Dissertation

Acknowledgements

It is a pleasure to thank those who made this dissertation possible. First of all I would like to

thank my supervisor Dr Khalid Bichou, without his support and guidance from initial stages till

the end I couldn’t be able to develop an understanding of the subject.

I would also acknowledge my husband who supported me financially and mentally throughout

the dissertation. I am also indebted to my family and friends whose unwavering emotional and

moral support helped me to sail through this project. Above all I am most grateful to the

Almighty Allah for the divine intervention in this academic endeavor.

1

Abstract

It is gradually growing need for world/ethnic food products in UK. In this research we will learn

that how Asda sustain its world/ethnic food department. What are its procurement operations for

this department, whether it is outsourcing globally or locally. Increasing competition among

supermarkets encourage them to keep their prices low than others. Supermarkets are dominating

over small retailers day by day. This research will examine the ethnic customers’ attitude and

their priorities towards ethnic food products shopping. We will evaluate that what are the reasons

that Asda’s world/ethnic food products are expensive than local ethnic retailers. We will observe

Asda’s ethnic customers by knowing their strategies for ethnic/world food shopping, whether

they prefer quality over low prices or not.

Key words; Asda’s procurement operations, world/ethnic food products, ethnic customers,

supermarkets vs. small retailers

2

Table of Contents

Table of Contents

Acknowledgements..........................................................................................................................1

Abstract............................................................................................................................................2

Table of Contents.............................................................................................................................3

Chapter 1: Introduction....................................................................................................................6

1.1 Background of research.........................................................................................................6

1.2 Scope of the research.............................................................................................................8

1.3 Limitation of the research......................................................................................................9

1.4 Research objectives/purpose and Questions..........................................................................9

1.5 Contribution of study...........................................................................................................10

1.6 Research process and methodology.....................................................................................10

1.7 Research structure................................................................................................................10

1.8 Summary..............................................................................................................................11

Chapter 2. Literature review.........................................................................................................12

2.1 Evolution and characteristics of UK population..................................................................12

2.2 Immigrants...........................................................................................................................12

2.3 Importance of world food and ethnic consumer..................................................................13

2.3.1 Food industry affected by Economy crisis....................................................................13

2.3.2 World food demand and ethnic consumer.....................................................................13

2.3.3 Ethnic food....................................................................................................................14

2.3.4 Ethnic consumers and retailers......................................................................................14

2.4 Supermarkets vs. ethnic retailers.........................................................................................15

2.4.1 Risk and safety matters..................................................................................................16

2.5 Role of Supermarkets to promote Ethnic food; Asda..........................................................16

3

2.5.1 Asda’s private label Portfolio........................................................................................17

2.5.2 Company’s Competitive Positioning.............................................................................18

2.5.3 Asda’ procurement activities.........................................................................................18

2.5.4 Asda Stores....................................................................................................................18

2.5.5 Asda Supply chain Management...................................................................................19

2.6 Below cost selling................................................................................................................20

2.7 Changes in food prices.........................................................................................................21

2.8 Operating margins for Asda and other grocery retailers......................................................21

2.9 Customized products............................................................................................................22

2.10 What is Procurement?........................................................................................................23

2.11 Outsourcing........................................................................................................................24

2.11.1 Outsourcing strategies.................................................................................................25

2.11.2 Outsourcing: Benefits and risks.................................................................................27

2.11.3 Outsourcing in retailing...............................................................................................28

2.12 Conclusion.........................................................................................................................29

Chapter 3: Research Methodology................................................................................................30

3.1 What is Research?................................................................................................................30

3.2 Purpose of research..............................................................................................................30

3.3 Research Design:..................................................................................................................31

3.3.1 Exploratory research:....................................................................................................31

3.3.2 Descriptive Research:....................................................................................................31

3.3.3 Analytical or explanatory research................................................................................31

3.3.4 Predictive research........................................................................................................32

3.4 Research sources:.................................................................................................................32

3.4.1 Primary Data collection.................................................................................................32

4

3.4.2. Secondary Data Collection...........................................................................................32

3.5 Research Methods:...............................................................................................................33

3.5.1 Survey............................................................................................................................33

3.5.2 Personal Interviews:......................................................................................................34

3.5.3 Internet survey:.............................................................................................................35

3.6 Types of Data.......................................................................................................................35

3.6.1 Quantitative...................................................................................................................35

3.6.2 Qualitative.....................................................................................................................36

3.7 Design of Questionnaire.......................................................................................................36

3.8 Research Testing Methods:..................................................................................................37

Reliability:..............................................................................................................................37

Validity:..................................................................................................................................37

Generalisability:.....................................................................................................................38

Chapter 4: Results and Findings....................................................................................................38

4.1 Introduction:.........................................................................................................................38

4.2 An over view of literature review and Hypothesis:.............................................................39

4.2.1 Ethnic customers:..........................................................................................................40

4.3 Research questions:..............................................................................................................40

4.4 Targeted Population:............................................................................................................41

4.5 Presentation of acquired Data.............................................................................................41

4.6 Interpretation of Data:..........................................................................................................44

4.7 Result analysis:....................................................................................................................45

4.8 Hypotheses...........................................................................................................................46

4.8.1 Hypothesis 1..................................................................................................................46

4.8.2 Hypothesis 2.................................................................................................................47

5

4.8.3 Hypothesis 3.................................................................................................................47

4.8.4 Hypothesis 4.................................................................................................................47

4.9 Limitations:..........................................................................................................................48

4.10 Discussion and comments..................................................................................................48

4.11 Conclusion:.......................................................................................................................49

Chapter 5: Conclusion...................................................................................................................49

5.1 Introduction..........................................................................................................................49

5.2 Summary:.............................................................................................................................50

5.3 Limitation of the research....................................................................................................51

5.4 Suggestions for the future research......................................................................................52

6

Chapter 1: Introduction:

In this chapter we are going to have an overview of purpose of the research,

literature review, research methodology and analysis, we will also discuss that what are

the objectives which force us to do a research on this topic, what will the scope of this

research and how this research will contribute in future. Further we will talk about

structure of the research that how we are going to organize our chapters.

1.1 Background of research:

Growth in international trade, tourism, immigration and globalization encouraged the

creation of ethnic minority retail enterprises in UK (Jamal, 2003). There is also growing

competition among supermarkets these days. Many big supermarkets are dominating UK’s retail

market. Some of these supermarkets e.g. Asda, Sainsbury’s, Tesco, M&S are in leading

supermarkets. Because of high competition and increasing demand, many new branches of these

supermarkets are opening these days, which is fruitful and profitable for the companies but not

truly for the small traditional retailers. It has become universal phenomenon that supermarkets

are taking place of small retailers. (Goldman & Hino 2004).

In recent times as UK’s economy is recovering from recession, customers spending power has

been affected. Customers are spending much time at homes; supermarkets offered much more

cheap deals to attract customers (Euromonitor report, 2010) . This situation raised more

competition among supermarkets and there is a race in between them to offer cheaper products

than others

We will try to find out that how UK’s population is increasing along with world/ethnic food

demand, firstly world food is not only need of ethnic communities but also becoming popular

among natives, As ‘curry’ is one of the famous dish in UK now. Till 1970s ethnic communities

were unable to find their traditional food but gradually ethnic entrepreneur start introducing

ethnic food in retail shops (Jamal, 2004). With the passage of time supermarkets realized its

need and develop its World/ethnic food departments. Asda is one of those supermarkets which

have expanded their world/ethnic food department, especially in ethnic majority areas.

7

Asda is one of the large supermarkets in UK. It is subsidiary of an American company known as

Wal-Mart.

We are going to investigate the procurement operations of Asda for its ethnic/world food

department. We are keen to know that how Asda manages its outsourcing for ethnic/world food

products. We will discover that how does Asda’s supply chain work to maintain speed and low

costs. Duke (2008) CEO of world’s biggest retailer Wal-Mart said that now we should move

forward by maintaining supply chain making it more responsible socially and environmentally.

They have developed a reporting structure to sustain their ethical programmes. Asda deals in

households, stationary, electronics and garments. It has slogan of ‘Always low prices’. It claims

that it is comparatively cheaper than other supermarkets. We are going to focus its ethnic/world

food department. It has wide range of ethnic/world food products but it seems that its

ethnic/world food products prices are slightly higher than small retailers, so what are the factors

which are affecting on this department and whether customers are still interested to buy Asda’s

ethnic/world food products. Increasing demand for world food can’t be overlooked. In UK,

growing population of immigrants is an indication that in coming future, world/ethnic food

demand will raise. This will also be highlighted that customers trends towards ethnic/world food

shopping. Supermarkets are already considering this fact and offering these products in wide

range. There is also increasing competition within supermarket, some of big supermarkets such

as; Asda, Tesco, Sainsbury’s and M&S, focus that they offer better quality products at

competitive prices. We also want to know that how company outsource for some of its products,

what are the strategies companies should make while outsourcing and how it can be profitable.

How Asda deals with its world/ethnic food department and comparison with other supermarkets,

we will also learn that need of customized products and outsourcing in coming chapter.

1.2 Scope of the research:

Outcome of this research may help to understand that how Asda manages its procurement

operations of ethnic/world food products. Asda is much cheaper than other supermarkets as it

claims so having slightly higher prices in its world/ethnic food products, does customers still

interested in buying these products. This research can point out that if customers do not buy

8

their ethnic/world food products from Asda’s above department because of the high prices than

traditional retailers, what can be done to overcome these problems. When supermarkets open in

such area where other small traditional retailer already exist, supermarkets almost ruin the

businesses in that area, because customers prefer to do shopping under one roof, we will confirm

that is this statement true, that customers do not bother slightly higher prices while doing one

stop shopping. It also can be find out that whether customers prefer high quality over low prices.

Will able to know Asda’s supply chain activities.

Will get customers opinion about its Ethnic/world food department.

Can suggest how this department can be better after getting customers point of views.

1.3 Limitation of the research:

There are some limitations might occur while doing this research. As our topic is very

vast and time consuming so time limit can create limitations to cover this topic, provided by the

institute. Asda is a big company and gathering information about its procurement activities can

be difficult. There are many sources to collect required data of company e.g. books written on

company’ performance of procurement, company’s website, but there can be many hurdles in the

way of getting accurate information which we required. It can be difficult to access company’s

procurement strategies as this type of information any company keep in secret due to high

competition in market. Many companies do not show their suppliers information and mode of

outsourcing.

1.4 Research objectives/purpose and Questions:

Objectives of this research are to get knowledge about strategies, activities and operations

of purchasing ethnic/world food products by Asda. We also tend to know customers point of

views that whether they like to buy ethnic/world food products from Asda , to evaluate that

whether customers have knowledge that Asda’s above department is slightly expensive than

other small retailers. We are going to search about customized products that how companies

manage customized products departments, as customized products designed and manufactured

for special customers to fulfill their needs, so ethnic/world food products also come under

customized products because ethnic groups are in minority in UK. Asda sells toys, food,

household, clothes, electronics etc, customers always give priority to shopping from one place,

9

and it saves their money and time both. So our purpose of this research is also gather information

about ethnic customers trends that whether they buy their traditional food from their small ethnic

retailer or Asda, can they get all products they want to get? By collecting all these information

we will be able to know about customers preferences that whether they buy quality of food or

low prices. This matter will also be considered that Asda’s suppliers are based here in the UK or

it approaches origin country for ethnic /world food products. We will underpin the reasons if

customers buy higher prices ethnic/world food products from Asda. This research will cover

Asda’s ethnic/world food purchasing strategies and will also give information about customers’

ethnic/world food strategies.

