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Aspiring Lawyers - Interviews & Vacation Schemes
Commercial Awareness Discussion
Commercial Awareness Update: January 2019!
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<blockquote data-quote="Abstruser" data-source="post: 8127" data-attributes="member: 260"><p><strong><u>4. How the UK supermarkets are surviving in the gloomy retail sector (by [USER=525]@Sara Moon[/USER])</u></strong></p><p></p><p><strong>The story:</strong></p><p></p><p>According to the British Retail Consortium, the British retail sector had the worst Christmas since 2008, with most of the companies suffering a decline in sales over Christmas. Overall, UK retail sales fell by 0.7% from December 2017. This Christmas nightmare was a result of several factors, including the increase in rents, business rate and wage rise, and uncertainties over Brexit.</p><p></p><p>However, the grocery retailers emerged victorious in the Christmas season. Tesco, the UK’s largest supermarket, had its best Christmas since 2009. Aldi, the German-based supermarket, earned £1bn in December. Morrisons experienced a rise in sales by 0.6% for the nine weeks to 6th January. Asda reported 0.7% rise in its sales. Amid the celebration of the UK’s largest supermarkets, Sainsbury’s was the only supermarket, among the “Big Four Supermarkets” of the UK (Asda, Tesco, Sainsbury’s and Morrisons) to suffer loss in sales. Sainsbury’s same-store sales fell by 1.1% in the 15 weeks to 5 January. Same-store sales measures growth in sales and revenue of a company’s existing stores over time. Sainsbury’s defeat was, however, primarily due to the aftereffects of the Black Friday rather than problems over the Christmas season. Despite the current trend in the grocery market being fierce undercutting, Sainsbury’s decided to reduce the discount rate during the Black Friday, leading to sales suffering dramatically.</p><p></p><p>With overall grocery retailers showing surprising strength, I thought now would be an interesting time to analyse how UK supermarkets are surviving in the gloomy market conditions of the retail sector. The general trend is slashing prices. This trend could be said to have been initiated by the German supermarkets, Lidl and Aldi. Both are well-known discounting stores and have shown huge success in the UK with their undercutting strategy. To stay competitive against them, UK supermarkets have been following their active price-cutting. Asda has reduced the price of everyday household goods, Morrisons announced it is cutting the price of 935 products by an average of 20%, Sainsbury’s has cut the price of 190 items, and Tesco reduced prices by more than 50% on its own-brand items.</p><p></p><p>In addition to undercutting, M&A has also been adopted as a powerful strategy in attracting customers. Tesco, for example, acquired Booker, the UK’s largest wholesaler, last year. One of the reasons why Tesco won over Christmas was a rise in sales at Booker by 6.7%. Sainsbury has also decided to merge with Asda and the Competition and Markets Authority (CMA) is currently investigating whether the deal will give less choices to consumers, raise prices, or worsen quality of services.</p><p></p><p><strong>Impact on businesses and law firms:</strong></p><p></p><p>With continuing uncertainties over Brexit and business rates set to rise again, 2019 will be a challenging year for UK supermarkets. This may mean that in order to maintain their growth in sales, they have to find alternative ways to continuously cut their price. With supermarkets already providing hugely discounted prices, undercutting doesn’t seem to be a sustainable strategy. Continuous mergers and acquisitions could take over the current undercutting trend or an increase in reliance of digital innovation could emerge as a new common strategy. Sainsbury’s has been operating the “Scan & Go solution” in some of its stores, allowing customers to scan products as they go with a handheld scanner or mobile phones, and check-out without having to go to tills. It is also testing personalised offers on the Isle of Wight. Therefore, it would be interesting to keep our eyes on where the supermarkets’ strategies head, and lawyers will be playing a crucial role in ensuring that companies do not breach competition laws when carrying out mergers and acquisitions or data protection laws when adopting digital services using personal data.</p><p></p><p></p><p><strong><u>5. Apple’s share plunge: What happened and what it means (by [USER=980]@Angel[/USER])</u></strong></p><p></p><p><strong>The story:</strong></p><p></p><p>At the end of 2018, Apple cut its revenue estimate because of unexpectedly slow sales of iPhones. The day after the news was announced, Apple’s share price plunged by a further 10%. Unsurprisingly, such news sent the market into a convulsion.</p><p></p><p><strong>Impact on businesses and law firms: </strong></p><p></p><p>Market actors and professional service providers, including lawyers, will be quick to analyse the reasons behind the fall of this blue-chip company and whether this is signalling a different direction for the conglomerate. Some reasons are as follows.</p><p></p><p>First, the economic slowdown in China. Tim Cook himself expressly attributed slower sales to this reason because China does account for approximately 18% of Apple’s sales. Indeed, repercussions of the US-China trade war in affecting buying habits is a topic that analysts have been considering for a while.