The Asda effect

J SAINSBURY has lost its position as Britain's second biggest supermarket group for the first time in a decade, to Asda, after months of sliding sales growth. Asda, owned by Wal-Mart, the world's largest retailer, now holds 17 per cent of Britain's grocery market compared with 16.2 per cent for Sainsbury's

On a food basis alone, Sainsbury's continues to hold second place.

Causes of Sainsbury's decline:

Higher prices
Lower availability of goods
More limited non-food range compared with rivals.

Source: the Times July 31st 2003 (adapted)

Questions

Outline THREE ways in which supermarkets compete.
Is demand for food a) price and/or b) income elastic? (Explain your answer)
What has happened to the Sainsbury bid for Somerfield?
Devise a strategy by which Sainsbury's may be able to regain second place and even push for first.

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