Research On Supermarket Market: Case Study Of Salus Supermarket

Data Collection Methodology

The assignment will be done on the basis of case study of Salus supermarket which has around 10 stores as per 2017 and the net revenue of the supermarket is £ 39.5 million. The aim of this assignment is to conduct a research on the market for supermarkets, customer’s buying patterns, promotional policies and the various problems which the supermarkets are facing (Ellickson 2016).  The results which are obtained from the research will be helpful for decision making purposes. For the purpose of this research, the researcher will be applying primary method and secondary method of data collection. The data collection will be done for the following areas such as buying patterns, promotion efforts of the supermarkets, satisfaction level of the customers and problems faced by the supermarkets. The research is conducted so that Salus Supermarket can obtain an overall understanding of the market and makes strategies so that the business can get a competitive advantage over its rivals. The research will be considering both primary and secondary sources of data. Primary sources of data refer to the data which is collected from primary sources such as first-hand information, questionnaire, checklist and other similar sources (Hox and Boeije 2005). Whereas secondary sources of data can be obtained from published journals, newspaper, articles and other similar sources.  

The data collection for primary sources will be done with the help of questionnaire which is to be prepared on the basis of the following areas which are buying pattern of customers, Promotional activities of the supermarket, Customer Satisfaction level and the basic problem which the supermarkets face. As per the analysis of the case study provided in the assignment, Salus Supermarkets faces tough competition from its competitors (Orkin 2014). The supermarkets faces competition as the some of the supermarkets have established their shops in the region where Salus Supermarket is operating as per the case study.

For the purpose of collection of primary data, the researcher has adopted the method of distributing Questionnaire among the customers in order to obtain the feedback of the customers. The questionnaire method is very useful for the collection of primary data and obtaining feedbacks on the basis of which the supermarket can determine what are the taste and preference patterns of the customers, which products are popular among the customers. The questionnaire will be distributed to the customers as they leave the supermarkets after purchasing goods. The researcher will also be applying sampling method whereby a particular group of people are selected on the basis of which data is collected and analysed (Lewis 2015).

Primary Data Collection

For secondary data collection the researcher has reviewed the various published articles, journals on the market conditions. For the purpose of this research websites and other publications of competitors will also be reviewed. The researcher will be reviewing the websites and gather information about the competitors of the company such as ALDI, Tesco, Sainsbury’s and other similar supermarkets. The researcher will also be reviewing different journals on the market condition in order to learn about the current market situation and also review the scope for growth for supermarket business. 

Survey Methodology and Sampling

Survey methodology refers to a system where persons to persons are questioned in order to gather information for the research. Survey methodology can be used to collect both qualitative as well as quantitative data (Hippler, Schwarz and Sudman 2012). The qualitative data is collected by applying techniques like personal interview, mail survey and telephone survey (Guest, Namey and Mitchell 2012). Whereas on the other hand quantitative data can be collected from analysing marketing trends and by applying sampling techniques (Neuman 2013).

In this research, for collection of qualitative data the researcher has adopted interview survey and uses questionnaire for the collection of data. The questionnaires are distributed among customers so that the supermarket can receive the feedbacks of the customers which will be used in the research (Merriam and Tisdell 2015). The basic advantage of using questionnaire is that a large area and a large amount of data is collected in very less time. For the quantitative analysis and collection of data the researcher applies sampling method wherein a group of population is selected on the basis of which data is collected and analysed (Treiman 2014). In other words, sampling method involves selecting a particular group or population on the basis of which research is conducted and data is collected for the purpose of research. Sample size refers to the size or number of persons present in the population on the basis of which sampling tests are conducted. The sample size is based on the judgement of the researcher and the nature of the sample is also on the judgement of the researcher that is which group of individuals which the researcher is targeting for the research such as office workers, homemakers, teenagers and regular shoppers (Marshall et al. 2013). The sampling techniques will be helpful in getting data about the satisfaction level, individual sales of the group of products like clothes, food, utensils. In this case sampling method will rank the different supermarkets which are the competitors of Salus Supermarkets and identify which supermarkets are preferred most by the buyers who are regular customers of supermarkets.  