So based on above objectives we are interested to get answers for following questions:

How Asda perform its procurement operations for ethnic/world food products; Global vs.

Local outsourcing.

What strategies can be followed by Asda to keep its ethnic/world food products prices’

low?

What hurdles can be faced by Asda if it outsources ethnic products from their country of

origin?

1.5 Contribution of study:

This study will provide beneficial information to Asda’s world/ethnic food department.

This study of research can contribute to give very constructive suggestions to Asda’s supply

chain and can be successful to get their attention towards different manners of outsourcing. It

also can help to students those who are interested in Asda’s supply chain. This study will show

the interests of customers which can help Asda to improve its department.

1.6 Research process and methodology:

The research methodology will be designed after reviewing literature and making

hypothesis. It will be decided that what type of research suits to our hypothesis, and what

methods can be used to collect required data. After getting information about the topic it will

analyze that whether secondary data is available to support our hypothesis or we need to collect

10

primary data. After that methods of research will be applied. Research process will support our

research objectives. We will make sure during the designing of the questions and collecting data

that our research is valid and collected data is reliable and we can generalize our research.

1.7 Research structure:

You should keep some important points while you structure your research, which is; that

you should plan your structure in understandable manners that help reader to go through whole

research thoroughly.

Structure of our research will be as follows:

Chapter 2 which will be the literature review, in this chapter we will get relevant details about

ethnic minority population in UK, and its characteristic. We will learn that how ethnic minority

groups contribute in UK’s economy. Further we will discuss demand for world food. Company

which we have chosen is Asda, so we will gather all significant information about Asda, its

supply chain and its world/ethnic food products department. We will also discuss customized

products and outsourcing, to create better perspective for reader to understand our topic easily.

Chapter 3 will be research methodology, methods which we will be use in research will be

described, that how we will collect data, and which type of data and what sources we will

approach.

Chapter4This chapter will present the results and findings. We will interpret and analyze our

collected data. And will adopt such methods which will make results of our gathered data, more

clear.

Chapter 5 Conclusion will be presented in this chapter. We will discuss limitations which we

may face in research. We will also present our recommendations for further research or

suggestions to make up loopholes which we may find during research.

11

1.8 Summary:

We have designed our research that will help us to identify some significant answers

related to our topic. On the whole we will discover that how one company’s supply chain

activities influence its sales. There will be some knowledge about UK’s ethnic minority

population and their choices for traditional food shopping. How supermarkets survive higher

competition by applying different strategies in their supply chain to attract customers and to

sustain competitive advantage in the market. We will also discuss small ethnic retailers, whether

they successful to attract customers by offering lower prices compare to supermarkets better

quality and slightly higher prices. We expect that all information we will get, would be reliable,

valid and we can generalize them.

Chapter 2. Literature review

2.1 Evolution and characteristics of UK population

In this section we will learn about the changes in UK population and also will find out the

reasons behind the increasing population.

UK’s population is reaching 60.7 million, grew by nearly 5%, between 1995 and 2007

(Euromonitor report, 2010). This growth is not just because of its inhabitants there are some

other issues involved in it, which we will learn as we go forward in this section.

2.2 Immigrants:

As United Kingdom is being a great attraction for third world countries and large

number of people are coming from those countries every year. People come in UK for different

reasons i.e. visit, business, for settlement and to study. A study which was basically based on

consumer lifestyles in UK shows that the main factor of growth in population is immigration,

which is raised as 154,000 immigrants in 2007 compared to 64,000 in 1995 (Euromonitor

report, 2010). The most recent growth in immigrant is after EU (European Union) issue. In 2004

a number of immigrants were added from Eastern European countries. These immigrants were

tended to get better work opportunities than their home country. Asylum seekers are also having

a great part in raising the population, according to the government data that in 2007 almost

12

164,635 people were granted British citizenship, one-third were from Africa, of these new

citizens, while more than one-fifth was Asians.

A large number of young people come from other countries to UK for higher education. By the

Higher Education Statistics Agency’s figures show that students from non-European Union

countries raised as 7% in 2005 to 2007 and their population reached nearly 240,000. However

most of them are Chinese and Indians.

On the other hand birth rate is lower than the death rate of inhabitant.

According to the above mentioned study it shows that the decline in death rate is because of

great efficiency and introducing new manners of keeping good health, creating awareness about

healthy diet by National Health Services and latest inventions for treatments of deadly diseases.

All these factors play an immense part to live a long life. And the reasons behind the decline in

birth rate are many; one of those reasons is inflation. People can’t afford large families and due

to growing expenses of food, housing and taxation, female are more attractive towards work than

before, so they are not encouraged by this situation to have more babies to leave them behind at

home.

So it shows that the UK is having people with background of different cultures, religions, taste

and nationalities.

2.3 Importance of world food and ethnic consumer

Before going in detail of importance of world food and ethnic consumer we have to take a look

over the food industry and trends.

2.3.1 Food industry affected by Economy crisis:

As the UK economy is struggling, the foodservice market also has been miserable. In

2009 a number of outlets closed down as their operators were struggling to pay up the bills and

other expenditures. Reports show that during 2007 and 2008 UK consumers faced major

increase in the prices of food, utilities and petrol. As credit crunch had a great impact not only

on the UK but whole world suffered in any way. The cost of basic foodstuffs increased rapidly,

in international market the prices of wheat, meat, corn, soya and dairy products have gone up

very quickly. As a result, basic food costs e.g. cheese, bread, eggs, milk and cooking oil have

risen extensively. Because of high prices supermarkets attract their customers by offering them

deals and discount offers.

13

2.3.2 World food demand and ethnic consumer

With the growing population of world, demand for food is also raising higher. .According

to the Japan International Research Center for Agricultural Sciences (JIRCAS), between 1995

and 2020, every year 70 million people will be added in the world population (Koyama, 2000).

It is necessary to project future food demand for many reasons, but the very important reason is

to assess the abilities to produce the food and trends of food demand, as it has been changing

from period to period and it modifies the pattern of world food trade, e.g. the demand of four

largely defined food categories -livestock, bulk, horticulture and other processed food in trade

has been increasing for two decades. These changes and demands are accelerating so these

changes are very important for any researcher who is willing to analyze policies relating to trade.

It will help to find the best producer and run the business according to the demand.

In the UK, data from the Office of national statistics shows a rise in the population is 0.6

percent higher than the last year, and the basic reasons for growing population in UK are fewer

deaths and more births to women from overseas, immigration rate is high, many people come

from different countries enter UK every year(Clifford, 2010). So now and in near future demand

for the world food will increase, and for supermarkets these growing ethnic population figures

need to be considered. ASDA is already concentrating on its world food department and

expanding its department according to the demand, better than its competitors.

2.3.3 Ethnic food

Ethnic food means foods which have cultural uniqueness, related to a particular religion,

race, nation or tradition. (Dwyer & Bermudez, 2003). Ethnic foods distinguish consumers

religiously, socioeconomically and regionally. In different parts of the world climate is different

and inhabitant of each particular area have special needs in their diet according to that climate, so

these needs developed different methods of food preparation. This trend is coming from

centuries and even people move to other regions they have that specific taste which keeps them

to stick to that traditional food. “Ethnic food represents traditions and cultures. Individuals in

different ethnic groups have different ways of categorizing foods, which are sometimes at

variance with medical views of foods as sources of nutrients that are based on physiological and

biochemical characteristics” ( Dwyer & Bermudez, 2003).

14

2.3.4 Ethnic consumers and retailers:

UK is having multicultural community; it means it is a big market for the ethnic retailers

and supermarkets. “ In a number of Western countries, worldwide immigration patterns of recent

decades have led to the creation of large ethnic subcultures”(Reardon et al., 1997). In the UK

immigrants especially from South Asia have their strong cultural identity and they are firmly

rooted to their background and this led to an ethnic minority business network. Not only

immigrants from south Asia but from other parts of world e.g. African immigrants also have a

great impact of their cultural background and they also have their small retailers for food,

garments and other stuff. According to an estimate business enterprises owned by ethnic

minority contributes £5bn in UK economy per year (Jamal, 2002). A study by Jamal (2002)

explains that demand for ethnic products has been growing since 1970s. this growth is because of

growing population of ethnic minority in the UK. These minority ethnic groups includes Indians,

Bangladeshis, Pakistanis, Chinese and Caribbean. There are some other minority groups e.g.

eastern European, jews,Turkish, Irish and many more. “During the early1970s, the survival of

most of the ethnic retail enterprises in the UK was based on the patronage behavior of ethnic

minority consumers who utilised their services” (Iyer and Shaprio, 1999)

Above mentioned authors describe this situation that the passage of time and as preferences and

taste of ethnic groups was developing, more and more ethnic retailers were encouraged. Now

the big supermarkets are also targeting for these ethnic minority groups by having food,

garments and other stuff, e.g. Asda, Tesco, Marks and Spencer, Iceland. Ethnic entrepreneurs

are targeting mainstream consumers as well as ethnic community while some of the mainstream

mass marketing retailers are ignoring the ethnic minority customers and they have been

criticized for doing this (Jamal and Chapman, 2000). By going through some articles it seems

that marketing of some of big companies totally ignored ethnic minorities, in their campaigns

and advertisements they paid no attention that they should also have bear in mind that the

minorities spending can have a big contribution every year. Mainstream retailers were missing

the chance to get benefit of £10bn every year which ethnic minorities spend every year (Jamal,

2003). But now it’s different from past times, people from ethnic communities can find their

spices, food, vegetables and meat from big supermarkets.

15

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VGN-47FDGF0-2&_user=7289589&_coverDate=01/31/2003&_alid=1422460712&_rdoc=5&_fmt=high&_orig=search&_cdi=6043&_sort=r&_docanchor=&view=c&_ct=7703&_acct=C000057807&_version=1&_urlVersion=0&_userid=7289589&md5=7fad001fdb8ac9613741d393a111e8e2#hit19

http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VGN-47FDGF0-2&_user=7289589&_coverDate=01/31/2003&_alid=1422460712&_rdoc=5&_fmt=high&_orig=search&_cdi=6043&_sort=r&_docanchor=&view=c&_ct=7703&_acct=C000057807&_version=1&_urlVersion=0&_userid=7289589&md5=7fad001fdb8ac9613741d393a111e8e2#hit21

2.4 Supermarkets vs. ethnic retailers:

Multi-stop shopping in small stores is much more time consuming and costly than the

one-stop shopping in any big supermarket (Betancourt & Gautschi, 1990). There are higher

opportunities for consumers to save their time and money in one way to do shopping in

supermarkets as they can find different type and variety of products under one roof. If we see it

other than conventional shopping we can have an experience to look at many other ethnic

products also. There can be income lag because of geographical differences, for example

supermarkets are accessible even to low income customers, but the issue is that their use is

unequal (Goldman & Hino 2004). Ethnic consumers keep shopping from their traditional

retailers even their supermarket is reachable. Many reasons can behind this attitude of customers,

e.g. price difference or less variety etc. Goldman et al. (2002) also point out some reasons that

customers have deep and old association with their traditional ethnic shop keepers who will greet

their customers and they have social attraction between them if the shopkeeper is from the same

ethnic community. In high income customer’s area supermarkets are successful because those

customers buy in big quantities and spend more money compare to low income customers which

buy regularly and in little quantity. Ethnicity does not matter when freshness of food and meat

comes, customers always prefer fresh food and meat and there should be authenticity of handling

it especially meat that should by killed in ritual ways (especially for Muslims and Jewish

community), so they buy it even it is slightly expensive (Jamal, 2005).

