🌟 New CEO, High Hopes: Brian Niccol, well known for reviving Chipotle, became CEO of Starbucks in August 2024. Investors were initially enthusiastic, hoping he could turn around the coffee chain’s fortunes.

📉 Sales Still Falling: In the first quarter of 2025, same-store sales declined by 1%, the fifth consecutive quarterly drop. Despite the leadership change, revenue has yet to improve.

☕ Back to Basics Strategy: Niccol introduced a “Back to Starbucks” plan to revive the brand’s image. It includes cosy seating, ceramic mugs, and free self-serve dairy alternatives to create a welcoming “third space.”

🧾 Menu Makeover: The company cut 30% of menu items and hired more baristas. This simplification aims to speed up service and improve the customer experience.

💸 Rising Costs, Falling Profits: Store operating expenses rose by 12% while net profit dropped 50% year-on-year. The turnaround strategy is proving expensive and has yet to yield financial returns.

🇨🇳 China Stabilises: After a slowdown due to economic conditions and local competition, Starbucks’ business in China has stopped shrinking. This is one of the few bright spots in an otherwise tough global picture.

☕🌍 Coffee Costs Climb: Coffee prices have surged due to bean shortages and U.S. tariffs on key suppliers like Brazil and Vietnam. Starbucks is responding by rerouting shipments and seeking new suppliers.

⚠️ Demand at Risk: Consumer confidence in the U.S. is at its lowest in a decade, threatening Starbucks’ largest market. Even though people still buy coffee, they may turn to cheaper alternatives.

🤷‍♂️ No Quick Fixes: Former CEO Howard Schultz warned of deep-rooted issues without easy solutions. Niccol may now be realising that fixing Starbucks is more challenging than expected.

Q. Analyse how product differentiation can help Starbucks maintain its market share in a competitive coffee market.
A. Starbucks can use product differentiation to build brand loyalty in an oligopolistic market, where non-price competition is key. Its “third space” concept—comfortable seating, personalised drinks, and premium ambiance—creates perceived value beyond just the coffee itself. This shifts the demand curve outward, allowing Starbucks to charge higher prices with more inelastic demand. Unlike price cuts, this approach avoids price wars and supports long-run profit maximisation. It also creates barriers to entry, deterring smaller rivals.

Q. Evaluate the extent to which increasing labour inputs, such as hiring more baristas, can improve productivity and profitability for firms like Starbucks.
A. Hiring more baristas can increase labour input, reducing wait times and improving customer service, which may raise labour productivity and customer retention. However, higher variable costs raise the average cost (AC) curve, potentially eroding profit margins unless matched by higher marginal revenue. In the long run, replacing technology with labour may limit economies of scale, especially if rivals automate. Evaluation: If Starbucks’ strategy increases customer satisfaction and demand, total revenue may rise faster than costs. But if fixed costs rise without volume growth, profits may fall. Impact depends on price elasticity of demand and operational efficiency

Q. Explain how cost-push inflation affects the pricing and profitability of firms importing primary commodities, such as Starbucks and coffee beans.
A. Rising global coffee bean prices due to shortages and tariffs leads to cost-push inflation for Starbucks. This shifts the short-run aggregate supply (SRAS) left and increases the firm's marginal cost (MC). Higher costs may be passed on to consumers via higher prices, but if demand is price elastic, quantity demanded may fall. Starbucks may face reduced profits if it cannot fully transfer costs, especially amid intense competition.

Q. To what extent is non-price competition an effective strategy in an oligopolistic market? Use Starbucks as an example.
A. Non-price competition in oligopoly includes branding, product design, loyalty schemes, and customer experience—Starbucks excels in these. Such strategies reduce price elasticity of demand, enabling price premiums. However, they involve high sunk costs and may not yield immediate revenue. Evaluation: In a kinked demand curve model, price remains rigid, so firms must differentiate non-price-wise. But in periods of falling demand (e.g., recession), non-price competition may not be enough to sustain sales, especially if rivals undercut on price.

Infographic of the Week

The IMF has sharply downgraded its 2025 global GDP growth forecast from 3.3% in January to 2.8% in April, citing rising trade tensions triggered by U.S. tariff hikes. The U.S. itself saw its forecast slashed from 2.7% to 1.8%, while Mexico faced the steepest downgrade, dropping into negative growth due to its heavy reliance on U.S. trade. Major economies like China, Canada, and the UK also experienced downward revisions, though Russia stood out as the only nation with a slight upgrade. Looking to 2026, global growth projections remain muted at 3%, still below the pre-pandemic average, as trade disruptions continue to weigh on economic momentum.

