Introduction - Shopper Strategies & Supermarket Behavior During Inflation
Inflation can have an effective effect on the cost of vegetables. When inflation rises, the price of “goods and services” increases, including the price of production and transport of food. The report sheds light on the effect of inflation on the “wonky vegetables”. There is a brief discussion on the role of supermarkets and scale economics on both buyers and sellers.
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(1) Briefly explain what strategies should be used by shoppers to offset the rise in inflation
The price of vegetables will also increase, causing them more costly for buyers. Furthermore, the price of living can rise during periods of increased inflation, resulting in buyers having fewer disposable earnings to spend on food, which can lead to reduced demand for vegetables (Jephcoteet al. 2021).
In the year 2008, in the UK there was a rise in market inflation. In that situation, the shoppers are found out various ways to offset the price inflation. In the month of September, the selling of frozen foods increased by 38 %. Increasing this percentage was reduce the chances of wasting food by 10%.
Another strategy taken by the shopper was that the shoppers were used to buying the low prices products over brand products. They are also been interested to buy more frozen foods.
(2) How are the compensation price and quantity of vegetables provoked by the increasing cost of petrol and energy costs and the other factors too?
Figure 1: Demand and supply diagram
According to the above figure, “p” represents the price term and “d” represents the demand term.
The increasing price of petrol and energy costs, as well as other elements, can have a marked effect on the equilibrium price and portion of vegetables. More increased petrol and energy costs can lead to more increased transportation expenses, creating it more expensive for growers to haul their vegetables to markets. However, other elements, such as “supply and demand”, weather customs, and country policy, can also affect the equaliser price and abundance of vegetables. Finally, the offset “price and quantity” of vegetables are confined by the market forces of “supply and demand”.
(3) a) Increasing the demand for “Wonky Vegetables”
In the year 2008, it was found out that there was an extra adding the value of £643 to the family bill. It became a pressure for managing the households in this situation of increasing the price of
petrol and the other energy costs. Some types of homeowners are also experienced in managing the budget for mortgage payments. The shoppers are selling the products at a cheaper rate of imperfect vegetables. There was a small suggestion for the homeowners that they should cook more from blemish for saving cash. The percentage of increasing fresh vegetables is 6%.
b)Iceland supermarket offers a 10% discount
In the year of 2008, high increasing inflation data shows that the inflation was hitting the percentage of 11% and the percentage annually is 1%. The percentage value jumped over 15 % of the values of food cost and the cost values of drinks. The cost values of eggs, meat and milk are highly risen in that year. In this situation, the Iceland Supermarket was taking this advantage and giving a 10% discount to the shoppers. They giving this 10% discount until the month of May end. This discount was used 4 million times and this is no type of shock given the backdrop of rising bills.
(4) a) Big supermarket behaving in an anti-competitive market
The traditional big supermarkets are discounters the “Aldi and Lidi”, in the percentage from of 12 % in the total month of three and this is valid to the month of October. The other two company is “Waitrose and Morrisons” they fare poorly in the quarter. In the year 2008, the sales percentage was down the percentage of 3 and the other percentage was down the percentage of 3.
b)Types of marketing structure for operating the supermarket
In the UK supermarket structure, most commonly the supermarket sector is operating in an oligopoly. The supermarket is operating as an oligopoly because there was a variety of large firms presented in this UK market (Rehman et al. 2020). For example, Tesco company have a huge market share in the whole world and another company is Sainsbury, this company has also a huge market o the basis of price and product ranges. Those markets also have the power to exploit prices and limit competition. In the UK supermarket, there is a large barrier to entry into this market. In general, it is quite difficult to get the planning approvals mandated to create a new supermarket.
(5) Concentration of market power damages the competition in a retail store
Market power is the power of a firm to dominate a market, either through pricing management or the power of supply. When one firm has a large portion of market power, it can use its leverage to harm competitors (Rehman et al. 2020). The market power can set prices below cost to drive rivals out of business, or it can use its control of supply to limit the availability of essential products. This decreases contest and can lead to increased costs for buyers. It can also lead to a reduction in the rate of “goods and services”, as firms no longer have to compete for customers. The suppliers who are small in nature are forced to make a deal with the big 4 supermarkets. Those supermarkets control all over 75 % of the total market. They are consuming more than half of the overall market share.
Role of scale economics as both buyers and sellers
Scale economics is the concept of gaining cost protection by expanding the size of a trade. “Buyers and sellers” can benefit from scale economics in an assortment of ways.
In the case of buyers, scale economics can mean lower prices on larger orders. By purchasing in size, consumers can save money in the form of discounts ( Rehman et al. 2020). However, consumers can lower their each-unit prices through “economies of scale”, which is the idea of performing cost protection by growing presentation volume. In the case of sellers, scale economics can indicate boosted sales and increased profits. More extensive orders manage to sell for increasing prices, and vendors can also benefit from economies of scale, as bigger orders are generally more efficient to create and need more occasional resources.
Role of supermarkets as both buyers and sellers
Supermarkets play an essential role in the purchasing and selling of goods. As buyers, they buy products from suppliers, factories, and wholesalers in a large majority, often at dismissed prices. This allows them to offer customers a wide choice of products at competitive prices (Jordà et al. 2019). Supermarkets also serve as vendors, offering their clients a comprehensive range of outgrowths, including meals, home items and more. By delivering these benefits and products, supermarkets are able to induce strong deals and profits. During the process this can be denoted they have influenced the suppliers and it makes a negative impact on the overall competitive market.
Conclusion
This report includes the effect of inflation on the “wonky vegetables”. Along describes the type of market structure in the UK supermarket. The supermarket is operating as an oligopoly because there was a variety of large firms presented in this UK market. Discussing the importance of scale economy and the supermarket. Scale economics can be good for both buyers and sellers. By expanding the size of the trade, buyers can save cash on bigger orders, and vendors can enhance their profits.
References
Jephcote, C., Medland, E. and Lygo-Baker, S., 2021. Grade inflation versus grade improvement: Are our students getting more intelligent?. Assessment & Evaluation in Higher Education, 46(4), pp.547-571.
Jordà, Ò., Marti, C., Nechio, F. and Tallman, E., 2019. Why Is Inflation Low Globally?. FRBSF Economic Letter, 19, p.15.
Rehman, M.U., Ali, S. and Shahzad, S.J.H., 2020. Asymmetric nonlinear impact of oil prices and inflation on residential property prices: a case of US, UK and Canada. The Journal of Real Estate Finance and Economics, 61, pp.39-54.