2.4.1 Risk and safety matters:

In 2000, Parliament set up an independent food safety watchdog known as The Food

Standards Agency (FSA). The aim to setting this agency up to make sure that the food industry is

practicing good and following the food law. The issue was raise by some of local authorities that

they were facing problems to communicate with the traditional retailers regarding some food

safety issues. According to the (FSA) Food standard Agency there were 7233 consumer

complaints regarding hygiene of food premises in 2001 (Rudder, 2004).

16

2.5 Role of Supermarkets to promote Ethnic food; Asda

Research on grocery market in the UK shows that it is dominant by some of big

supermarkets, ASDA is one of them. As UK is multicultural country, with many different ethnic

groups, supermarkets know the growing need of world food so most of the supermarkets are

concentrating on their world food departments with wide range of products availability to fulfill

the customer needs and obtain the maximum level of customer satisfaction.

ASDA is one of the leading supermarkets in Britain; it was started as a dairy collective which

was based in Yorkshire. ASDA retails food, toys, clothing and general merchandising. Products

include finance and travel agency services, insurance, a home buying and selling service,

telecommunication and insurance services in the North East. Petrol sales, private label

pharmaceuticals and in-store pharmacies are also offered by the company. Asda’s CEO is Andy

Bond. It is second largest supermarket in UK after Tesco. George and Asda living standalone

chains are also run by the store. In 1999 it has become subsidiary of world’s largest retail

American company Wal-Mart. ASDA claims that it is British lowest price supermarket. At the

end of 2008, ASDA expanded its internet grocery retailing. As its competitor Tesco was getting

much profit from its internet grocery retailing facility Asda followed the same trend and made a

big difference in its profit which company was having before. As recession hit businesses, battle

is started to compete with lower prices between retailers to attract more and more customers and

to survive in the market. According to the growing demand of world food ASDA introduced its

first world food store in London and also occupies a big department of World/Asian food in its

each store. Many retailers purchase their World/Asian food products by outsourcing both locally

and globally.

ASDA is well aware of the needs of customers, and by knowing the upcoming demand it takes

decisions before its competitors for example ASDA George has launched a range of Asian

clothes, for the very first time in the UK’s supermarkets. ASDA not only introduced authentic

ethnic clothes range baring in mind customers demand but also it kept its image of having low

prices. Now, it’s not just Asian customers are attracted to the new introduced clothes, it also

captured the attention of other communities.

17

Another bold and unique step which is taken by ASDA is having Halal meat butchers in the

stores, which attracted a number of Muslim customers. People are happy to find whole range of

products under one roof and ASDA is successful to get attention of Asian community.

2.5.1 Asda’s private label Portfolio:

Summary 2 Asda Stores Ltd: Private Label Portfolio

Private Label

BrandSector(s) Notes

Smart price

Grocery, stationery, home wares and

pharmacy

Lowest price range

Asda Grocery and general merchandise Standard price range

Extra Special GroceryPremium positioned

range

Organic Grocery Organic range

Good for you! Grocery

Healthier range

More For

Kids Clothing and home wares Child-focused products

Figure 2.1 Source: Euromonitor International from company reports, trade press

We can divide Asda’s private label portfolio into three ranges of prices: premium, budget and

standard. If we compare Asda with other supermarkets, it has a somewhat narrow portfolio of

private label products.

18

2.5.2 Company’s Competitive Positioning:

In retail ranking of 2009, Asda moved up from its position to second place, and its value

share was over 6%. The major reason of its progress was its share in hypermarkets, with

company’s leading position with 35% value share. Asda has its “lower price” impact on its

customers, and its wide range of product offering is also attractive to consumers, its offerings

include clothing, groceries, electrical goods, home furnishing, books and flowers etc. the

company is having its ‘why pay more?’ slogan to promote more sales and to retain its impact on

customers. Asda’ internet retailing policy is making its position more strong in the market as its

low delivery fees marketing campaign (Euromonitor, 2010).

Summary 3 Asda Stores Ltd: Competitive Position 2009

Channel Value share Rank

Hypermarkets 35.4% 1

Supermarkets 0.0% 12

Discounters 0.1% 4

Variety Stores 7.6% 3

Internet Retailing 4.6% 3

Mass merchandisers 100.0% 1

Figure 2.2 Source: Euromonitor International from trade press, company reports, trade interviews

2.5.3 Asda’ procurement activities:

Asda is having plans to retracting on China manufacturing, because raging inflation in

China is forcing company to pull back its manufacturing operation. Andy Bond, CEO of Asda,

told local sources that it is significant that we move our manufacturing operations from China

and we are looking to outsource some low-cost countries such as Vietnam. Bond said, "In

common with other retailers we are always looking to where we source from, and Vietnam is one

of the countries we are looking to." (Jerrel Yun, Singapore Published: Sep 05, 2008 Procurement

Asia). Asda has an approved list of its main contractor and designers. Its main suppliers are Lain,

HBG Construction, Carillion and Pearce Retail; these contractors are working for more than five

years with the company. These partners are agreed on profit margins, overhead costs and

19

preliminary packaged, for all projects. These are all big contractors but subcontractors work is

tendered.

2.5.4 Asda Stores:

There are 374 stores situated throughout Wales, England and Scotland. Asda works with

over 2,800 suppliers. They employ 150,000 colleagues and claims that their employees are the

friendliest in the industry.

Asda’s world food Department:

Asda has a bigger department for its world/ethnic food products, compare to its competitors.

2.5.5 Asda Supply chain Management:

As supply chain is fundamental part of any business, but especially for supermarkets.

(Account watch Asda, 2008) In this section Asda’s supply chain director, Andy Ellis will

explain that how does Asda’s supply chain works and what are the goals to achieve by its

effective supply chain. He describes that effective supply chain is very significant not only for

the firms but also for the customers as they can’t get fresh, up-to-date products. So it’s essential

that businesses give importance to their supply chain in a new better way, and develop new and

innovative ideas to bring high quality and affordability to products which they offer their

customers.

2.5.5.1 A customer-centric approach:

Andy Ellis, Asda’s supply chain director says that “For Asda, supply chain not only

improves our business, by driving top line, reducing costs and improving margins, but it also

saves resources and means that we can pass all of these savings back to our customers”(British

Retail consortium, 2008)

Furthermore, he describes that they attempt to take a customer-centric approach; so they can

understand customers problem and priorities so they can adopt supply chain in a way to reach

customers needs. So how they make it possible by adopting technologies and supply chain

processes in a way that help them to capitalize on growth even delivering value to their

consumers? He explained it that it is followed by their distribution strategy, so cost effective and

20

fast supply chain adapts sudden changes in demand very quickly and gives us tangible results,

and he says that they are very sure that right results can be delivered to the consumers.

However, he admits that in some cases the speed is too slow of getting stocks from their

suppliers. The route selection decisions are very important, so they understand that need options

on technologies, by making right decision with the help of technologies they can get competitive

advantages.

2.5.5.2 Significance of Innovation in supply chain:

For any business to be successful, it needs innovation in supply chain. Asda has many

distribution channels to make sure that every single of products must be available on right time

in right store. Supply chain director of Asda Andy Ellis say that they encourage their depots

through multi-tier system, to act as suppliers. When they get products order from regional

distribution centers, which merge the purchase order at import centre by the system. After that

they pick the order and send it to the depots, which is the final pick before sending products to

the store. This way is not only enable flow network in more effective manners, it also make less

inventory in regional DCs (distribution centers). In this way they hold bulk stock centrally and

distribute it on need basis. They also have their unique idea that they order stocked and stockless

products from suppliers on same purchasing order. In this way supplier will be able to send fast

moving products with slow moving products on same truck e.g. Weetabix which is fast moving

and slow moving product such as specialist organic cereal bar. By adopting this strategy it is not

only flexible it also allows suppliers to fill up their trucks. It will reduce the vehicles on the road

dramatically.

2.5.5.3 Accuracy and visibility:

Technology changes very fast, so there is need to keep company up-to-date by adopting

new changes. Advancement in technology enabled retailers to track their deliveries. Asda has

global transportation system (GTS) which can track their each and every vehicle with deliveries

on the road, so stores can get up-to-date reports at any time. Asda also operates product tracking

21

systems, including voice activated technology and radio frequency. By using these systems

throughout the supply chain, Asda obtain excellent level of visibility and accuracy of products.

2.6 Below cost selling:

Below cost selling mean when any product is being sold for less than its input cost by

retailer. It is for the consumer’s benefit, but below cost selling can create competition.

Below-cost selling by Asda and other grocery retails:

It is confirmed by UK’s ten grocery retailers that they are engaged in below cost-selling, these

stores are; Asda, Aldi, Lidl, Netto, Morrisons, Somerfield, CGL, Sainsbury’s, Waitrose and

Tesco. (Account watch Asda, 2008)

There are mainly two or three product groups can be related with below-cost sales, for most

grocery retailers. There are two main product groups across all ten stores which are sold below

cost, are tinned packet goods and alcohol. The other product groups include books, DVDs, CDs

health and beauty products and non-alcoholic beverages. It has been observed that branded

products take shorter period being sold in comparison with own-label products.

Reasons for below-cost selling:

Retailers told different reasons for selling products below cost.

To maintain their position in competitive market.

To attract customers on certain times of the year e.g. Easter, Christmas

For seasonal products such as vegetables and fruits, when they have these products more

than stock.

When they launches some new product.

2.7 Changes in food prices:

Mainly Influences on grocery prices because of competition between grocery retailers.

Other reasons for differences in prices can be role of tax in food prices, planning system and

different property markets. In the UK food prices increased compared with other EU countries.

(Scotland on Sunday, 3 June 2007)

22

2.8 Operating margins for Asda and other grocery retailers:

In Account watch Asda (2008), it shows that the large grocery retailers including Asda

earn higher operating margins compare to independent retailers, in 2007 large grocery retailers’

operating margin was 3.6 to 4.5 per cent higher than average margin earned by the 50

independent grocery retailers which was 2.9 per cent.

ASDA Morrisonos M&S Sainsbury's Tesco Waitrose0

1

2

3

4

5

6

7

2000/012001/022002/032003/042004/052005/062006/07

Figure 2.3 Source: Accounting watch Asda.UK Grocery Retailers, Operating Margins, 2000 to

2007

Purchasing costs for Asda and other grocery retailers:

According to Account watch Asda, (2008) the analysis of cost advantage for large stores e.g.

Asda, Sainsbury’s and M&S compared with other retailers is the terms of purchasing goods from

suppliers.

It indicates that:

The large grocery retailers and wholesalers have a major advantage in purchasing terms

than the other small retailers

Among large retailers, Tesco has a considerable advantage in purchasing conditions.

23

After Tesco, some of the other large retailers i.e. Asda, Morrison’s and Sainsbury’s, who

also have significant purchasing terms advantages.