Chart of the Week

After decades of expansion, global trade as a percentage of GDP peaked at 62.8% in 2022 but has since declined to 58.5% in 2023, according to the World Bank. Recent disruptions—from Trump-era tariffs and renewed protectionist policies to COVID-19’s shock to global supply chains—have prompted firms and nations to rethink the risks of interdependence. While world trade rebounded swiftly post-pandemic, the resurgence of nationalism and the unpredictability of trade policy have raised doubts about the future of globalisation. With rising uncertainty and supply chain vulnerabilities, the current wave of tariffs and reshoring trends may mark the beginning of a shift away from deeply integrated global trade networks—though the permanence of this shift remains uncertain.

Macroeconomic Data

Emre Aksahin

Chief Learning Officer at Edgenie

Hey Genies, 👋

I got this exact question from one of you recently:

"This sounds silly, but how am I meant to perfect exam technique if there are gaps in my knowledge?"

Brilliant question.

Here's the truth:

Knowing your Economics content inside out isn’t enough. 🙅‍♂️

Why?

Because the examiner isn’t looking for everything you know.

They're looking for your ability to apply it precisely to the question at hand.

Take this typical exam question as an example:

"Evaluate supply-side policies the UK government can use to boost productivity."

Simply knowing market-based or interventionist supply-side policies won’t get you full marks here.

You have to link them explicitly to productivity.

And not just productivity in general—specifically the UK's lagging productivity growth.

So, what's the solution?

✅ When learning content, always link it immediately to potential exam questions.

✅ Practise structuring and writing answers as soon as you cover a topic—don’t wait for perfect knowledge.

✅ Identify gaps by doing questions FIRST, then revise to fill those gaps.

At EdGenie, we teach you how to master this exact approach:

👉 Precisely how to interpret questions.

👉 How to structure your answers around application and context.

👉 How to turn partial knowledge into full marks.

So if you’re stuck trying to perfect your exam technique because of knowledge gaps, we’ve got your back.

Don't just memorise content—master applying it!

Ready to get rid of those gaps and master your exam technique?

Join EdGenie and let’s make that happen.

Cheers,

Emre

💸 Big Investment Incoming: Asda is planning to invest a “pretty significant war chest” to lower prices and add more staff on shop floors. 🛒

📉 Sales & Market Share Slide: The chain is fighting declining sales and market share, despite food price inflation of over 3% last year. 📊

💰 Profit Will Dip – But On Purpose: Chairman Allan Leighton says it’s an “investment warning, not a profit warning” – profits will drop in the short term to fund long-term growth. 💼

🛍️ Focus on Growing Sales: The goal is to boost profits by increasing sales, not cutting costs alone. 📈

🏪 Store Footprint Still Large: Asda operates over 580 supermarkets, nearly 500 convenience stores, and 769 petrol forecourts across the UK. 🏬

📉 Sales Slightly Down, Profits Up: Sales dropped by about 1% to £21.7bn, but underlying profits (excluding debt) rose 6% to £1.1bn. 💷

🥊 Tough Competition: Asda is under pressure from Tesco, Sainsbury’s, and fast-growing Aldi and Lidl. ⚔️

🧺 Tackling Price & Shelf Issues: Leighton highlights the need to fix pricing, stock gaps, and product range – balancing budget and premium lines. 🧃

🏷️ Everyday Low Prices Return: Asda will bring back its “Asda Price” branding next year, dropping complex promotions. 🛍️

👥 More Staff, More Hours: £43m is being spent to add 5.9 million more working hours to improve customer service in stores. 👨‍👩‍👧‍👦

💻 IT Transition Woes: The switch from Walmart’s systems is delayed, costing over £800m and causing shelf stock issues. 🖥️

🧑‍💼 Job Cuts in Tech: Around 200 roles tied to IT changes are being cut, with more tech job reductions expected later in the year. 🧾

🕰️ Long Road to Recovery: Leighton says it could take up to five years to fully turn Asda around after its £6.8bn buyout in 2021. ⏳

🧑‍🔍 Still No New CEO: The search for a chief executive continues, but Leighton says they’re taking their time to find the right fit. 🧐

💼 Strong Assets, Big Debts: Asda has £800m in cash and £9bn in assets, with £3.8bn in debt (excluding leases). Some car parks and land are being sold as routine business. 💳

📉 Debt Burden Hurts Competitiveness: Interest rates are easing, which helps, but £470m in debt repayments last year affected Asda’s ability to compete. 📉

Q. Evaluate whether Asda’s pricing strategy could lead to predatory pricing or limit pricing outcomes in the market.
A. Asda’s everyday low pricing strategy may resemble limit pricing, deterring new entrants like smaller convenience chains by maintaining prices just above marginal cost. However, unless prices fall below average variable cost, it is unlikely to be predatory pricing, which is illegal and unsustainable. Given Asda’s need to protect market share from Aldi and Lidl, the pricing strategy likely aims to signal low-cost efficiency, rather than drive rivals out. Nonetheless, competition authorities may scrutinise intent and outcomes if rivals are significantly weakened.