Questionnaire Method

Questionnaire

The questionnaire was distributed on the basis of which primary data is collected and information is collected on the basis of which analysis of the supermarkets are to be conducted.

1. Which Supermarket do you often visit?
2. Asda
3. Tesco
4. Aldi
5. Sainsbury’s

1. How often do you visit Supermarkets?
2. Everyday
3. Thrice in a Week
4. Twice in a Week
5. Less than twice in a Week

1. Which products are mostly purchased by you from supermarkets?
2. Cereals and Beverages
3. Clothes
4. Fruits, Vegetables and other Baked products
5. Kitchenware and Appliances

1. What are the promotional activities which the supermarkets engages in?
2. Advertisement in newspaper and social media
3. Lucky draw system
4. Gifts and Vouchers
5. Free coupons once in a week

1. For which products the supermarkets uses promotional activities mostly?
2. Cereals and Beverages
3. Fruits, Vegetables and Baked products
4. Clothes
5. Kitchenware and appliances

1. Are you satisfied with the services and range of products offered by the supermarket?
2. Totally satisfied
3. Satisfied
4. Fair services and product range
5. Not satisfied

1. Which supermarket would you prefer on the basis of satisfaction level?
2. Asda
3. Tesco
4. Aldi
5. Sainsbury’s

1. Which food products are brought frequently by you from Supermarkets?
2. Cereals and Beverages
3. Dairy products and Cheese products
4. Meat
5. Baked Cakes and Cookies

1. What problems do you face while purchasing products from supermarkets?
2. Freshness of the product
3. Cost issues
4. Inefficient packaging
5. Customer services

1. What improvements which you wish to see in supermarkets?
2. Better customer services
3. Food quality and freshness of the product
4. After Sale services
5. New products introduction

The analysis of data is done with the use of techniques like sampling and statistical methods like mean, median, mode and measure of dispersion. The research will be utilizing statistical data as well as secondary data for drawing conclusions and results of the research.  Primary data can be collected from sources which are generally from first-hand information and contains raw data. Primary data are often tailor made for the research and the same is collected as much as possible. The four key areas where the researcher has focused while collecting data are explained below:

1. Buying Pattern of the Customers: An important consideration for which the researcher has to collect data is the buying patterns of the customers. This is an important area this will give an idea to the researchers about the buying behaviour of the customers and also the taste and preference patterns of the customers (Epstein et al.2012). In a supermarket where the consumers have a lot of options regarding the type of product, therefore the taste and preference patterns of the consumers is important. For example in case of beverages, the consumers have options such similar beverage products are present in supermarkets which belong to different companies.
2. Promotions Effects of supermarkets: The promotional activities which the supermarket engages in are also important area which shows how the management is trying to gain competitive advantage and face the intense competition which the supermarket is facing (Cameron et al.2016). These activities including advertisement in newspapers, social media, different promotional activities such as lucky draws, gifts and vouchers. Sometimes such promotional activities are focused solely on a particular line of product such as clothes, food products, appliances. The researcher can collect data about the promotional activities which the supermarkets are employing for the overall promotions of the business.
3. Satisfaction level of the Customers: The satisfaction level of the customers is an important factor which influences the customers. If a customer is satisfied with the services and product range in a supermarket then he will be preferring the same supermarket for future purchases. The satisfaction level of the customers is determined by the level of services of the supermarket and also the range of products which the supermarket can provide under the same roof (Orel and Kara 2014). In addition to this, supermarkets are known for keeping branded products and thus the quality of the products are good and therefore the customers has access to a large range of branded products in one place.
4. Problem faced by Supermarkets: The problems which a general supermarket faces are stock out situations, mismanagement, narrow range of products, intense competition among rivals. The researcher needs to collect information about the general problems which supermarkets faces (Aloysius and Binu 2013). 

