Usually, Market Competition is considered good for the consumer as well as sellers, it lowers the cost and improves the quality of goods being sold, it also encourages shop owners, to stay in market they have to improve themselves and create a brand name with help of goodwill. But this is not the same case in the UK, many shops are busting and closing due to hideous market competition.
It is stated that every day four firms are closing due to the unhealthy market competition in the UK. The insolvency reports show that 350 market shops closed in between January and March. This stat is 25% higher than last year and continuously increasing. The major reason behind this hazardous phenomenon is the introduction of online shopping in recent years. It is 40% more than that of 2018.
Perils due to Online Giants
The shopkeepers have to pay rents and have to compete with online prices at the same time. Which is causing a large mass of owners to bust out of the market. Online giants like Amazon and Asos are taking over the market with lower costs and better quality. Many high-profile names like Debenhams, LK Bennett, HMV have collapsed this year due to this. This crisis is also responsible for the loss of more than 175,000 jobs in the coming future. It is going to be a major cause of unemployment for the UK as stores are closing at a gusty speed.
The sudden revolution in shopping habits due to the emergence of Online Shopping and the introduction of better quality goods at lower costs led to this crisis. Many well-established brand names and shops are falling and closing up. Tesco, Britain’s largest retailer blames business rates for this condition of crisis. The conditions are getting worse as 7,500 stores closed last year leaving 3 Million people unemployed. BRC stated that products sold on heavy discount doubled in April to match the intense competition against Online Shopping giants.
Solutions and Reforms
Market Competition is forcing shop owners to sell products on negligible or negative profit due to such harsh conditions. It might be beneficial for consumers but it is very harmful to retailers and shop owners. The government is required to modify and change the Business Rate System that is beneficial for everyone. To avoid shop closures and job losses the Government should take action and take retailers of the UK out of this peril. With every passing year, conditions are getting worse for shop owners making them back out of the market or slowly perish away. A modification in Rates is a must and proper reforms should be taken to limit the falling costs, letting retailers have a good profit margin is an essential part of a market. Current conditions are good for consumers, but they are not going to be as good in the long run.