EUROPEAN NEW ENTRY INTO UK GROCERY RETAILING

A number of competitive forces seem set to re‐shape the UK grocery retail market during the 1990s, such as superstore saturation,information technology, and the emergence of a dominant “Big Three” group of retailers. A factor likely to be of major significance is the entry of European retailers, such as Aldi and Netto. The UK market is particularly attractive to European limited line discounters because of its wide net margins, and because its price competitive low end is vulnerable, having been largely abondoned during the 1980s as many UK incumbents moved “up market”. These European discounters possess the specific skills and assets necessary to penetrate the UK market′s three main barriers to entry. European new entry is partly responsible for a renewal of interest in discount grocery retailing among UK incumbents, which, in combination with other competitive forces, will produce a more complex and subtle structure to the UK grocery retail market.