As per the questionnaire prepared by the supermarket, most of the questions which are prepared does not provide numerical data but a normal frequency and therefore the analysis of mean, median, mode and measure of dispersion is done for the question whether the customers are satisfied with the services and range of products which are provided by the supermarkets (Busk and Marascuilo 2015). The table below shows the statistical data analysis which is prepared on the basis of the questionnaire:

Are you satisfied with the services and range of products offered by the supermarket?	Results
Mean	2.2
Standard Error	0.173205081
Median	2
Mode	2
Standard Deviation	0.866025404
Sample Variance	0.75
Kurtosis	-0.880105402
Skewness	-7.49199E-16
Range	3
Minimum	1
Maximum	4
Sum	55
Count	25

Figure: (Table Showing Statistical data prepared on the basis of Questionnaire)

Source: (Created by the Author)

The statistical analysis of data as shown in the table above shows that the mean of the analysis is 2.2 which shows that most of the customers visiting the supermarkets are satisfied by the services and range of products as provided by the supermarket. The mean analysis for the satisfaction level of customers visiting supermarkets shows that on an average most of the customers of supermarkets are satisfied by the level of services and range of products which are provided to them. The median of the questionnaire also depicts a similar result of 2 which is that the out of the sample most of the customers are satisfied with the services and range of products as provided by the supermarkets. The mode as per the analysis of the questionnaire as shown in the table shows the highest percentage of the customers are satisfied with the services and range of products as provided by the supermarkets (Ramsey and Schafer 2012). 

Secondary data refers to the data which is collected from secondary sources such as published journals, articles and other secondary sources (Brewer 2012). The secondary sources of data for supermarkets can be collected from the annual reports of the supermarkets, other statements issued by the supermarkets, other journals issued on the supermarkets, official websites of the supermarkets. For the purpose of this research, secondary data will be collected from the annual reports of the supermarkets, official websites of the supermarkets and other secondary sources. The basis on which the secondary data is collected for this research are given below:

1. Market Shares: Market shares of the company is a standard on which the overall performance of the company is measured. The market shares of the supermarkets can be obtained from the official websites of the same (Machek 2012). The market shares of the supermarkets can be used to compare the performance of the companies.
2. Profitability Ratios: Profitability ratios are used companies to measure the overall profitability of the company. The profitability ratios consist of gross profit ratio, net profit ratio and operating profit ratio (Velnampy and Niresh 2012). The profitability ratio of the supermarkets are analysed and compared in order to establish the performance of the supermarkets.
3. Sales turnover: The sales turnover of supermarkets can be obtained from the annual reports of supermarket (Cheshire Hilber and Kaplanis 2014). Sales turnover is also one of the performance indicator of business.

Statement showing Financial Information of super markets
Particular	Asda	Tesco	Sainsbury’s	Aldi
Market Shares	200.17	206.36	255.1	204
Sales Revenue	£    482,13,000.00	£  552,95,000.00	£  319,07,000.00	£  220,50,000.00
Profitability Ratio
Gross Profit margin	5%	5%	6%	4%
Operating margin	2%	2%	2%	1%
Net Profit margin	2%	-1%	1%	1%

Sampling Method

The above table shows the comparison between the financial information of successful supermarkets chains like Asda, Tesco Plc, Sainsbury’s and Aldi which operates in the market of United Kingdom. The market shares of the company show that Sainsbury’s supermarkets enjoy a higher value in market shares as compared to Tesco, Aldi and Asda supermarket shares. The market shares of the Sainsbury’s as shown in the above table is 255.10 c which shows that the supermarket chain is performing better in terms of market shares as compared to its rival Supermarket chains. The market shares of Tesco, Aldi and Asda are more or less in the same range which signifies that there is intense competition among the supermarkets for market dominance. Asda and Aldi Super markets in order to get even with its rivals Tesco and Sainsbury’s is applying all the strategies which can have impact on the profitability and market shares of the company. The profitability ratios which include gross profit margin, net profit margin and operating profit margin also show that the same results when comparison is made in respect of all supermarkets. However, the sales revenue of Tesco supermarkets is much more than Sainsbury’s, Asda and Aldi which is evidence that the supermarket is popular among the customers and the customers prefer Tesco markets for one stop destination shopping.

