1. Strengths, Weaknesses, Opportunities and Threats
STRENGTHS
• Some expenditure on food is essential for everyone and is considered an established part of the household budget.
• Many food products are deemed necessities and are unlikely to be harshly affected by any economic downturn. It is discretionary spending that is usually badly hit in a recession, which is, therefore, more likely to harm sales of 'luxury' foods.
• The UK has a well-established supply structure, in terms of both its production base — for meat, dairy products, fresh and processed vegetables, bakery products and fish, in particular — and its network of retail outlets — mainly in the form of major multiples.
• Following a period of extensive rationalisation and
• The UK's ageing population presents increasing opportunities for sales of health foods, vitamin-enriched foods, and other 'nutraceuticals', although price competition in these sectors is likely to increase as more new products are launched.
• The convenience-store format will continue to grow to cater for increasing consumer demand for 'convenience' in their shopping habits.
• Significant potential remains for increasing the household penetration of many added-value foods and newer product segments: for example, fresh soups, pour-over sauces, and takeaway foods that are freshly prepared in supermarkets.
• The penetration of online grocery shopping, which offers convenience and saves time, is expected to increase, as more people gain access to the Internet (and broadband, in particular) and teething troubles with the various services are ironed out. The weaker players in the food retail market might find it beneficial to target specific online grocery sectors, rather than the whole market.
• In December 2002, the Government announced the launch of a pilot scheme to allow supermarkets to operate convenience stores at motorway service stations, as a means of introducing competition into this market. Should the pilot be successful, such a move would provide opportunities for supermarket chains to operate smaller-format stores in a potentially lucrative market. Brands such as Marks & Spencer's Simply Food or Tesco's Extra would be able to offer convenience