Q. To what extent does Asda’s strategy help address allocative and productive inefficiency in the supermarket industry?
A. By lowering prices and improving in-store service, Asda may enhance allocative efficiency, bringing prices closer to marginal cost and better matching consumer preferences. Productive efficiency could improve if economies of scale are achieved through increased sales volumes. However, if increased staffing costs outweigh gains, cost structures may rise, reducing overall efficiency. The success of the strategy thus depends on whether productivity gains offset investment costs in the long term.

Q. Assess whether underinvestment in IT infrastructure could be seen as a form of market failure.
A. Underinvestment in IT systems can be seen as a form of productive inefficiency, leading to stock shortages and poor consumer experience. If this results from information failure or misaligned incentives post-ownership change, it could represent a market failure. Moreover, if consumer welfare is significantly reduced due to persistent stock gaps, there’s a potential negative externality affecting broader retail standards. However, since this is a firm-specific issue, it may not constitute a widespread market failure unless industry-wide.

Q. Analyse how Asda’s shift to “everyday low pricing” could affect the price elasticity of demand for its products.
A. Everyday low pricing may reduce perceived price variation, potentially making demand more price inelastic, as consumers become less responsive to individual price changes. However, by promoting price consistency, it could attract more budget-conscious shoppers, increasing elasticity for particular product categories. The overall impact depends on substitutability and brand loyalty—if rivals offer similar value, elasticity could rise despite the pricing shift.

Q. Using a cost and revenue diagram, illustrate and explain the possible impact of price cuts on Asda’s total revenue and profits.
A. A cost and revenue diagram would show a movement down the demand curve, potentially increasing total revenue if demand is elastic. However, average revenue may fall faster than average cost, squeezing profit margins. In the short term, profits may decline, but if sales volume grows significantly and fixed costs are spread more efficiently, long-run profits could improve. The outcome hinges on cost elasticity and how well additional sales offset the lower price per unit.

Q. Using the kinked demand curve theory, analyse why Asda may be reluctant to increase prices, even during periods of high inflation.
A. Under kinked demand curve theory, firms in oligopolies expect rivals to ignore price increases but quickly match price cuts, creating a kink in the demand curve and price rigidity. Asda may fear loss of market share if it raises prices while Tesco or Aldi do not follow suit. Hence, it prefers holding prices steady despite inflation, absorbing cost pressures instead of risking consumer defection, which explains reluctance to pass costs on to shoppers.

Q. Evaluate how increased investment in staff and lower prices can be seen as forms of non-price competition in an oligopolistic market.
A. Improved staffing enhances customer service quality, differentiating Asda’s offering beyond price and building brand loyalty—a key form of non-price competition in oligopolies. Everyday low pricing, though price-based, can also signal value reliability, fostering consumer trust without constant promotions. These strategies help avoid destructive price wars and instead compete on experience and perception. However, rivals may imitate these efforts, reducing their impact unless Asda can maintain a sustainable service advantage.

Infographic of the Week

In 2023, China led the world with the largest trade surplus, reaching $593.9 billion—more than the combined surpluses of the next three countries—driven by its booming export sector amidst sluggish domestic demand. Germany followed in second place, with a $249.9 billion surplus largely attributed to its automotive exports, particularly to the United States. Ireland, Singapore, and Saudi Arabia also featured prominently in the top rankings, with the latter bolstered by its crude oil exports. Notably, five of the top ten surplus nations were European, highlighting the continent’s strong export presence. The data, sourced from the World Bank, reflects shifting global trade patterns amid rising geopolitical tensions and potential trade barriers, particularly between the U.S., China, and the EU.

