Industry Analysis & Industry Trends
The performance of supermarkets is dependent on consumers' incomes and their willingness to spend. Many of the products they sell are considered non-discretionary – the kind of spending that consumers are unlikely to abandon unless faced with severe poverty. Given that large supermarkets can buy cheaply and sell at low margins, this means supermarkets can actually benefit from poor economic conditions like those that have been prevalent over much of the past five years.
Over the five years through 2014-15, industry operators have exploited the fact that often consumers wanted to minimise their spending and have taken revenue from independent convenience stores, department stores and specialised food retailers... purchase to read more
Industry Report - Industry Investment Chapter
For every pound spent on labour in the Supermarkets industry, 23p is spent on capital. Even though wages absorb a relatively small slice of total revenue, capital is not a major expense either, since there is little need for equipment beyond a small quantity of lifting equipment and in-store checkout equipment.
Wages in the industry are low primarily due to the low skill requirements of its staff. Most employees operate checkouts, provide customer service or restock empty shelves. Average wages have remained relatively stagnant in real terms for some time, as there have been no significant changes to the industry's service offerings or changes in the regulatory environment regarding the pay of the industry's workforce... purchase to read more