Suppliers struggle as convenience stores cannibalise supermarket profits

Despite some vague reports that the price war between the big four superstores is easing off slightly, casualties of the war are still being made, particularly suppliers and supermarkets themselves.
It is reported that the profits of Allied Bakeries has been severely damaged during this financial year, as the supermarkets dragged their suppliers down with them.
Sunblest and Kingsmill are some of the more well known products produced by Allied Bakeries, but due to the big retailers selling cheaper bread products in a push to reduce the price on all staple goods and attract more footfall, the baking suppliers have lost profit.
This is by no means the first hints of a supplier falling victim to supermarkets stamping down on prices. Tesco made it into the news just a few weeks ago because of claims they were pressuring suppliers to drop prices in a bid to boost their profits.
Theories regarding the need to boost these profits however have turned to the explosion in the number of convenience stores that have been opened throughout the country by the same supermarkets which are now struggling.
Since 1996, the number of little local stores, such as Tesco Express, or Sainsburys Local, have trebled in number.
The range of products at these small stores is more limited than in the large superstores, limiting the scope of products sold. Therefore price of upkeep is often relatively larger, especially because of the high profile positions of these little shops, near public transport stations in the inner cities or on high streets.
These little scattered stores may have managed one thing though, and it is not necessarily a good thing for the industry. It has been proposed by retail consultant Richard Hyman that the little stores have “encouraged people to fragment their shopping” and shop several times a week, even daily, at convenience stores, rather than head out to the big stores, where all the money making deals are, for one big weekly shop. This effectively means the large supermarkets have cannibalised their own profits.
It seems that the price war, which was meant to boost profits and try to fix the market, has only added to the confusion, and the grocery market of the country has been left in a convoluted mess. It is just a shame that the suppliers and smaller businesses are likely the ones who will be the least able to cope.