A similar picture is emerging in the market structure of UK business electricity retailers as witnessed within the supermarket sector especially between the competitive practices being undertaken.
Just like supermarket chains, business electricity retail is dominated by a few major players who share some 96% of the total market. However, rather than compete head-on for market share, they appear only compete for a small percentage of customers at the peripherals.
They attract these new customers from each other by offering competitive new customer only introductory rates, quickly reverting to standard rates (and sometimes more), when contracts roll-over after the first year or so. These practices are not dissimilar to the loss-leaders used by supermarkets to attract customers into the store where they are likely to spend much more on non-discounted goods.
Although showing very similar market structures now, these sectors got to this position in very different ways. The grocery sector was originally fragmented with no major players really dominating until the emergence of supermarket chains. Whereas, electricity was monopolised by regional suppliers and...
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