In 2012 UK retail sales were over £311 Billion, taking account for around 20% of Total GDP. If we break this down further, food retail sales in the same year were worth around £163 Billion accounting for over half of all retail sales meaning that on average out of every £1 spent in the UK retail market, 50p of it is spent in a supermarket. This figure is set to increase to around £162 Billion by the end of 2013 as seen below in figure 1.

The UK food markets is made up of; superstores, small supermarkets, convenience stores, discounters and online retailers (Figure 2). Supermarket companies such as Tesco own around 6,000 stores worldwide, consisting of the first four store types and making up the largest proportion of the UK food market with a share of around 30%. In fact if we are to look at the top ten UK retailers in general, 6 of them are food retailers, namely; Tesco, Asda, Sainsbury’s, Morrison’s, Co-operative and Marks and Spencer. This is due to the type of product these retailers offer. They are un-substitutable in general terms to the consumer. They may be substitutes in terms of where the consumers chooses to buy them, however in general terms all people must eat.
This is where complimentary and substitute goods play a big role in the food retail market. In a market with an oligopoly structure, it is dominated by a few large firms and therefore their products are differentiated by either branding or tastes and personal preferences. Here supermarket must consider the price of their products carefully. If Tesco’s cornflakes are simply too expensive, then consumers will look elsewhere, which could for example be to the cornflakes sold in Sainsbury’s. These are known as imperfect substitutes, as the goods are not identical yet if one is bought in substitute for the other, could more or less maintain a constant level of utility for the