Throughout at least the past two decades the market share of large retailers, including Tesco PLC has increased considerably. This increased size has led to increased buyer clout for large retailers and has consecutively led to large retailers being able to sell their wares at decreased prices as compared to small retailers in several cases. This has led to a type of honourable circle for retailers such as Tesco whereby the economies of enhanced buyer clout can be spent in superior customer services or lower prices which then lead to increase sales and so even more buyer clout and so on an so forth. As long as this progression does not lead to extreme market power, a matter which the national competition authorities would have to take into account, it is expected to be advantageous to consumers by resulting in lower cost goods. Supposing that large retailers are not big enough to employ market power (i.e. to increase prices without dread of corrective proceedings from competitors) then putting a ceiling on the increase and growth of large retailers, in order to amplify the number of small retailers will lead to increased prices to consumers (as the capacity for retailers to take advantage of increased buyer clout will be restricted).
Limiting the development and progress of large retailers, because of its impact on restricting cost reductions, might also lead to restraining the number of regions in which retailers work. This means that reducing the expenses of operation is apt to imply that regions which until that time were not economically feasible become more feasible and so competitors enter into the region. Limiting the expansion and development of retailers such as Tesco is apt to decrease economies of scale and, as a consequence, may restrict the number of regions retailers operate in.
These consequences are motivated mainly by the buying clout enjoyed by large retailers. Independently, small retailers are unable to attain any considerable buyer clout. On the other hand, to the degree that they create buying faction, small retailers may be able to tackle some of the competitive return of large retailers with respect to buyer clout and so likewise tackle some of the consequences outlined above.
The latest attempt by retailers, principally Tesco, to set up small format outlets in high street sites along with increased operating hours has resulted in smaller retailers lose a great deal of their earlier unique selling point of handiness (when it came to site and operating hours). Similarly as the case with the increase in buyer clout, these adjustments are the consequence of market forces and imply that no public policy interference is needed on the pretext of economic efficiency (except that believed to be necessary by national competition authorities to tackle any competition problems that may result as a consequence of these changes).
While the expenses of setting up shop in London, as weighed against the remainder of the country are greater for all retailers, there are some expenses that influence specifically on small retailers. The expense of retail felony seems to impact more heavily on small retailers as measured up to large retailers. Into the bargain, the expenses of acting in accordance with government laws, such as the Disability Discrimination Act, fall unreasonably on small retailers. Local Authorities and other organizations such as chambers of commerce or trade associations, could offer backing and/or counsel to small retailers on observance of rules in order to decrease the expenses of putting into practice legislation.
The ease of access of retailers to customers is a problem for all retailers in UK, nevertheless a few of the problems of availability influence more severely small retailers than Tesco. This is due to the fact that Tesco operates on a scale that allows it to extend the expense of interference to customer availability over a higher level of sales (typically in a larger number of outlets) in contrast to small retailers. For this reason it is critical that the effect on small retailers of possible changes to means of transportation is taken into account by the authorities concerned.
Whereas several of these elements, along with elements such as the problem of ancestry, have led to a number of small retailers shutting shop, there are methods by which small retailers can compete more efficiently with Tesco. These consist of heightened specialisation and competing on the basis of customer service among other factors
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