</p><p></p><p>Second, that such a cycle is simply a common trend within the technology industry. In an interview by The Economist, an analyst from New Street Research says that such market trend happens to almost all revolutionary technology, including cars, televisions, and computers. The cycle kicks off with the first generation of the product being mediocre and not be too great. Engineers will then be quick to learn their mistakes and make steep improvements, bringing high value into the second generation of these products. These improvements will then be so optimal that any subsequent improvements become mere refinements that no longer hold the same excitement as before. This is what is happening now. After a decade-long bloom, smartphones that once revolutionised the world have become ubiquitous.</p><p></p><p>Third, Apple’s business strategy and targeted market. Brand loyalty is definitely Apple’s competitive advantage. The most loyal Apple fans will associate the brand as trustworthy and transparent. However, Apple’s steep product prices were bound to limit the conglomerate’s reach. With ruthless competitors raising the game in recent years, consumers are more informed and faced with comparable, or perhaps better, choices and value for money than ever. While Apple is busy raising its prices to squeeze customers to make up for lower volumes, non-Apple products are doing the exact opposite.</p><p></p><p><strong>Some thoughts on Apple's share price:</strong></p><p></p><p>With that said, the crucial question is how long this slump will last and where this industry will be steered into in 2019. Market optimists will argue that a new wave of innovation can rejuvenate demand. For example, there are rumours that Samsung is planning to launch a foldable phone later this year- a device that can function as both a smartphone and tablet. It is also no surprise that 2019 will see the release of smartphones that are compatible with the latest ultra-fast ‘5G’ network.</p><p></p><p>However, quoting The Economist, such innovation seems more ‘evolutionary rather than revolutionary’. These are merely form factor changes. In fact, many may have already become complacent with the current design of their gadgets. The incentive to pay extra money to try something so out of the norm is simply not there. The same goes to the network upgrade. It is definitely an improvement to the industry as a whole. However, similar to the possible reasons for the market slowdown, for the majority of consumers, it is safe to say that the current technology is satisfactory for everyday life.</p><p></p><p><em><strong>What do you think? Do you think the market is too saturated and businesses should start looking elsewhere in 2019? </strong></em></p><p></p><p></p><p><span style="color: #b30000">That's all for this week! Let us know in the comments what you thought about this update, and have a great week ahead <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /></span></p></blockquote><p></p>
[QUOTE="Abstruser, post: 8127, member: 260"] [B][U]4. How the UK supermarkets are surviving in the gloomy retail sector (by [USER=525]@Sara Moon[/USER])[/U][/B] [B]The story:[/B] According to the British Retail Consortium, the British retail sector had the worst Christmas since 2008, with most of the companies suffering a decline in sales over Christmas. Overall, UK retail sales fell by 0.7% from December 2017. This Christmas nightmare was a result of several factors, including the increase in rents, business rate and wage rise, and uncertainties over Brexit. However, the grocery retailers emerged victorious in the Christmas season. Tesco, the UK’s largest supermarket, had its best Christmas since 2009. Aldi, the German-based supermarket, earned £1bn in December. Morrisons experienced a rise in sales by 0.6% for the nine weeks to 6th January. Asda reported 0.7% rise in its sales. Amid the celebration of the UK’s largest supermarkets, Sainsbury’s was the only supermarket, among the “Big Four Supermarkets” of the UK (Asda, Tesco, Sainsbury’s and Morrisons) to suffer loss in sales. Sainsbury’s same-store sales fell by 1.1% in the 15 weeks to 5 January. Same-store sales measures growth in sales and revenue of a company’s existing stores over time. Sainsbury’s defeat was, however, primarily due to the aftereffects of the Black Friday rather than problems over the Christmas season. Despite the current trend in the grocery market being fierce undercutting, Sainsbury’s decided to reduce the discount rate during the Black Friday, leading to sales suffering dramatically. With overall grocery retailers showing surprising strength, I thought now would be an interesting time to analyse how UK supermarkets are surviving in the gloomy market conditions of the retail sector. The general trend is slashing prices. This trend could be said to have been initiated by the German supermarkets, Lidl and Aldi. Both are well-known discounting stores and have shown huge success in the UK with their undercutting strategy. To stay competitive against them, UK supermarkets have been following their active price-cutting. Asda has reduced the price of everyday household goods, Morrisons announced it is cutting the price of 935 products by an average of 20%, Sainsbury’s has cut the price of 190 items, and Tesco reduced prices by more than 50% on its own-brand items. In addition to undercutting, M&A