Remaining large retailers pay higher prices than above mentioned stores but pay almost

same prices as each other.

Some other additional information about company and its competitors e.g. Supermarkets

company shares by value 2005 to 2009, supermarket brand shares by outlet 2006-2009

and Brand share by selling Space 2006-2009 can be learned by following charts:

Supermarkets Company Shares by Value 2005-2009

% retail value rsp excl sales tax 2005 2006 2007 2008 2009

Tesco Plc 39.5 39.3 39.4 40.2 39.5

Wm Morrison Supermarkets

Plc 19.0 19.5 20.0 20.9 23.3

Waitrose Ltd 6.9 7.4 8.1 8.5 8.7

J Sainsbury Plc 6.6 6.7 6.9 6.9 8.0

Somerfield Ltd - 8.1 8.1 8.0 6.5

Iceland Frozen Foods Ltd 2.9 2.9 3.7 4.1 4.8

Co-operative Group, The 2.6 2.6 2.7 2.9 4.0

Midlands Co-operative Society 0.9 0.9 1.0 1.0 1.0

Farmfoods Ltd 1.0 1.0 0.9 0.9 1.0

The Midcounties Co-operative 0.7 0.8 0.9 0.9 1.0

Musgrave Group Plc 0.4 0.4 0.2 0.2 0.2

Asda Stores Ltd - - - - 0.0

Kwik Save Group Plc - 1.2 - - -

Somerfield Plc 10.0 - - - -

Others 9.5 9.3 8.1 5.3 2.1

Total 100.0 100.0 100.0 100.0 100.0

Figure 2.4 Source: Official statistics, trade associations, trade press, company research, trade

interviews, Euromonitor International estimates

24

Supermarkets Brand Shares by Outlets 2006-2009

sites/outlets Company 2006 2007 2008 2009

Iceland Iceland Frozen Foods Ltd 674.0 663.0 723.0 794.0

Co-op Co-operative Group, The 455.0 500.0 542.0 778.0

Somerfield Somerfield Ltd 748.0 750.0 755.0 605.0

Tesco Superstore Tesco Plc 435.0 435.0 446.0 451.0

Morrisons Wm Morrison Supermarkets

Plc330.0 337.0 346.0 384.0

Farmfoods Farmfoods Ltd 303.0 303.0 304.0 307.0

Waitrose Waitrose Ltd 173.0 183.0 187.0 201.0

Tesco Metro Tesco Plc 162.0 164.0 172.0 177.0

Sainsbury's

Supermarkets J Sainsbury Plc 148.0 153.0 159.0 172.0

Midlands Co-op Midlands Co-operative Society 141.0 150.0 159.0 164.0

Midcounties Co-op The Midcounties Co-operative 120.0 130.0 138.0 144.0

Budgens Musgrave Group Plc 88.0 51.0 50.0 45.0

Asda Asda Stores Ltd - - - 4.0

Kwik Save Kwik Save Group Plc 170.0 - - -

Kwik Save Somerfield Plc - - - -

Somerfield Somerfield Plc - - - -

Safeway Wm Morrison Supermarkets

Plc- - - -

Others Others 504.0 452.0 400.0 235.0

Total Total 4,451.04,271.

04,381.0 4,461.0

Figure 2.5 Source: Trade associations, trade press, company research, trade interviews,

Euromonitor International estimates

25

Supermarkets Brand Shares by Selling Space 2006-2009

surface area '000 sq m Company 2006 2007 2008 2009

Tesco Superstore Tesco Plc 1,236.71,224.

11,244.0 1,245.4

Morrisons Wm Morrison Supermarkets

Plc817.0 829.7 851.9 948.4

Somerfield Somerfield Ltd 551.2 555.0 558.7 447.7

Co-op Co-operative Group, The 249.4 277.0 300.3 441.0

Waitrose Waitrose Ltd 285.5 322.2 349.2 376.4

Iceland Iceland Frozen Foods Ltd 306.6 301.6 332.9 372.6

Sainsbury's

Supermarkets J Sainsbury Plc 241.8 248.0 266.4 288.1

Tesco Metro Tesco Plc 177.7 176.8 186.1 192.0

Farmfoods Farmfoods Ltd 128.8 128.8 129.2 130.5

Midlands Co-op Midlands Co-operative Society 80.1 85.0 91.1 95.0

Midcounties Co-op The Midcounties Co-operative 69.1 74.6 78.2 81.6

Budgens Musgrave Group Plc 28.7 17.2 16.9 15.3

Asda Asda Stores Ltd - - - 10.6

Kwik Save Kwik Save Group Plc 125.6 - - -

Kwik Save Somerfield Plc - - - -

Somerfield Somerfield Plc - - - -

Safeway Wm Morrison Supermarkets

Plc- - - -

Others Others 940.8 838.8 699.5 506.9

Total Total 5,239.15,078.

85,104.4 5,151.4

Figure 2.6 Source: Trade associations, trade press, company research, trade interviews,

Euromonitor International estimates

26

2.9 Customized products:

The definition of customized product is a unique product which is designed and

manufactured for special customers to fulfill their needs. In recent years, demand for the custom

products has been increased. It has become a trend. Customized products give a sense of

uniqueness to the customer. It is Managers responsibility to understand that why customers

demand for customized products. In this modern era customers want to be looked different by

having personalized products. Intense competition in the market, fast changes in technology and

low prices for standard products derived industries to a new revolution. According to this

revolution customer service and customized products are very important. Customized products

are capturing the huge attraction from customers. Now a day’s customer’s demands are low

prices, good quality and customized products which should be exact to their expectations. Most

famous customized products are mobile phone, cars, garments etc. in computer industry DELL

was the first company who introduced customized computers for the very first time. We can say

that any products which are not mass produced and for the little number of customers are

customized products.. Peppers et al. (1999) say that if company is unable to identify its

customers, that company cannot differentiate and address each customer’s needs. Here are four

key stages which can be used by any company to build a relationship with the customers;

27

Figure 2.7. Source internet.

The very first step is to classify the customers and identify their needs by understanding their

behavior. For launching any product successfully company should keep in mind the trends of

that time and collect information about the customers as much as possible. The second stage is to

distinguish their customers; it would be helpful to recognize the most valuable customers. The

third stage is very important to make a good association with the customers by interacting with

them. Customized behavior of the company is very significant as well as marketing program for

effective relationship. There should be a good connection between manufacturer, supplier and

customer for successful customized product supply.

2.10 What is Procurement?

“Procurement is the purchase of goods and services from an external agency.”

When any organization defines their aims and objectives, they decide what is needed. They take

a look at public sector policy, legislation and then of course market condition. They work out

that how the procurement will be done. Procurement includes all purchasing decisions such as

marginal benefits, delivery and handling and price fluctuations. There are two categories for

procurement, one is called direct and the other is indirect, first category is production related and

other is non production related procurement. Direct procurement comes under manufacture

settings, which directly affects the production functions of manufacturing companies. When

company decides what they have needed they gather the information about suppliers which can

satisfy the requirements. After identifying the suitable supplier they can either ways contact the

suppliers, by advertising the quotation or proposal or contacting direct to the suppliers. Then

company collect the samples of products, check the quality, and all considerable trials and

undertaken for example warranty, installation and maintenance. After this they evaluate all of the

tenders and company award the contract to those suppliers which fulfill the set criteria. During

this process company negotiate on price, availability and delivery schedules. Now it is

company’s responsibility to monitor the supplier’s performance regularly, and after set

contracted time period companies renew the contract or by considering other suppliers company

may be advertise again.

28

2.11 Outsourcing:

Outsourcing meant to be the specific sources of purchasing goods or services which are

external to the organization. Organizations adopt outsourcing when they find it better, cheaper

and faster way of completing the purpose by an outside firm. There are many definitions for

outsourcing e.g.

“Paying other firms to perform all or part of the work” (Structural Cybernetics, c. 1996).

“…. Having an outside vendor provide a service that you usually perform in-house”.

(Laabs, c. 1997).

“The use of external suppliers as a source of finished products, components, or services.”

(anynonmous)

These definitions give us a hint to learn that what is outsourcing although they do not give us

detail meanings and methods of outsourcing. This is to be understood by its name that it is

something which gives chance to the companies to get finished products or services from

external resource. It is not just about the requiring help from outer resources but there are also

many things to be considered in regarding of finding the right and cheaper suppliers and finding

new methods of securing the delivery of finished goods, raw materials, services and

components. Another description for outsourcing is “the practice of handing over the planning,

management and operation of certain functions to an independent third party” (Neal, 1995). The

concept of outsourcing refers to find some expertise to handle specific business functions outside

the organization. As cutting costs is common throughout the industries, so management decides

before outsourcing that which method will be beneficial whether “make or buy”. Outsourcing is

driven by three major changes that affected society and work, William Bridges describes these

changes in his book, Job Shift, as;

IT: work is more dependent on computers; production of products by the help of IT has

strikingly changed the structure of work.

Organizational change: organizational structure is changing by the time. New methods of

running the organizations successfully e.g. re-engineering, customization and

organizational changes are now more important.

29

Communication: development in communication technology is shrinking the world day

by day. People are more aware of what is happening in the other part of world, more than

ever, so work can be done in any part of the world e.g. companies prefers to appoint their

call centers in cheaper labor countries.

So, as a result these three changes in organizations are fundamental motives for outsourcing.

Outsourcing for IT is more attractive by companies who are more likely to have contact with

customers e.g. banks, mobile phone companies, they prefer to move their call centers and data

centers in low-paid worker countries’ like India. Fast changes in technology is making firms

more aggressive to compete others, they are more interested to hire existing facilities to maintain

their position in the market rather than manufacturing. IBM outsourced its whole Human

Resource department, to gain the competitiveness, accountability, profitability and flexibility.

There is more pressure of shareholders which lead companies to outsourcing in manners of

getting more profit and cutting the costs. The outsourcing trend has been growing; these

following figures show the increasing interests of companies in outsourcing.

It came across by the research that the biggest clients by industry are the manufacturer, retail

trade and wholesalers.

Figure 2.8

30

2.11.1 Outsourcing strategies:

Outsourcing is become essential content for businesses. Firms are now more concerned about

cost reduction and efficiencies towards the customer service, by realizing this fact that they do

not need to manufacture or produce their own components or products, they are focusing on

reliable and cost effective external resources. Many successful firms are very careful about

outsourcing strategies and they outsource their core processes such as manufacturing, marketing,

design and engineering. Outsourcing strategies brings affective competitive advantage and

enhance companies’ performance as they can give more attention to their core processes. It is

better solution to outsource the difficult business process which can be expertise for some

specific procedure, access to modern technology and to improve service levels. There are multi

dimensional strategies for outsourcing. Outsourcing will not work unless it will be implemented

in a right way:

First of all mark down the company’s core competence and basic sources of profits, and

analyze that if you really need to outsource them.

Find out the processes or functions within the firm that do not help company to stand out

in the market. These parts can be outsourced which do not offer a competitive advantage

for the business.

Company has to evaluate the costs, in a sense that whether company can afford to make it

or it will be cheaper done by other company. Understanding of whole situation is very

important for the benefit of the company, so it is necessary to over look that why

company need to outsource some functions, to cut the costs, enhance company’s

performance or to achieve the goals.

