Local Independent Grocery Co-Operative (IGCO)
Working as a Business Economist for the local Independent Grocery Co-Operative (IGCO), you have been asked by the Chair, Arata Takuma, to prepare a report on the impact supermarkets giants are having on privately owned local grocery stores in Southampton. He and his colleagues have read that the supermarket industry is seen as an oligopoly and this allows them to control a substantial percentage of the grocery market and force smaller grocery firms out of business, which of course is having an adverse effect on IGCO members.
In this report, Arata and his colleagues would like to know the following:
With examples, define and explain oligopoly and discuss how it differs from other forms of competitive models in economics.
According to the Student Room Web Site (https://www.thestudentroom.co.uk/showthread.phpt=2291249) the average student buys the following items from a supermarket:
2 cola 1L
Pack of 20 Sausages
English mustard
2 loaf of bread
Soft Cheese
Strawberry Jam
Beef burgers x 8
Ketchup
Wholemeal (or white) bread rolls x 6
Pack of bacon
Strawberry jelly
3 x Instant chicken noodles
Soy sauce
Stir Fry vegetables
Chicken breast steaks
3 x Canned instant custard
Canned peaches
2 x Canned pineapple
2 x milk 1L
(Please substitute where identical products cannot be found)
Using the student shopping list above you have been asked to compare the total cost of shopping if the items were bought from the following stores:
Tesco
Asda
Morrison
Sainsbury
Waitrose
Aldi
Local independent convenient store
ï From the data, you have collected explain (using economic theory and statistical analysis) the differences, if any, in food prices/total cost of shopping between the different stores. What does this say about the competitiveness and segmentation of the food market?
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