SAFE PORTERS 5 FORCES
2.1 Past- factors affecting Safeway in the past 2.1.1 Porter’s five forces To investigate the factors that has brought Safeway to its current position the five forces as cited in Johnson, G & Scholes, K p.113 will allow for an in-depth analysis. Bargaining Power of Suppliers There are various suppliers of Safeway, such as Heinz, Kellogg’s, Procter and Gamble and so on, these suppliers have more power than Safeway. If these suppliers decide to supply larger bulks to Tesco; for example, then more of the suppliers’ products will be sold and also benefit Tesco with higher discounts on bulk purchases. Specific suppliers are only interested in supermarkets where they see an opportunity and future sales. The suppliers acknowledge the fact that a lot more of their products can be sold through the major supermarket chains, which is successful. The supplier’s power is also likely to be high when a specific supermarket cannot do without a particular brand, for example ‘Kellogg’s’ is a well-known brand and therefore the majority of the ‘cereal’ shelves are filled up with ‘Kellogg’s’ products, therefore Safeway could not survive without this brand. The number of stores Safeway currently obtains compared to its rivals is considerably low. (Please see Appendix 1). To this day, size has been Safeway’s weakness; as they only obtain 10% of the supermarket share while on the other hand Tesco posses approximately 27%. With Safeway’s explosive decrease in the past two years, the company now crawls over its rivals, selling fewer products then its rivals. This gives Safeway a under grading edge in scale, along with no control over suppliers. This crucial factor seems to be working against Safeway. About 30% of sales come from special offers, and prices of other goods have been pushed up to compensate for the lower margins.