Be careful while selecting an outsource partner because it will be the representative to

your company in the future.

You have to monitor regularly when you have decided to outsource, it is better to check

performance of outsource partner to avoid any hassle in future.

After deciding to outsource some processes for the company look out the ways of

improvement.

31

It is true that outsourcing is a trend to reduce costs and enhance performance for any

company but it does not mean that company should have to adopt it unless it is necessary.

(Kelley, 1995).

To manage the outsourcing is very crucial. There are some important things to be considered, at

very first it must be subjected to a cost-benefit analysis, then estimate that the contractor you are

hiring is eligible for doing better job in faster manners. Once company decided to outsource

some function there are some step to be taken:

Inform your staff that some affected function is needed to be done by external.

Make a request proposal

Encourage and invite external and internal bids.

Assess the bids.

2.11.2 Outsourcing: Benefits and risks:

Major benefit of outsourcing for the organization is cutting the costs. As many companies

outsource for different departments, those companies who outsource their HR, such as pay roll

transactional HR work, handling with the critical situation e.g. employee fraud, when any

modem technology introduced in the market, staff requires training so organizations outsource

for these types of trainings, all companies have to comply with the current legislation so they

outsource for guideline. Technology is very important drive for outsourcing. Many processes

outsourced because firms want to fulfill the modern technology requirements, or they need quick

access to the current technologies and their staff to be trained, so these types of tasks can be

handled easily by external resources which are loaded with the expertise and skilled people.

There is another benefit of outsourcing which is quality and service improvement.

As outsourcing has many advantages and benefits to the organizations, it also has some risks and

limitations. Research shows that many organizations which are experiencing outsourcing,

describes that outsourcing is not much cost effective and free of problem as it was estimated. It

has indicated by a survey that half of the respondents found outsource activity more expensive to

manage than originally expected.(Albertson, 2000). There are some service risks involve in

outsourcing e.g. it is very hard to find flexible contractor, who can be changed with the

32

preferences of the organizations. Furthermore it is more likely that your dealer may enter the

market as your competitor, when you hire some company to manufacture your design it is

possible that manufacturer copy your design and start making for his company, there is live

example of a U.S. manufacturer of bicycles known as Schwinn, who outsourced Taiwanes firm,

Giant manufacturing for its bicycle frames. A few years later, Taiwane firm ruined the Schwinn’

business by entering the bicycle market. It is reported by a survey that 25% of respondents

expressed that outsourced caused the less personal relationship with employees and decrease in

customer service. (Lily, Gray & Virick, 2005). Outsourcing also effects on workers performance

and morale (Elmuti & Kathawala, 2000). On the whole if we overlook the performance of

outsourcing, it has some flaws and risks as far as some benefits. It is not beneficial for a

company to outsource at extreme levels because it allows outsider to learn about the company’s

secrets and weak points which cannot be favorable for the company and it reduces the value of

any firm. However, even with these drawbacks and risks, it is calculated that between 1% and

20% of outsourced Human Resource processes have been brought back in-house (Gurchiek,

2005; Pollitt, 2004).

2.11.3 Outsourcing in retailing:

Before going in details of retail outsourcing we better have a look at outsourcing in

manufacturing industry. If we look back in the beginning of 20th century when Henry Ford was

producing T Ford model, everything was manufactured in a giant factory. By the passage of the

time, demand for the cars, customers requirements increased and development in the technology

forced manufacturer to think of ‘make or buy’ strategy. So manufacturers started to buy parts and

raw material from the expert suppliers. Outsourcing trend in manufacturing is more common

compare to retailers. According to Van Hoek (1999), outsourcing in European grocery supply

chains is lesser than in other industries. Retailers to some extent are limited to shipment and

warehouse outsourcing. There are some examples can be spotted where retailers are trying to

outsourcing some processes but with the lack of strategies. Although the suppliers to the retailers

are operating globally, but the retailers are all depending on these suppliers rather than

considering global manufacturers. In the supermarkets they deal in variety of products so they do

not bother to contact to direct manufacturer for each product so they buy from suppliers. Buying

from suppliers is not a cheaper way, as there is somehow some expenses are involve, for

33

example products which comes through suppliers from manufacturer to retailers, are value added

products, as there is some services involves by suppliers. Retailers should concentrate the ways

of outsourcing which are more beneficial to them. For some products which are more popular

within the customers and many supermarkets are selling those products, create competition

among them, so it would be better to purchase from the manufacturer than the supplier to keep

prices low and to gain competitive advantage. Retailers should identify their core competencies

and spot those subsystems which can be outsourced. By applying strategic outsourcing retailers

can boost their income, paying attention to those functions which give that retailer uniqueness in

the market should be operated within the organization. Research by BRC (British Retail

Consortium) and Pinsent Masons 2007 shows that outsourcing is successfully embraced by the

retail sector. Data shows that 88% of companies which are outsourcing confirmed that it has

been successful. The findings of survey show that 70% of respondents agreed that the most

popular functions which have been outsourced are warehousing and IT, and remaining 30%

which are not outsourcing are more likely to consider it in near future. Director General of the

British Retail Consortium, Kevin Hawkins says that “outsourcing can make retailers more

competitive, but it is more than just saving money. It requires serious effort and retailers must be

clear from the outset about their aims and objectives.” Some of the respondents of the survey

showed their interest of of-shoring because it is cost saving but some of them are not agreed as

culture shift may be not suitable for them, as relationship would not fit. According to the

research that sufficient preparation is vital and company should be clear about what they want to

get from outsourcing. Outsourcing is favorable for the company in a sense of introducing its

efficiencies. It is indicated clearly by the survey that management boards should review that

which operational processes can be handled in-house, regularly. By doing so they can identify

those functions which can be done by third party.

In retailing industry outsourcing is vital to achieve benefits and to win customers trust and attract

them in a better way than the competitors.

2.12 Conclusion:

By going through all the related data and research reports, some points can be

highlighted. In the recent years when immigrant from different part of the world start entering

the UK around 1970s, they couldn’t get any of their traditional food product here. But with the

34

passage of the time people from the ethnic communities start realizing that it is necessary to have

traditional retailers. In the beginning ethnic retailers just have their own products, and

conventional retailers did not bother to have products for other communities. But now a days

with the growing population of immigrants, not only small retailers but supermarkets also

representing the minority ethnic groups. Literature about ethnic foods by small retailers and big

supermarkets looks like that the minority ethnic consumer can now shop from supermarkets for

those traditional food product which he could only find at local ethnic retailer. Asda is playing

significant role in developing its department for world food, but it came across that although

Asda is cheaper than other supermarkets but its world food department is even expensive than

the local retailers, so question is that what are the factors behind this reason.

Asda is outsourcing for its world food from local supplier?

What are the Asda’s procurement strategies for world food products?

Is Asda popular or not within the ethnic groups?

Do people like to buy their ethnic food from local ethnic retailer or from supermarket?

Slightly price difference does not matter when customer do one-stop shopping?

Does ethnic and world food require similar marketing and sales strategies to those for

conventional food?

35

Chapter 3: Research Methodology:

In this chapter we are going to describe that how we will collect the information regarding

our hypothesis. We will also study research methods, and about appropriate methods,

resources and types of data collection, which suits to this dissertation.

3.1 What is Research?

Kothari (2008) defines research as a systematic and scientific search for significant

information on a particular topic. He describes research as an art of scientific investigation.

We can get more knowledge about the meaning of research by this definition, “Research is a

systematic and objective analysis and recording of controlled observations that may leave to

development of generalizations, principles or theories result in prediction and possibly

ultimate control of events” (Best, 2006).

3.2 Purpose of research:

The purpose of our research is to gather implicit information about the company’s

procurement department, to discover the factors behind prices differences of World/Asian

foods between the company and small retailers. It is very exciting topic for the author to get

know how about the ethnic minority groups strategies of shopping for their traditional foods.

There is also a curiosity about the company’s specific department’s slightly higher prices in

comparison with other small retailer; even it’s having a slogan of ‘lower prices’.

3.3 Research Design:

Research design is a specific framework which shows us that how we can identify the

problem to present as a research report. It is a plan or a structure for a study that can be used

as a guide in gathering and analyzing data. We design our Research in a way that we collect

required information as much as we can. There are different types of research design

described below and we also will discuss the research design which we have selected.

3.3.1 Exploratory research:

Welman & Kruger (1999) defines that exploratory research’s approach is to locate a

problem to be tested. This type of research is helpful when researchers are unable to get an

36

idea of the problems, they can get during a study. By exploratory research, researchers

develop concepts more clearly, pin down main concerns, develop prepared definitions and

make their final research better (Cooper & Schindler, 1998). It is a process of gathering,

understanding and analyzing information. There are different ways of collecting information

by using exploratory research.

3.3.2 Descriptive Research:

Descriptive research refers to the sort of research design, questions and data analysis,

which will be related to a given topic. (Jonassen, 2004). It also called Statistical Research.

This type of research is basically designed to describe the characteristics of targeted

individuals in an accurate and systematic way. The main purpose of descriptive research is to

describe the characteristics and data about what is being done. This kind of research is highly

accurate. Researchers conduct this type of research when they want to get accurate

knowledge about the situation, it does not get the reasons behind the situation. We have

selected this type of research to solve our hypotheses; this design of research will help us to

gather required knowledge.

3.3.3 Analytical or explanatory research

This type of research is continuation of descriptive research. In this research, researcher

analyses and describes that how and why something is happening. There are different types

of analytical research such as philosophical, historical, reviews and research synthesis.

3.3.4 Predictive research

This type of research goes further by forecasting. It consists of prediction e.g. will this

bonus scheme motivate the employee? Predictive research presents answers to ‘why’, ‘how’

and where, and also predict future results of current situation.

3.4 Research sources:

3.4.1 Primary Data collection:

We are going to gather information by using primary data collection method. As we

could not find any appropriate secondary data about our hypothesis. Primary data collection

means that you have to collect all required information by yourself by using methods such as

surveys and interviews. This type of data is unique as no one has studied it before.

37

Here are some advantages and disadvantages of collecting primary data;

Advantages:

You find data what you required for your research.

Researcher have greater control over how the information is collected, primary data

collection allows researcher to focus on specific issues, e.g. time frame that how long

it will take to complete the project, location of research.

Disadvantages:

Usually it’s time consuming.

Primary data collection is costly compare to secondary data collection.

There are many ways to collect primary data, some of them are:

Interviews, Observation, Case studies and Questionnaire.

We are going to use survey method for our research and will design a questionnaire.

3.4.2. Secondary Data Collection:

Secondary data is the data which was collected by someone for some other purpose and

available from other sources. This type of data is easy to obtain and a cheaper way to get

information. It is a quicker way to gather required information than the primary data. We can

get secondary data from the company websites, archives, books and other sources. We have

tried to get some secondary data about company’s procurement operations but we have been

failed to obtain such data. So we are relying only on primary data.

3.5 Research Methods:

There are different types of research methods e.g. survey, case study, experiment, cross

sectional etc. the research method which we are going to use is survey.

38

3.5.1 Survey:

What is survey?

