I am writing to express my opinions towards the oligopoly acts of the big supermarkets. Nowadays, it is common for the local small shops to be expelled from the current market due to the duopoly of PARKnSHOP and Wellcome. A lack of competition is resulted, which then arouses lots of concerns and worries in society.
From my point of view, I concur that the monopolistic power of larger chain supermarkets indeed dealt a severe blow to the local small business. Thanks to the large-scale operations of supermarkets, which enable them to enjoy economies of scale, such as quantity discount in bulk purchase, they are granted with competitive edge in the market. The factor of reduced cost of goods sold contributes to the increase in the supermarkets’ profits. With the accumulation of capital, not only can the supermarkets afford the skyrocketing rent increase nowadays, they can also seize the opportunity to expand their businesses in order to capture market shares. On the contrary, it is usually difficult for the small local shops to get financial support from banks since their operation scale is small and so their credit ratings tend to be low. Moreover, the round-the-clock operations of big supermarkets also lure customers from small local shops since they are prioritized by customers because of convenience. As a result, local shops’ competitiveness plummets at the same time when the chain supermarkets enlarge their market coverage, causing the small local shops to be weeded out gradually. This would lead to a fall in consumer choice, as we have no choice but to buy the products in supermarkets even they raise the price as we have little bargaining power relative to the big supermarkets.
To solve the monopolistic situation of the current market, in my opinion, it is necessary for the government to carry out intervention. It would be a good move of the government if it could solve the oligopoly exists in the current market by increasing the competitiveness of the small local shops. For example, the government could enforce laws on anti-competition for the sake of dealing with the duopoly by punishing the anti-competition actors, i.e. the big chain supermarkets. Not only could this eliminate the adverse effects of duopoly, it could also serve to protect consumers’ interest so that their choice no longer be limited to the products offered by large supermarkets.
Furthermore, we could also make a difference by choosing small local shops for patronage. If we pay our efforts in supporting the small shops, the current monopolistic situation will be better off. I sincerely hope that this problem could be addressed by the joining of hands of the government and the public.