Why ddon

1
(No Transcript)
2
Why didnt supermarkets sell live fish and raw
meat several years ago. However, fish and meat
are sold in superstores now. Why???

• by Cheung Tsz Ho, Tony
• 23 Nov, 2006

3
Outline

• Benefits from economies of scale (mass sales)
• Lifestyle of Hong Kong people
• Providing convenience and cleaner environment

4
Economies of scale

• What is meant by economies of scale?
• A production process is said to have economies of
  scale, if all inputs doubles, outputs increase by
  more than 100
• This concept can only be applied in the long run

5
How can economies of scale be applied to
supermarkets?

• There are 50 ParknShop superstores and 16
  Wellcome superstores in Hong Kong which sell raw
  meat and live fish
• These superstores buy their stocks in bulk
• According to the statistics of National Sun
  Yat-sen University, their inventory cost is 5 to
  10 lower than that of wet markets, say 15 for
  superstores and 16.125 for wet markets

6
How can economies of scale be applied to
supermarkets?

• The retail price of raw meat in wet market is 22
  per 500g and that of superstores is 24 per 500g
• So, raw meat of superstores is 9 more expensive
  than that of wet market
• The profit margin is about 23.6 more than that
  of wet markets
• Profit margin for wet market(22-16.125)/16.12536
  .4 superstore(24-15)/1560

7
How can economies of scale be applied to
supermarkets?

• It is profitable for the supermarkets to sell raw
  meat and live fish
• They can also cut prices against their
  competitors in price wars since they have the
  market power to do so

8
Lifestyle of Hong Kong people

• Do you know when Hong Kong people have time to
  buy foodstuff generally?
• Usually after their work
• Maybe after 7 pm
• At 7 pm, most stores in wet markets are closed
• This provides a strong demand for the sale of raw
  meat and live fish in the evening

9
Providing convenience and cleaner environment

• Supermarkets are usually located at large
  shopping centres or near housing estates
• This provides much convenience
• Also, selling live fish and raw meat means that
  customers can buy stuff that could only be bought
  in wet markets
• Can save time for going to markets

10
Providing convenience and cleaner environment

• Moreover, supermarkets provide a hygienic
  environment and guarantees the freshness of their
  food
• This is very appealing to customers

11
Conclusion

• Providing foodstuff that are formerly sold by wet
  markets is a new marketing strategy for
  supermarkets
• If markets dont improve the shopping environment
  and lengthen their opening hours, it is very
  likely that wet markets will fail to exist

12
END

• Thank you!!!