Enanoria (2009) describes survey as a systematic method for collecting information from

a sample of specific individuals for the reason of explaining the features of population. By

using this method you can collect information by asking people questions. Information can

be gathered by having interviews, asking people to fill the questionnaire etc. we are going to

conduct a survey for our research problem, so here are different kinds of survey and steps

which are considerable during the survey, described below in detail:

There are some steps to keep in mind while you conduct a survey:

Establish your goals:

In this first step you should know that what you want to learn. Your goals should be clear

if your goals are vague your results will be unclear. The area you are going to explore you

have to know how about that area to some extent. You should be specific about your

objectives, so you can get usable answers. We established our goal that we have to collect

data regarding our hypotheses which are knowledge about procurement strategies of Asda,

how they perform their procurement operations for ethnic/world food products.

Selecting sample:

You should know that to whom you are going to have an interview. First step is to know

that what kind of people to interview. This group of people often called as target population.

In some cases target population is obvious, e.g. an employee attitude survey, but if you are

going to ask about the success of a product, target group may be less obvious. So target

population should be representative. You can lose the opportunity to meet your goals if you

do not interview the right kind of population. After choosing right people now it’s time to

decide that how many people you need to interview. Sample size bases on some factors e.g.

what budget you have, available time, and how much you have to precise. So bearing in mind

all these aims we have targeted population which is Asda’s ethnic customers. Customers

those who came from different backgrounds, civilization and culture.

39

Avoiding a Biased Sample:

By avoiding biased sample will save you from biased results. You should contact those

people who are illegible for those questions, e.g. if you are surveying about a product which

is for young people you should not ask elderly people about that product, or you do not have

to ask about anti wrinkle cream to teenagers.

Here are data collection methods which are selected by author for research, and each method

has some advantages and disadvantages.

3.5.2 Personal Interviews:

When you interview someone face to face it calls face to face interview. These type of

interview can take place anywhere e.g. at home, in park, at a shopping mall, in college and so

on. We have decided to design a questionnaire and go to Asda, approach customers directly

and tell them about questionnaire and research and ask them to fill the questionnaire.

Advantages:

a. In face to face interview, gives a chance to interviewee to feel and see a product.

b. You can find people outside that specific outlet you want to ask about, to customer easily

rather than you call people randomly.

c. Face to face interviews can be tolerated if longer, people can find it easy at home, sitting

and chatting.

Disadvantage:

a. This method is costly. When you travel to each person to take an interview, it costs you

time and money both.

b. Sometimes you go to shopping mall to interview people, people living around that

specific geographical area, can be influenced to a typical kind of that area and cannot be

taken as a representative group. But we have selected Asda which is situated within ethnic

majority population.

3.5.3 Internet survey:

Advantages:

a. In this category we can include email survey, web page survey and computer direct

40

Interviews. We have chosen e-mailing survey.

Advantages:

b. These methods are very economical and fast. An e-mail survey can gather thousands of

responses within a day.

c. You can get more accurate answers by computer direct surveys

d. There is no cost involved at all.

e. You can send/show photographs of products.

Disadvantages:

a. This method is not universal as so many people do not have access to the internet.

b. People set their email addresses that if they get unknown email, will automatically go to

the junk mail.

c. Sometimes people do not have much time to fill questionnaire so they delete such emails.

d. People can easily quit the web page during the survey, if questionnaire is too long.

e. You do not know whether one respondent answered you once or many times with

different identification.

3.6 Types of Data

There are two main ways of approaching a research topic qualitative and quantitative and

we are going to use both of the methods for our research.

3.6.1 Quantitative

This method concentrates on counting or measuring and analyzing statistical data and

applying numerical tests. This method involves the numbers to assess information. Your

research should be well structured and controlled under scientific research design. Most

popular form of Quantitative data collection comes in surveys. By conducting surveys you

can capture information through questionnaire, online survey, telephonic and mail surveys.

3.6.2 Qualitative

Qualitative data includes different information that is not numerical in nature. Those

information which cannot be measured statistical, e.g. you can gather information by

41

interviewing someone but you cannot measure an interview in numbers. There are some

major categories of qualitative data

3.7 Design of Questionnaire:

Questionnaire is designed in a simple manners, we have been very careful while making

the questions. We made sure that there should not be any jargons used. Questionnaire is easy to

understand and questions are multiple choice. We did not make a lengthy questionnaire by

keeping in mind that if it will be lengthy there is possibility that we would not get good response

from customers. Customers do not bother themselves to fill long questionnaire while shopping.

42

Name: ____________________

Date__________

Ethnic origin: (Please specify the country).

African______________ Asian_______________ European______________

Other_______________

Sex: Female Male

Please tick the appropriate box

Q. 1 Do you shop your ethnic/traditional or world food products from Asda?

Yes No

Q.2 If yes what are the reasons to buy your ethnic/traditional or world food products

from Asda?

Variety of food products quality of food products

Authenticity of food products

Q.3 If No then from where do you like to buy your ethnic/traditional or world food

products?

Traditional small retailer other supermarket

Q.4 Do you find price differences between Asda and ethnic/traditional or world

retailer while shopping for ethnic/traditional or world food products?

Yes No Slightly different

Q.5 Do you think ethnic and world food require similar marketing and sales strategies to

those for conventional food e.g. TV ads.

Yes No Don’t know

43

3.8 Research Testing Methods:

Here are some methods to assess the credibility of research findings

Reliability:

You should be careful that data you have collected is reliable. Joppe (2000) defines

reliability that a perfect representation of the total population, and if there will be a need to

reproduce by using same methodology, then the research implement should be considered to

be reliable. Sometimes data may be reliable but the sources, by which you got the data, are

not reliable. We designed our questions for ethnic minority group and will be asked to those

customers who are purely belongs to some ethnic minority group and we expect that if

research is conducted again in same circumstances with ethnic minority groups, results will

be the same. Reliability also refers that how much measuring device is dependable.

Validity:

Validity of research questions is vital; it has been planned that data which we are

expecting must be valid. Validity refers to a study measures or also can observe what it

claims to measure or examine. There is an observation that because of number of reasons,

generally questionnaires are lack validity. Answers given by participants can be a lie. It has

been disputed quantitative data is not much valid than the qualitative data. But we tried to

design neutral questions in questionnaire. Questions are not forcing or making up participants

minds to get required answer. Validity simply means assumptions, decisions and conclusions

are meaningful and appropriate, made on the basis of test scores.

Generalisability:

Before discussing that how our research can be generalized we will look at the meaning

of generalizability. It means that a representative group should represent the whole

population. There are three main points should keep in mind to generalize your research

which are; sample, time and size.

Sample should be enough to represent the whole population.

Time can change behaviors so quickly.

Size of samples should satisfy the statistics.

44

We have tried to take representative group of population, as we had to target the ethnic minority

population and those who also are customers of Asda. So we chose Asda which is situated in

ethnic minority area, we visited the store and ask customers to fill the questionnaire. We expect

that our sample size will represent the ethnic minority, so we can generalize our research.

45

Chapter 4: Results and Findings:

4.1 Introduction:

This chapter will present the details of our findings about our hypothesis. We conducted a

survey to get knowledge about ethnic/traditional food shopping by ethnic minority groups that

shop from Asda. Results will be provided in this chapter which will show that whether our

findings support our hypothesis or diverge from it. Collected data will be calculated by Microsoft

Excel. Limitations which are faced by the author will also be discussed later in this chapter.

4.2 An over view of literature review and Hypothesis:

The main trigger for this research was to know about the Asda’s Procurement operations

regarding its Ethnic/World food department. We would like to revise some of company’s details.

Asda is one of the Britain’s leading supermarkets which retail food, toys, clothing and general

merchandising. We were investigating its Ethnic/World food procurement strategies, so we had

to get knowledge about the customers which were main cause for Asda to develop such a

department in the store. People from different backgrounds and ethnicity have a big portion in

UK’s population, and supermarkets are well aware of this growing market, especially in those

areas which are representing majority of ethnic population. According to the growing demand of

world food ASDA introduced its first world food store in London and also occupies a big

department of World/Asian food in its each store. Its world/ethnic food departments in its stores

are bigger than its competitors, especially in ethnic minority areas. By investigating about Asda’s

ethnic/World food department it seemed that it has higher prices than smaller retailer, so author

was tend to know that why this difference was even though Asda is much cheaper than other

supermarkets as it claims of being cheaper. Asda is one of the some leading supermarkets

(Tesco, Sainsbury’s, Morrison’s) who are selling below cost Account watch Asda, (2008)

explains that Asda is getting advantage by below-cost selling, as it encourages customers to

enjoy its special offers on seasonal events e.g. Christmas, Easter.

Asda is comparatively cheaper from other supermarkets as it claims. Asda has taken many

successful steps for the very first time, i.e. introducing Halal meat (ritually slaughtered for

Muslims) butchers counter in Asda. It is very famous among Muslim customers as they find it

authentic and according to health and safety rules.

46

We tried to get information of Asda’s ethnic/World food procurement operations by different

sources, e.g. Asda’s website, articles about the supermarket, and books but couldn’t find any

appropriate data regarding our research title. Although we could get some material about Asda’s

supply chain, but it was more about its activities which make its supply chain process fast and

cost effective, we have been unable to find any material specifically about Ethnic/world food

was available.

4.2.1 Ethnic customers:

There are many traditional retail shops for these types of customers. Supermarkets like

Asda are, by understanding the needs of ethnic customers, expanding their ethnic/world products

departments. Asda George introduced a new Asian fashion range in their stores which is highly

welcomed by Asian customers. It seems that Asda is now realizing of this growing market in

UK. This research will show that from where ethnic customers like to shop and why?

4.3 Research questions:

Our main research questions were as follows:

Our hypotheses were all about procurement operations of Asda for its ethnic/world food

products. By reviewing the literature we were unable to find any data regarding Asda’s

procurement strategies

What are Asda’s procurement strategies for world food products?

What are the main challenges for ASDA in world food’s procurement?

Is outsourcing for world food products from local suppliers a better option than overseas

outsourcing?

What are the criteria for supplier selection in world food retailing?

To gather information for these main hypotheses we required data which can be only collected

by making some hypothesis which can make a base to reach the main hypothesis, which are

followings;

47

Is Asda popular or not within the ethnic groups?




conventional food?

4.4 Targeted Population:

Our target population was Asda’s ethnic minority customers. We wanted to know that

whether these customers like to do shopping for their ethnic/traditional food from Asda or from

somewhere else e.g. small retailer or other supermarkets, and what are the reasons behind both

cases. These customers were from different part of the world. Customers with different race,

religion and traditions, were asked to fill the questionnaire.

These customers were from different ethnicity, countries are mentioned below:

Ethnic background Country Number of participants

Africa

Ghana 1

Nigeria 4

Somalia 2

Mauritius 1

South Africa 1

Eritrea 1

Seychelles 1

Morocco 1

Philippine 1

China 1

48

Asia

Oman 1

Pakistan 10

India 7

Sri-Lanka 4

Bangladesh 2

North America

Dominica 1

Carribean 1

Europe

Poland 1

UK 3

Figure 4.1 Source by Author

4.5 Presentation of acquired Data

All questions were simply designed so customers can understand easily.

in first question, we asked customers that whether they shop their ethnic/traditional or world

food from asda or not. The response we got for this Q was that 61.91% customers said yes and

38.09% said no. this data show that most of the people buy their ethnic/traditonal or world food

from Asda.

