After the store wars: Towards a new area of competition in UK food retailing?

Abstract

A significant shift in competitive conditions has occurred in UK food retailing. The capital markets have experienced a collapse in confidence in the leading firms of the industry, and those firms have been forced to reverse key features of the corporate strategies that produced a ‘golden age’ of growth and profitability in the late 1980's and early 1990s. In this paper, three main reasons for that shift in sentiment are considered: the rise and wider competitive impacts of the “deep’ growing worries over property valuations, sunk costs and ‘exit’; and growing public unease about the excesses of retailer dominance. These reasons are shown to be rooted in the era of the so-called ‘store wars’. Finally, considerations is given to what the shift in sentiment implies in terms of the nature of competition to be expected in UK food retailing in the mind- to late 1990s, and some of the emerging of that new era of competition are identified.