The Role Of Large Chain Supermarkets

Essay by pierce_d35 April 2009

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The role of large chain supermarkets is rapidly expanding, as suppliers of goods and services to consumers and the building of local and international economies. The current tariff laws of the United States make it a lot easier for foreign born grocery chains to operate within the United States. The extent to which they do this is highly refuted because supermarkets have an array of effects on markets and economies. However they can provide jobs and services to the region, but they can also drive pre-existing markets out of business if they fail to compete or meet supermarket standards. Supermarket chains influence traditional chains of distribution and production through homogenization of services and products.

Tesco's Fresh & Easy launched in the USA in November, 2007, it is in the market introduction stage of its product life cycle. While in this stage of the product life cycle, Fresh & Easy is not yet profitable and is suffering from low sales.

It has endured high distribution costs because they had to build a new distribution network from scratch, including building its own distribution center in Riverside, California to serve up to 500 stores. Promotion expenses have been in the way of store design and creating brand awareness, with the company choosing to avoid most traditional advertising media outlets. Also typical of this stage are competitors moving in with similar products, in this case Wal-Mart with its Neighborhood Food Stores have captured a significant portion of this market with their brand name. Tesco's Fresh & Easy has had a low sales volume and has yet to make a profit. Tesco is expecting to start being profitable around 2010.

The U.S. is seen by some retail analysts as a graveyard for the British retailer. This is somewhat accurate as successful UK retailers such as...