has also been adopted as a powerful strategy in attracting customers. Tesco, for example, acquired Booker, the UK’s largest wholesaler, last year. One of the reasons why Tesco won over Christmas was a rise in sales at Booker by 6.7%. Sainsbury has also decided to merge with Asda and the Competition and Markets Authority (CMA) is currently investigating whether the deal will give less choices to consumers, raise prices, or worsen quality of services. [B]Impact on businesses and law firms:[/B] With continuing uncertainties over Brexit and business rates set to rise again, 2019 will be a challenging year for UK supermarkets. This may mean that in order to maintain their growth in sales, they have to find alternative ways to continuously cut their price. With supermarkets already providing hugely discounted prices, undercutting doesn’t seem to be a sustainable strategy. Continuous mergers and acquisitions could take over the current undercutting trend or an increase in reliance of digital innovation could emerge as a new common strategy. Sainsbury’s has been operating the “Scan & Go solution” in some of its stores, allowing customers to scan products as they go with a handheld scanner or mobile phones, and check-out without having to go to tills. It is also testing personalised offers on the Isle of Wight. Therefore, it would be interesting to keep our eyes on where the supermarkets’ strategies head, and lawyers will be playing a crucial role in ensuring that companies do not breach competition laws when carrying out mergers and acquisitions or data protection laws when adopting digital services using personal data. [B][U]5. Apple’s share plunge: What happened and what it means (by [USER=980]@Angel[/USER])[/U][/B] [B]The story:[/B] At the end of 2018, Apple cut its revenue estimate because of unexpectedly slow sales of iPhones. The day after the news was announced, Apple’s share price plunged by a further 10%. Unsurprisingly, such news sent the market into a convulsion. [B]Impact on businesses and law firms: [/B] Market actors and professional service providers, including lawyers, will be quick to analyse the reasons behind the fall of this blue-chip company and whether this is signalling a different direction for the conglomerate. Some reasons are as follows. First, the economic slowdown in China. Tim Cook himself expressly attributed slower sales to this reason because China does account for approximately 18% of Apple’s sales. Indeed, repercussions of the US-China trade war in affecting buying habits is a topic that analysts have been considering for a while. Second, that such a cycle is simply a common trend within the technology industry. In an interview by The Economist, an analyst from New Street Research says that such market trend happens to almost all revolutionary technology, including cars, televisions, and computers. The cycle kicks off with the first generation of the product being mediocre and not be too great. Engineers will then be quick to learn their mistakes and make steep improvements, bringing high value into the second generation of these products. These improvements will then be so optimal that any subsequent improvements become mere refinements that no longer hold the same excitement as before. This is what is happening now. After a decade-long bloom, smartphones that once revolutionised the world have become ubiquitous. Third, Apple’s business strategy and targeted market. Brand loyalty is definitely Apple’s competitive advantage. The most loyal Apple fans will associate the brand as trustworthy and transparent. However, Apple’s steep product prices were bound to limit the conglomerate’s reach. With ruthless competitors raising the game in recent years, consumers are more informed and faced with comparable, or perhaps better, choices and value for money than ever. While Apple is busy raising its prices to squeeze customers to make up for lower volumes, non-Apple products are doing the exact opposite. [B]Some thoughts on Apple's share price:[/B] With that said, the crucial question is how long this slump will last and where this industry will be steered into in 2019. Market optimists will argue that a new wave of innovation can rejuvenate demand. For example, there are rumours that Samsung is planning to launch a foldable phone later this year- a device that can function as both a smartphone and tablet. It is also no surprise that 2019 will see the release of smartphones that are compatible with the latest ultra-fast ‘5G’ network. However, quoting The Economist, such innovation seems more ‘evolutionary rather than revolutionary’. These are merely form factor changes. In fact, many may have already become complacent with the current design of their gadgets. The incentive to pay extra money to try something so out of the norm is simply not there. The same goes to the network upgrade. It is definitely an improvement to the industry as a whole. However, similar to the possible reasons for the market slowdown, for the majority of consumers, it is safe to say that the current technology is satisfactory for everyday life. [I][B]What do you think? Do you think the market is too saturated and businesses should start looking elsewhere in 2019? [/B][/I] [COLOR=#b30000]That's all for this week! Let us know in the comments what you thought about this update, and have a great week ahead :)[/COLOR] [/QUOTE]
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