Analysis Of Waitrose And Sainsbury

1.0 Introduction
UK supermarket industry has high level of competition with several big retailers. Waitrose is owned by UK retailer the John Lewis Partnership. Sainsbury is the third supermarket chain in UK. In this report, there is an analysis of retail strategies about Waitrose and Sainsbury. In the supermarket industry, the retail strategies of Waitrose and Sainsbury are compared based on the highly competitive industrial environment. Before the main body, there is an overview of macro environment and competition conditions of supermarket industry of UK. PESTLE analysis is used to identify the macro industrial environment and Porter’s five forces are used to discuss the industry rivalry. After that, it is a market segment of Waitrose and

The market shares of UK supermarkets are presented in Figure 1. Sainsbury occupies 16.29% of the whole market share, and Waitrose is 5.06%. With high concentration ratio, the supermarket industry of UK has high degree of vertical integration and has formed high level of economies of scale, which results in high entry barriers for new entrants (Jenkins and Williamson, 2015). It is calculated that independent retailers has declined by one third within recent 5 years (Economics Online, 2015). Bargaining power of suppliers of UK supermarket is low since big retailers of the industry show their business power to suppliers. Prices from suppliers are low and there is a large profit gap between suppliers and retailers. Supplier power is weaken due to the cheaper product sources overseas. Consumers have strong power to make decisions based on low switch cost and homogenized products within different UK supermarket retailers. Both Waitrose and Sainsbury face strong threat from substitutes. In current UK supermarket chains, there are lots of UK supermarkets competing in the market. Tesco is the most powerful competitor for supermarket retailers with the market share of 28.5%. And within the free trade zone of EU countries, UK supermarkets face higher level of competition since its competitors come from both local, nation, and EU members. In other words, the bargaining power of competitors are strong as well. UK supermarket industry has a high level of industry