Chart of the Week

Over the last five decades, global education levels have seen remarkable progress, particularly for girls. However, gender disparities in lower secondary school completion still persist across regions. According to World Bank data from 2018 to 2023, some countries still exhibit stark inequalities. In Afghanistan, for instance, girls were significantly underrepresented, with a -30.4 percentage point gap. Other countries such as Iceland, Albania, Mauritius, and the Democratic Republic of Congo also showed fewer girls completing eighth grade. Conversely, several countries reveal a reverse gender gap, where boys are underrepresented—most notably in the Cayman Islands (34.5 p.p. gap), Tuvalu, Sierra Leone, Palau, and Suriname. Encouragingly, 22 economies, including Turkey and Peru, reported near parity. Yet, lagging data and political shifts, like the Taliban's impact on girls’ education in Afghanistan, underscore the ongoing need for focused policy efforts to ensure equal educational access for all children, regardless of gender.

Macroeconomic Data

Emre Aksahin

Chief Learning Officer at Edgenie

Hey Genies, 👋

I got this exact question from one of you recently:

"This sounds silly, but how am I meant to perfect exam technique if there are gaps in my knowledge?"

Brilliant question.

Here's the truth:

Knowing your Economics content inside out isn’t enough. 🙅‍♂️

Why?

Because the examiner isn’t looking for everything you know.

They're looking for your ability to apply it precisely to the question at hand.

Take this typical exam question as an example:

"Evaluate supply-side policies the UK government can use to boost productivity."

Simply knowing market-based or interventionist supply-side policies won’t get you full marks here.

You have to link them explicitly to productivity.

And not just productivity in general—specifically the UK's lagging productivity growth.

So, what's the solution?

✅ When learning content, always link it immediately to potential exam questions.

✅ Practise structuring and writing answers as soon as you cover a topic—don’t wait for perfect knowledge.

✅ Identify gaps by doing questions FIRST, then revise to fill those gaps.

At EdGenie, we teach you how to master this exact approach:

👉 Precisely how to interpret questions.

👉 How to structure your answers around application and context.

👉 How to turn partial knowledge into full marks.

So if you’re stuck trying to perfect your exam technique because of knowledge gaps, we’ve got your back.

Don't just memorise content—master applying it!

Ready to get rid of those gaps and master your exam technique?

Join EdGenie and let’s make that happen.

Cheers,

Emre

💸 Big Investment Incoming: Asda is planning to invest a “pretty significant war chest” to lower prices and add more staff on shop floors. 🛒

📉 Sales & Market Share Slide: The chain is fighting declining sales and market share, despite food price inflation of over 3% last year. 📊

💰 Profit Will Dip – But On Purpose: Chairman Allan Leighton says it’s an “investment warning, not a profit warning” – profits will drop in the short term to fund long-term growth. 💼

🛍️ Focus on Growing Sales: The goal is to boost profits by increasing sales, not cutting costs alone. 📈

🏪 Store Footprint Still Large: Asda operates over 580 supermarkets, nearly 500 convenience stores, and 769 petrol forecourts across the UK. 🏬

📉 Sales Slightly Down, Profits Up: Sales dropped by about 1% to £21.7bn, but underlying profits (excluding debt) rose 6% to £1.1bn. 💷

🥊 Tough Competition: Asda is under pressure from Tesco, Sainsbury’s, and fast-growing Aldi and Lidl. ⚔️

🧺 Tackling Price & Shelf Issues: Leighton highlights the need to fix pricing, stock gaps, and product range – balancing budget and premium lines. 🧃

🏷️ Everyday Low Prices Return: Asda will bring back its “Asda Price” branding next year, dropping complex promotions. 🛍️

👥 More Staff, More Hours: £43m is being spent to add 5.9 million more working hours to improve customer service in stores. 👨‍👩‍👧‍👦

💻 IT Transition Woes: The switch from Walmart’s systems is delayed, costing over £800m and causing shelf stock issues. 🖥️

🧑‍💼 Job Cuts in Tech: Around 200 roles tied to IT changes are being cut, with more tech job reductions expected later in the year. 🧾

🕰️ Long Road to Recovery: Leighton says it could take up to five years to fully turn Asda around after its £6.8bn buyout in 2021. ⏳

🧑‍🔍 Still No New CEO: The search for a chief executive continues, but Leighton says they’re taking their time to find the right fit. 🧐

💼 Strong Assets, Big Debts: Asda has £800m in cash and £9bn in assets, with £3.8bn in debt (excluding leases). Some car parks and land are being sold as routine business. 💳

📉 Debt Burden Hurts Competitiveness: Interest rates are easing, which helps, but £470m in debt repayments last year affected Asda’s ability to compete. 📉

Q. Evaluate whether Asda’s pricing strategy could lead to predatory pricing or limit pricing outcomes in the market.
A. Asda’s everyday low pricing strategy may resemble limit pricing, deterring new entrants like smaller convenience chains by maintaining prices just above marginal cost. However, unless prices fall below average variable cost, it is unlikely to be predatory pricing, which is illegal and unsustainable. Given Asda’s need to protect market share from Aldi and Lidl, the pricing strategy likely aims to signal low-cost efficiency, rather than drive rivals out. Nonetheless, competition authorities may scrutinise intent and outcomes if rivals are significantly weakened.

