RETAILERS PRICE BEHAVIOUR IN THE UK FRESH FRUIT AND VEGETABLE MARKET

The purpose of this paper is to study the price behaviour of fresh produce at the retaillevel of two leading supermarkets, Tesco and Sainsbury, with the purpose of gainingknowledge about their interaction. We focus the study on six products from the freshfruits and vegetable group (i.e., tomatoes, Bramley’s apples, white cabbage, cucumbers,Iceberg lettuce and Round lettuce) due to the fact on the one hand it is a less complexsupply chain (e.g., perishable product, less number of intermediaries) and on the otherhand, because during the last 20 years the group has significantly evolved withsupermarkets becoming the major players in the chain. The empirical methodologyconsisted of using Granger causality tests to establish the relationship between theseries (e.g., leader-follower) and then vector autoregressive (VAR) models and variancedecomposition procedures to capture the interaction of supermarket prices by product.Overall results indicate that the competition behaviour amongst the two retailerschanges by product and evolve over time