that traditional high street retailers will have to come up with a strategy to combat the increasing market share of non-food goods being captured by the supermarkets.
Tough competition from supermarket chains has had its effect on Boots, Woolworths, Superdrug, WH Smith, HMV and a host of other high street names to say nothing of the smaller independents that do not even figure in the statistics.
To put their power into context, Tesco alone now sells more toiletries and medicines than Boots and Superdrug combined and consequently it has more buying power than either of them. Just before Christmas Tesco were selling brand new television sets in selected stores as £10 less than the wholesale price!
No retailer can respond to such competition by price matching because they would effectively be giving money away. Retailers both large and small will have to respond to this challenge by improving their offer in other areas. Supermarkets by and large are big, bland sheds without ambience or character. High streets (and side streets) need to capitalise on their advantage of being interesting places that can offer an experience as well as an opportunity to buy goods. This means concentrating on the whole offer not just what’s on offer in each individual shop. They must offer a better environment, a better service, better entertainment (in-store and on-street) and better response to customer demands.
Tesco and Asda have shown that the supermarket formula is a winner. Other retailers and retail trade associations have to develop their own alternative formula and they haven’t got long to do it.
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