61.91%

38.09%

YesNo

Figure 4.2 Ethnic/World foods shopping from Asda by ethnic consumers

49

In second question was linked with above Q that if customers do their ethnic/traditional or world

food shopping from Asda, what are the reasons for their shopping, there were three options, first

option was that do they find variety of food products in Asda’s World/Ethnic food department?

Second option was that quality of food products is the reason and third option was about

authenticity of products which attract customers. So with all these options figure 4.2 will show

the findings:

26.92%

61.53%

11.53%

Variety of food productsQuality of food productsAuthenticity of food products

Figure 4.3 Reasons for buy ethnic/world food products from Asda.

By analysing this question we have come to know that most of the people prefer quality of the

products.

Third question was also refered to the Q1, if people do not shop their ethnic/world food products

from Asda then what are the other sources. There are many small retailers which are representing

their specific ethnicity and also many other supermarkets sell Ethnic/World food products. So

question was designed to know about other sources. Chart will present the findings.

50

81.25%

18.75%

Traditional small re-tailersOther super market

Figure 4.4 Shopping for Ethnic/World food products

This figure shows that the ratio of buying ethnic/world food products from traditional small

retailer is much more than the other supermarkets.

Question four was about customers who buy their ethnic/world food from Asda and who do not,

do they find any price differences or not? Most of the customers said that they find price

difference. Almost all customers who buy their ethnic/world food products from Asda said that

they find it expensive even then they buy from Asda, and we can conclude the reasons as we go

through by Q2. People prefer quality of food rather than price. It suggests that small retailers

offer low prices compare to Asda for their ethnic/world food products but they do not have better

quality so mostly customers ignore price difference and buy better quality.

52.38%

11.90%

35.71%

YesNoSlightly different

51

Figure 4.5 Prices difference between Asda and Ethnic Retailers.

Fifth question was about ethnic/world food marketing, we asked customers that do they think

that ethnic/world food need marketing and sales strategies like conventional food, most of the

answers were ‘yes’. It seems that people would like publicity for their ethnic food. By reviewing

articles related to ethnic and convetional food marketing(mentioned in literature review) that

ethnic people feel alienated when they don’t see marketing for any of their products. This factor

can not be neglected that ethnic/world food also need marketing.

57.14%

16.66%

26.19%

YesNoDon’t know

Figure 4.6 marketing and sales strategies for ethnic/World food

4.6 Interpretation of Data:

We have presented the Data which was collected from Asda’s ethnic customers.

Percentage we got from this question shows that most of ethnic consumers do shop for their

ethnic/world food products from Asda. Over 60% said yes, so we have got the answer that

whether Asda’s above mentioned department is popular among ethnic customers or not. In

second question we evaluate results that people prefer quality of food so price does not matter

when it’s the question of quality. Customers who said that they don’t buy from Asda were most

likely to buy from traditional small retailers rather than other supermarkets. It confirms that

Asda’s customers who do not buy their ethnic food products from it, most of them do not go to

other supermarkets, it also suggest that may be they find other supermarkets more expensive

from Asda so they desire to go to the small traditional retailer. Last question was asked to the

52

customers, whether they want that their ethnic food products should be marketed or not, answers

were encouraging towards marketing.

4.7 Result analysis:

We targeted 100 Asda’s customers in which 46 customers who responded and in total

response was 46%. We approached 23 customers by e-mail and 77 customers face to face

interview. The survey interview was conducted in Asda superstore which is situated in Ethnic

population majority area. In survey questionnaire we had five multiple choice questions.

Results show that Asda is much successful to attract customers towards its world/ethnic food

department. We also can assume that Asda is offering better quality with high prices, than small

traditional retailers who may be offer low quality and prices. It has been seen by analysing

female responses that they are most likely to buy from Asda than male customers. Customers

always would like to buy from place they can save time and money, where they can find variety

of products with high quality. statistics show that most of customers are well aware of higher

prices in Asda’s ethnic/world food department but even then they are buying, one of the factors

we got from results, is quality of food, but other factors can also be involved e.g. saving of time.

Consumers like to do one-stop shopping. This can also be a factor of buying comparitively high

prices for ethnic/world food, e.g. customers come for shopping for other stuff from Asda and

they find it convinient that they also buy their ethnic or world food products from the store. We

surveyed with random ethnic customers but it has been observerd that mostly customer were

from South Asia, it can indicate that South Asian customers are showing more interest in Asda’s

ethnic/world food department than other continents, but we cant ignore the interest that they

showed in small traditional stores also. It can be possible that they like to buy ethnic/world food

from Asda, but they can not find much variety of products in the store so they shop rest of their

ethnic/world food products from small retailers, answers for our second questions can point out

this factor that customers can not find variety of food in the store. It is encouraging for Asda that

most of the ethnic/world food customers are interested in buying their traditional food products

from it, results also show that the ethnic customers who shop from other sources are most of

them who buy from ethnic small retailers but not from other supermarkets. It is a plus point for

Asda that remaining customers do not find competitor supermarkets any cheaper. Asda can

improve its sales and get its ethnic customers back by introducing more variety and keeping its

53

prices lower than small retailers, it needs to concentrate on its supply chain activities, to get

cheaper supplier. Data we have collected shows that customers are well aware of price

differences. Customers can easily switch to other supermarket if they find price differences.

Marketing for ethnic/world is another issue which can be discussed; survey shows that mostly

ethnic consumers showed interest in ethnic/world food marketing. This is understandable that

ethnic community is in minority and their food products are not being consuming products as

much as conventional food products, even then there is a big market for these products and

supermarkets can boost their sales by marketing these products e.g. by TV ads. It has been

observed that most of the supermarkets such as Asda, Morrison’s, M & S, run their TV ads near

events, e.g. Christmas, Easter etc, for food deals they offer in stores, so why not they target

minority community events, at least for those ethnic groups which are in majority than others,

e.g. Eid festival for Muslims. By doing this supermarkets might be successful to get attention

from those ethnic customers who do not buy their ethnic/world food from these supermarkets

and also many inhabitants who want to try new food, can be attracted. It can be very helpful not

only to raise their sales but also can make new customers for world/ethnic food.

4.8 Hypotheses

4.8.1 Hypothesis 1

Our first hypothesis was that, Is Asda popular or not within the ethnic groups?

Q1 was related to this hypothesis, after collecting all acquired information it seems that Asda’s

Ethnic/world food department is popular among customers; chart 4.1 shows the response that

mostly people buy their ethnic/world food product from Asda, as 61.91% said yes and 38.09%

said no. Results show that people do like to buy their ethnic/world food products from Asda.

Reasons behind this trend can be multiple e.g. customers can get variety of ethnic/world food

products, not only their own traditional food products but also can find other world food

products, in comparison with small retailers, which mostly retail for specific region and you

can’t find different ethnic/world food products.

54

4.8.2 Hypothesis 2


To get answer for this hypothesis Q1, Q2 and Q3 were designed. After analyzing answers it

looks that mostly people shop from supermarkets. There can be many reasons for this e.g.

customer may be prefer one stop shopping rather than going to different shops. People can find

variety of products. Quality of food products also matters; it seems that customers get these both

elements in supermarkets while shopping for their ethnic/world food products. Sometimes people

trust big supermarkets that their products will definitely be authentic, e.g. Asda halal butcher

counter is very famous among Muslim customers, as they trust that it is slaughtered in ritual

ways and in clean and safe environment.

4.8.3 Hypothesis 3


Q4 was related to this hypothesis and results show that even after knowing price difference

between Asda and small ethnic retailer, customers buy from Asda. Customers go for the quality

but not just for lower price, and they do not bother to go to other retail shop for their

ethnic/world food shopping. Figure 4.4 represents that most of customers found Asda expensive

than small traditional retailers but even then it doesn’t matter. It also can refer to that may be

customers are not satisfied with the quality of small retailers; it can be matter of freshness of

food or health and safety issues that’s why customers can be willing to buy slightly expensive

ethnic/world food products from Asda.

4.8.4 Hypothesis 4


conventional food?

To get answer for this we designed Q4, 25% customers want marketing for their ethnic products.

It seems that people are well aware that don’t see any marketing of ethnic minority food products

on TV, radio etc. 11% customer respond that they don’t know and just 7% customers said that

they don’t think their ethnic food products need marketing or strategies for sale.

55

4.9 Limitations:

There were some limitations while gathering information regarding hypothesis. We

approach Asda customers by e-mail and sent them questionnaire, but it was very disappointing

that we couldn’t get response we were expecting. We visited Asda store to reach customer face

to face, many customers refused to fill the questionnaire.

4.10 Discussion and comments:

Analysis of Asda’s ethnic/world food products department gave a good image. Customers

seem satisfied with above mentioned department, and they seem happy to do their ethnic/world

food shopping from Asda. This survey was conducted in Asda store and questionnaire was filled

by the customers those who were shopping at that time. The response we have got tells that more

than 50% customers prefer Asda’s ethnic/world food department and those who do not, there can

have many factors involve, customers may be like the quality and authenticity of ethnic/world

food products but because of price difference they do not buy and reach other small retailers and

supermarkets where they can have quality with lower prices. It can be alarming that if consumers

find high quality with low prices in other supermarkets they can easily be switched to other

supermarket. As 52.38% customers mentioned that they found price difference in Asda in

comparison with other small retailers. It seems that Asda is much popular among south Asian

customers. So it can concentrate on expanding it section for these countries’ food products.

In the end marketing and sales strategies for ethnic/world food products issue is also

considerable that 57.14% people would like to watch their ethnic food products ads, it may

create a more big market for ethnic food, people who always want to try new food, can attract

potential customers.

4.11 Conclusion:

By analyzing the collected data it seems that Asda need to have a second look to its

Ethnic/world food products, as findings show that it is popular among the customers and many

customers buy ethnic/world food products from Asda and rest of the customers who do not, they

can be attracted if prices are low. It seems that whether Asda has an expensive supplier or it is

purchasing these products from local suppliers. We have concluded that Asda can maintain its

ethnic/world food department by introducing new variety of ethnic products, managing prices a

56

bit lower. If Asda is purchasing ethnic food products from local suppliers it should consider to

approach the country of origin or manufacturer, which will help to maintain its prices low.

Customers seem happy with its ethnic food products quality by analyzing the collected data,

which is encouraging for Asda.

57

Chapter 5: Conclusion

5.1 Introduction

This chapter is going to describe conclusion including summary of research. We are also

going to discuss limitations which we have faced while conduction of this research and finally

suggestions for the future research.