 

Figure1: (Chart showing Market shares of supermarkets)

Source: (Created by the Author)

The above diagram shows that the market share of Tesco is comparatively less than the market share of Sainsbury’s. Sainsbury’s Market shares shows clear evidence that the company enjoys superior market share as compared to all other supermarkets which is shown by the above chart. The market shares of Tesco as per the research is 206.36 and the market shares of Sainsbury’s is 255.10. The market shares of Asda and Aldi are lower than Sainsbury’s and Tesco which is 200.17 and 204 respectively.

 

Figure 2: (Chart Showing Sales Revenue of Supermarkets)

Source: (Created by the Author)

The sales revenue for the year 2017 shows that Tesco has higher sales revenue as compared to Sainsbury’s. The sales revenue for Tesco is £ 552,95,000 which is more than other of its rival supermarkets like Asda, Sainsbury’s and Aldi which are £ 482,13,000, £ 319,07,000 and £ 220,50,000 respectively. 

 

Figure 3: (Chart Showing Gross Profit Margin of Supermarkets)

Source: (Created by the Author)

The above chart shows the gross profit margin of Tesco and Sainsbury’s Supermarkets. The gross profit margin of Tesco is 5.19% which is much lesser than Sainsbury’s which is 6.23%. The gross margin of Sainsbury’s is also much more as compared to gross profit margin of Asda and Aldi. The above analysis of gross profit margin shows that Sainsbury’s supermarket is earning more in terms of gross profit than its rivals which also suggest that the operational structure of the Sainsbury’s is better than Tesco.

Secondary Data Collection

As per the collection of primary and secondary data and analysis of the market conditions of supermarkets, it is clear that Salus Supermarket is facing intense competition. As per the research, it can be identified that a majority of the customers are satisfied with the services of other super markets and as per the questionnaire, customers are satisfied with the services and product range of ALDI. However, this is true for the sample of customers which was selected for the research, which may be different if broader basis of sampling is to be considered. 

The following recommendations can be given as per the analysis of the data collected of other supermarkets and market conditions which can provide assistance to Salus Supermarket to combat the competition pressure which is present in the market:

1. The supermarket should develop an organisational structure which focuses on the customer satisfaction and overall of level of services which is provided by the supermarket.
2. The range of products which the supermarket is currently offering must be increased. As per the research the customers always prefer when the range of products which are offered by the supermarkets are on the higher side (Hassan 2012).
3. The promotional activities of the supermarkets need to be increased in order to increase the competitiveness of the supermarket with other supermarkets. Promotional activities which the supermarket must introduce are advertisement in newspaper, social media, lucky draw schemes and gift and voucher offers (Sogn-Grundvåg, Larsen and Young 2013).
4. The supermarket must analyse the buying pattern of the consumers and collect feedback about which products would the consumers would like the supermarket to include in the range of products which the supermarket is currently offering. Such feedback can also be used to determine the satisfaction level of the customers.
5. In order to increase the sales of the supermarket, the management of the supermarket can offer discounts on weekends or exclusive offers which are appealing enough for customers (Atasoy 2013). This will increase the overall sales of the supermarket and thereby this will assist the supermarket to combat the competitiveness of market.
6. The management of the supermarket must ensure that the stocks of products which are purchased in bulk are kept in appropriate storage so that there is no damage done to packaging or freshness of the product. Most of the supermarkets purchase the products in bulk and face storage problems.

Conclusion

The research shows that the supermarket business is highly competitive and thereby each supermarket is adopting strategies to gain competitive advantage. These strategies include expansion strategies, cost reduction or increased sales strategies. In this case, Salus Supermarkets can increase the sales or reduce the cost of the supermarket in order to gain competitive advantage. The research shows that other supermarkets which are operating in the region have decent amount of sales turnover and gross profit margin. The research identifies buying patterns of customers, satisfaction level of customers and the range of products and sale services which the supermarket is offering. 

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