Investment recommendations and commercial reality in Scottish grocery retailing

Abstract

Since 1990 the grocery market in Scotland has been restructured and re-organised. November 1990 saw the opening of the first Shoprite hard discount grocery store in Scotland. A discount re-orientation and price war had begun. Shoprite expanded (too) rapidly, got into difficulties and have had to sell their stores to Kwik Save. Wm Low, after being adversely affected by the changed competitive structure, have been taken over by Tesco. These events illustrate the increased competitive nature of the Scottish grocery market. Both developments came as a surprise however to dedicated followers of brokers' reports on these retail companies, despite the supposedly close relationships between brokers and retail. This study looks at brokers' reports on Shoprite and Wm Low in the lead up to their take-overs in 1994, and points (admittedly with hindsight) to a divergence in investment recommendations and commercial reality.