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Future of tesco, morrisons
Comments
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I hope Tesco's either turn around or get bought out...
I can't see them being taken over. The Competition Commission wouldn't allow any more consolidation in the Big 4. Wallmart already own Asda and the only other retailer big enough to be able to afford them would be Carrefour and they have been struggling too.0 -
Doshwaster wrote: »I can't see them being taken over. The Competition Commission wouldn't allow any more consolidation in the Big 4. Wallmart already own Asda and the only other retailer big enough to be able to afford them would be Carrefour and they have been struggling too.
Private equity.0 -
Buffett already has a stake in it, and has about $40bn in cash...Faith, hope, charity, these three; but the greatest of these is charity.0
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i do expect a drop in shares in tesco and morrisons will be struggle0
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Stepping back from the issue of accounting irregularities for which heads will likely roll but probably don't really affect the underlying business one jot...Having visited Aldi for the first time yesterday I was surprised how busy it was and how cheap some items were. Other items were almost the same as Tesco, although I guess 10p more on a 70p item is still nearly 15% more expensive.
Aldi will have some items that are genuinely surprisingly cheap so customers (helped by the media perception that Aldi is a 'discounter') will have in their mind that Aldi is overall very cheap and saving them money - whether they are or not. So that's a problem.
At the same time, the public may perceive that other items are 'almost the same as Tesco' with a price difference of 70p to 80p as you suggest, even if that percentage is of course quite wide if they were to do the maths properly. Some items we buy once a week or more, others we don't and we don't remember every price. So if Tesco cut the 80p item by 6.3% to 75p, or by 10% to 72p, the public buying that item once a month without really noticing the exact price, are still going to think it's 'almost the same as it was', even though Tesco has slashed the margin and got that particular item down to very close to their rival.
And supermarket margins are not so wide that anyone can just slice 10% off the price of everything while maintaining the service levels and store space per customer and loss-leading online delivery and the clubcard points etc etc.
So Tesco and the others are in a tricky position of convincing the public that they are not too expensive after all, and even if they are a bit expensive in some areas, you can probably afford to pay for quality and choice again now the worst of the recession is over...
If you look at the bottom end at the value ranges:
- Aldi 'everyday essentials' 500g penne pasta is 29p. Tesco 'everyday value' is the same 29p.
- A kilo of longgrain rice from those two ranges ; both 40p.
- 2L of cola or lemonade; both 17p.
- Wrapping foil - 72p for 20metres at Aldi, 52p for 15m at Tesco.
So actually if you're looking for the bottom end on a whole load of products, Tesco is price matching and perfectly competitive. Not on everything but the value ranges are pretty comparable now. Of course, Tesco hope you won't just buy the 17p Value lemonade, but will consider the Sunsip brand at 25p extra, or the main Tesco own brand for 50-60p or the Schweppes or R Whites at £1-1.30 or the Sprite at £1.50+ etc etc depending on the deals on that week. Much wider choice if you want it. And if you pick Tesco's big stores, you can easily park in a massive carpark with attached cheap petrol, and you earn Clubcard points/vouchers on everything, or if you plan an unpopular timeslot in advance you can get Tesco bring it to your door for £1 having done your entire shop online while watching telly.
And these days Tesco / Sainsburys will give you banking and credit cards and insurances and broadband and mobile phone service and consumer electronics and media streaming / downloads etc - they'll hook you up with all sorts of peripheral services because they're not just trying to pump out a restricted selection of groceries at the absolute cheapest price.
As a customer like I said, I'm happy with Tesco but when you have so much of the pie it's very difficult to stop others just running past and grabbing a bit here and there - if the only way to fight back is to slash margins, you run out of margins. They have to keep competing on quality, range, premium product etc while also having a better range than the super premium niche that Waitrose are trying to expand from.
Thing is, they have such a customer base and have the ability to get their hooks into customers for such a range of services that they could easily become the 'Amazon' of UK retail - selling everything to everyone by the most efficient route. The problem is that the margins at Amazon, who have always valued market share over current profit, are much more paper thin than the margins at a typical bricks-and-mortar UK supermarket, and those margins and that level of dividend (i.e. zero) is not what UK supermarket investors want to receive.0 -
I'm fairly price conscious and do the shopping in our household. I much prefer Tesco to Lidl (we don't have Aldi on doorstep). Lidl is much smaller with fewer choices. I've seen out of date refrigerated packet food in Lidl and been to the store a few days later and seen the same packet there despite mentioning it to the guy at the checkout on the previous visit. I've also seen mouldy oranges there. I accept this could be an aspect of this location and not Lidl in general. I've not been to many other locations.
Tesco on the other hand feels like a supermarket done mostly right for many of the reasons bowlhead99 has already mentioned and more. Choices. Prices notably cheaper than Sainsbury's. Clubcard points, spacious car parks. I can pay by credit card at Tesco but I can't at my local Lidl. Cash and debit card only which doesn't suit me. Tesco have loads of offers on and a good reduced section. In the last 2 years I've probably only bought 2 loaves of bread for full price. The others have been reduced from around £1.40 to about 50p. Cheese has always been bought on offer, etc. I can therefore get brands like Warburtons and Cathedral City for a good price. They have self-service tills, more tills open, better lighting. If I ask staff where to find items they stop what they're doing and take me to the aisle.
Another important plus point of Tesco vs. Aldi (well, my local Alsi anyway) is that I can get all my shopping in one trip at Tesco. I've tried this before at Aldi and I can't.
Another thing is the loose veg. If I'm cooking a bolognese (for example) then invariably I want 1 onion, not 3. Tesco sell them individually. Lidl sell them in packs of 3 only. I hate waste so will refuse to buy them from Lidl.
For me, Tesco is in the "sweet spot" between Lidl and Sainsbury's.0 -
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I think Aldi saves money for people that buy things like branded biscuits and junk. For me I find Aldi is a lot cheaper on a few select things like Yoghurts and bread but the problem is they dont have much choice. I dont eat dairy and Aldi dont have any Soy yoghurts, they dont have gluten free bread and have only 1 free range chicken option.
The lack of choice is a bit of a deal breaker, especially as grocery shopping is moving online and the likes of Ocado have a massive range of food, I shop with them pretty much exclusively now.
I could probably save 20% or more by shopping at Aldi, or even Asda if they delivered to my area, but you gotta get online if you want my business. The extra £10-20 saved isn't worth my effort physically getting to one of their shops.Faith, hope, charity, these three; but the greatest of these is charity.0 -
I do shop at Aldi and have shopped regularly at most of the big supermarkets.
There is restrictive choice this is one of those things that means you might actually spend less as you buy less not because its necessarily cheaper.
On average we save £15 a week, compared to previous morrisons shop and more than that compared to Waitrose or Sainsburies. Is it all good well, I do not rate their beef and buy that elsewhere when I want some but otherwise pleasantly surprised.
The problem the bigger supermarkets have is there is no harm in trying it and now people are. It wont suit everyone but everyone who changes even sometimes will be lost sales.0 -
The way we tackle the lack of choice at Lidl is to go to both Lidl and Sainsburys. I am not a mega fan of going to numerous shops to get my weekly shop but fortunately, in this instance, they are next door to each other. It is true that for some things Lidl is a lot cheaper, but for others the difference is inconsequential or in fact Sainsburys is cheaper (you try explaining to people that one - its the problem bowlhead99 outlined above).YNWA
Target: Mortgage free by 58.0
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