5.2 Summary:

To gain answers to our research questions we have conducted survey. We were intended

to know about Asda’s supply chain activities, how it performs its procurement operations for its

world/ethnic food products. Other small retailers have comparatively low prices than Asda in

ethnic/world products. It is most probably that these traditional ethnic retailers purchase these

products from their country of origin. It also can be possible that they are having low quality in

comparison with Asda, or may be these retailers have a huge range of products while Asda have

just a small department for these products, so these small retailers purchase these products in big

quantity from wholesalers, that’s why they are able to keep prices low. Another factor is that

Asda deals in variety of world/ethnic food so it has some popular products for different

communities, on the shelves while traditional retailer may be representing just one community

and has wider product range than Asda. To know all these factors we conducted the research. We

were also keen about the ethnic food popularity; we have got the reasons why ethnic and world

food demand is growing rapidly. As ethnic/world food is getting popular among UK inhabitants

as well as it is in ethnic communities. Small traditional retailers are dealing with ethnic/world

food for long time, but now fast growing trend of supermarkets with high competition, effected

customers strategies for shopping as they prefer for one-stop shopping at the supermarkets rather

than going at different traditional small retailers, which consumes much time and money. Firstly

we reviewed the literature regarding to our topic, we collected relative data from internet, books,

journals and magazines. There were problems in getting secondary data which we will explain in

limitations section. We designed our survey according to our hypothesis. We followed primary

data collection method. This was being sure that questions which were asked to the customers

must be valid and reliable. The results of our survey show that the mostly people are buying their

ethnic/world food from Asda. This supports our hypothesis that whether Asda’s world/ethnic

food department is popular among the customers or not? Results show that customers do know

58

about the price differences even then they buy their ethnic/world food products from Asda, it has

been shown by results that customers are happy by its good quality products and also they can

find variety of products and remaining customers who do not buy these products from Asda, can

be interested if they find low prices in compare with those small retailers or supermarkets, they

buy their ethnic/world food products. It also can point to this factor that customers may not much

satisfied with retailer’s quality so they prefer Asda over retailers. Asda should expand it world

food department especially in those areas where ethnic groups are in majority, by developing this

department Asda can be successful to attract more and more customers. When we were going

through the literature it seems that Asda’s 2009 performance was not very good, but it was also

described that it has been introducing innovative ideas in its supply chain, which can promote its

sales. We evaluate our results that customers want that their ethnic food products should be

marketed. It can be a good step towards promoting ethnic/world food, which ethnic and other

customers will be able to know about other communities’ food products, it also will increase

sales of these products.

5.3 Limitation of the research

We observed that these supermarkets are offering world/ethnic food with higher prices in

comparison with retailers so it was needed to get to know the facts behind selling these products

expensively. We chose Asda which has lower prices than other supermarkets in many products,

but it is expensive in its world/ethnic food products. So we wanted to investigate its purchasing

strategies for these products whether Asda outsourcing for these products globally or locally. It

was a very vast topic to cover which required more time we had and cost also. So we decided

that we should have look other reasons which can be accessed under our given time and

expenses. For these reasons we designed questionnaire which could tell us that may be Asda is

not popular within the consumers of ethnic/world food that’s why Asda has kept prices high to

cover its costs. There also could be the other reasons e.g. Asda is taking advantage of customers

one-stop shopping preferences, it does not matter for the customers to pay slightly higher while

they are saving their time on the other hand by doing all their shopping under one roof, so we

tried to get answers to this factor as well. Another reason could be that Asda know its customers

attitude that they prefer quality over low prices, so they might have better quality food than the

small retailers.

59

When literature was being reviewed, it has been very hard to get any secondary data about

Asda’s procurement department; especially regarding its world/ethnic food purchasing activities

so it was disappointment for the author that there was no given data about Asda’s procurement of

ethnic/world food products.

We conducted face to face and email survey, it was bit disappointing that we couldn’t get much

responses up to satisfactory level. There can be many reasons for that, people do not have much

time to fill up the questionnaire, or they don’t bother to fill. Sometimes people have redirected

emails from unknown senders to junk mail folder due to some security reasons. So they never

know that they have been asked to fill some kind of survey.

5.4 Suggestions for the future research

After concluding and analyzing the data we feel that there is need to give some

suggestions for the future. This can be suggested by this research that if Asda keep its prices low

in ethnic/world food department, this can help to boost its sales. According to our results more

than 50% customers buy world/ethnic food from Asda, if it concentrates on its pricing strategies

in this department it can attract remaining customers also.

Because of short time and limited expenses we were bound to keep our research narrow. We

made a step towards a vast topic i.e. to gather knowledge about Asda’s purchasing activities and

performances for its world/ethnic food products, how it is outsourcing for these products, locally

or globally. As above mentioned limitations it was not possible to cover a huge subject, it can be

investigated in future to know the facts of outsourcing, because if it is outsourcing these products

from local suppliers, it is most probably the cause of its higher prices in this department, whether

purchasing these products from country of their origin can be cheaper. Based upon the results

and findings of the research, we have done already; future research can approach this vast topic,

and conclude the factors behind it and can come up with constructive suggestions for Asda.

Future researchers are allowed to work at other hypotheses which are made by author; it will be

highly encouraged to do further research on related topic which can lead us to optimum

satisfaction after knowing the facts.

60

References

Articles.

1. Goldman, A. and Hino, H. (2004), “Supermarkets vs. Traditional retail stores: diagnosing

the barriers to supermarkets’ market share growth in an ethnic minority community”,

Retailing and Consumer Services, Vol. 12 No. 4, pp. 273-284.

2. Chen, S.L. and Tseng, M.M. (2005), “Defining specification for custom products: A

multi-attribute negotiation approach”, CIRP Annals-Manufacturing Technology, Vol. 54

No. 1, pp. 159-162.

3. Giovandia, S., Denis, B. and Flavio, F. (2001), “Mass customization: Review and

research Directions”, Production economies, Vol. 72 No. 1, pp. 1-13

4. George, H., Timothy, S., Pine, W. and Josep, B. (2005), “The power of product platforms

in mass customization”, Mass Customization, Vol. 1, No. 1, pp.1-13.

5. Masona, R. and Lalwani, C. (2008), “Mass customized distribution”, Production

Economics, Vol. 1 No. 14, pp.71-83.

6. Schreier. M. (2006), “The value increment of mass-customized products; an empirical

assessment”, Consumer Behaviour, Vol. 5 No. 4, pp. 317-327.

7. Belcourt. M. (2006), “Outsourcing- The benefits and the risks”, Human Resource

Management Review, Vol. 16, pp. 269-279.

8. Parsa, F. and Lankford, M.W. (1999), “Outsourcing a primer”, Management Decision,

Vol. 37 No. 4, pp.310-316.

9. Fan, Y. (2000), "Strategic outsourcing: evidence from British companies", Marketing

Intelligence & Planning, Vol. 18 No. 4, pp.213 – 219

10. Embleton, R. P. and Wright, C. P. (1998), "A practical guide to successful outsourcing",

Empowerment in Organizations, Vol. 6 No. 3, pp. 94 – 106.

11. Javalgi, G.R., Dixit, A. and Scherer, F. R, (2009) “Outsourcing to emerging markets:

Theoretical perspectives and policy implications”, International Management, Vol.15

No. 2, pp.156-168.

61

12. Kaipia, R. and Tanskanen, K. (2003), “ Vendor managed category management-an

outsourcing solution in retailing”, Purchasing and Supply Management, Vol. 9 No. 4, pp.

165-175.

13. Ronan, M., (2008), “What is the right outsourcing strategy for your process”, European

Management, Vol. 26 No. 1, pp.24-34.

14. Bermudez, I. O. and Tucker, L. K. (2004), “Culture aspects of food choices in various

communities of elders”, Generations, Vol.28 No.3, pp. 22-27.

15. Rudder, A. ( 2006), “Food safety and the risk assessment of ethnic minority food retail

businesses”, Food Control, Vol. 17 No. 3, pp. 189-196.

16. Wusheng, Y., Hertel, T. W. Preckel, P. V. and Eales, J. S. (2004), “Projecting world food

demand using alternative demand systems”, Economic Modelling, Vol. 21 No. 1, pp. 99-

129.

Web sites.

17. Pearson, M. (1999) Online study skills guide, http:\\www.hud.ac.uk\schools\skills \

referen.htm, Date accessed 16/9/99.

18. Langdon, D. and Wall, G. Mott. (2003) Cost model: supermarkets,

http://www.building.co.uk/data/cost-model-supermarkets/1029095.article, Last accessed

01 July 2010.

19. Koyama, O. (2000) Projecting the World Food supply and Demand using a Long-Term

Dynamic Simulator, http://www.agnet.org/library/eb/492/, Last accessed 02 July 2010.

20. Clifford, L. (2010) UK immigration leads to record population high,

http://www.globalvisas.com/news/uk_immigration_leads_to_record_population_high243

3.html, Date accessed 02/07/2010.

62

http://www.globalvisas.com/news/uk_immigration_leads_to_record_population_high2433.html

http://www.globalvisas.com/news/uk_immigration_leads_to_record_population_high2433.html

http://www.agnet.org/library/eb/492/

http://www.building.co.uk/data/cost-model-supermarkets/1029095.article

21. Warner. J. (2008). Global food supply is a growing problem,

http://www.telegraph.co.uk/finance/economics/2791256/Global-food-supply-is-a-

growing-problem.html. Last accessed 05 July 2010.

22. Asda. (2009). New from George: authentic Asian clothing at affordable prices,

http://your.asda.com/2009/9/14/george-launches-first-asian-clothing-range-on-high-

street. Last accessed 05 July 2010.

23. Onresc. (2007). Asda saves 200,000 by outsourcing its expense management to

GlobalExpense,

http://www.onrec.com/news/asda_saves_200_000_by_outsourcing_its_ex. Last accessed

07 July 2010

24. Euromonitor. (2010). Asda stores Ltd-Retailing-United Kingdom,

https://www.portal.euromonitor.com/Portal/Statistics.aspx. Last accessed 08 July 2010.

25. Euromonitor. (2010). Retailing-United Kingdom,

https://www.portal.euromonitor.com/Portal/DocumentView.aspx. Last accessed 10 July

2010.

26. Euromonitor. (2010). Supermarkets-United Kingdom,

https://www.portal.euromonitor.com/Portal/DocumentView.aspx. Last accessed 10 July

2010.

27. Procurementblog. (2010). The Asda approach to SRM,

http://blog.procurementleaders.com/procurement-blog/2010/2/19/the-asda-approach-to-

srm.html. Last accessed 12 July 2010.

28. Building.co.uk. (2003). Asda Stores,

http://www.building.co.uk/comment/asda-stores/1026235.article. Last accessed 15 July

2010.

29. ProcurementAsia. (2008). Asda Looking To Pull Back On China Manufacturing,

http://www.procurement-online.com/news/8429. Last accessed 15 July 2010.

30. Asda Aero. Asda activities, http://www.asda.aero/activities.html. Last accessed 15 July

2010.

Books

63

http://www.asda.aero/activities.html

http://www.procurement-online.com/news/8429

http://www.building.co.uk/comment/asda-stores/1026235.article

http://blog.procurementleaders.com/procurement-blog/2010/2/19/the-asda-approach-to-srm.html

http://blog.procurementleaders.com/procurement-blog/2010/2/19/the-asda-approach-to-srm.html

https://www.portal.euromonitor.com/Portal/DocumentView.aspx

https://www.portal.euromonitor.com/Portal/DocumentView.aspx

https://www.portal.euromonitor.com/Portal/Statistics.aspx

http://www.onrec.com/news/asda_saves_200_000_by_outsourcing_its_ex

http://your.asda.com/2009/9/14/george-launches-first-asian-clothing-range-on-high-street

http://your.asda.com/2009/9/14/george-launches-first-asian-clothing-range-on-high-street

31. Dimitri, N., Piga, G. and Spagnolo. G , 2006, The Handbook of Procurement, Cambridge

University press.

64

Dissertation

Documents

ethnic food asda

ethnic food products

food industry

asdas ethnic customers

ethnic consumers

worldethnic food department

local ethnic retailers

ethnic customers attitude