Q. To what extent does Asda’s strategy help address allocative and productive inefficiency in the supermarket industry?
A. By lowering prices and improving in-store service, Asda may enhance allocative efficiency, bringing prices closer to marginal cost and better matching consumer preferences. Productive efficiency could improve if economies of scale are achieved through increased sales volumes. However, if increased staffing costs outweigh gains, cost structures may rise, reducing overall efficiency. The success of the strategy thus depends on whether productivity gains offset investment costs in the long term.

Q. Assess whether underinvestment in IT infrastructure could be seen as a form of market failure.
A. Underinvestment in IT systems can be seen as a form of productive inefficiency, leading to stock shortages and poor consumer experience. If this results from information failure or misaligned incentives post-ownership change, it could represent a market failure. Moreover, if consumer welfare is significantly reduced due to persistent stock gaps, there’s a potential negative externality affecting broader retail standards. However, since this is a firm-specific issue, it may not constitute a widespread market failure unless industry-wide.

Q. Analyse how Asda’s shift to “everyday low pricing” could affect the price elasticity of demand for its products.
A. Everyday low pricing may reduce perceived price variation, potentially making demand more price inelastic, as consumers become less responsive to individual price changes. However, by promoting price consistency, it could attract more budget-conscious shoppers, increasing elasticity for particular product categories. The overall impact depends on substitutability and brand loyalty—if rivals offer similar value, elasticity could rise despite the pricing shift.

Q. Using a cost and revenue diagram, illustrate and explain the possible impact of price cuts on Asda’s total revenue and profits.
A. A cost and revenue diagram would show a movement down the demand curve, potentially increasing total revenue if demand is elastic. However, average revenue may fall faster than average cost, squeezing profit margins. In the short term, profits may decline, but if sales volume grows significantly and fixed costs are spread more efficiently, long-run profits could improve. The outcome hinges on cost elasticity and how well additional sales offset the lower price per unit.

Q. Using the kinked demand curve theory, analyse why Asda may be reluctant to increase prices, even during periods of high inflation.
A. Under kinked demand curve theory, firms in oligopolies expect rivals to ignore price increases but quickly match price cuts, creating a kink in the demand curve and price rigidity. Asda may fear loss of market share if it raises prices while Tesco or Aldi do not follow suit. Hence, it prefers holding prices steady despite inflation, absorbing cost pressures instead of risking consumer defection, which explains reluctance to pass costs on to shoppers.

Q. Evaluate how increased investment in staff and lower prices can be seen as forms of non-price competition in an oligopolistic market.
A. Improved staffing enhances customer service quality, differentiating Asda’s offering beyond price and building brand loyalty—a key form of non-price competition in oligopolies. Everyday low pricing, though price-based, can also signal value reliability, fostering consumer trust without constant promotions. These strategies help avoid destructive price wars and instead compete on experience and perception. However, rivals may imitate these efforts, reducing their impact unless Asda can maintain a sustainable service advantage.

Infographic of the Week

In 2023, China led the world with the largest trade surplus, reaching $593.9 billion—more than the combined surpluses of the next three countries—driven by its booming export sector amidst sluggish domestic demand. Germany followed in second place, with a $249.9 billion surplus largely attributed to its automotive exports, particularly to the United States. Ireland, Singapore, and Saudi Arabia also featured prominently in the top rankings, with the latter bolstered by its crude oil exports. Notably, five of the top ten surplus nations were European, highlighting the continent’s strong export presence. The data, sourced from the World Bank, reflects shifting global trade patterns amid rising geopolitical tensions and potential trade barriers, particularly between the U.S., China, and the EU.

Chart of the Week

Over the last five decades, global education levels have seen remarkable progress, particularly for girls. However, gender disparities in lower secondary school completion still persist across regions. According to World Bank data from 2018 to 2023, some countries still exhibit stark inequalities. In Afghanistan, for instance, girls were significantly underrepresented, with a -30.4 percentage point gap. Other countries such as Iceland, Albania, Mauritius, and the Democratic Republic of Congo also showed fewer girls completing eighth grade. Conversely, several countries reveal a reverse gender gap, where boys are underrepresented—most notably in the Cayman Islands (34.5 p.p. gap), Tuvalu, Sierra Leone, Palau, and Suriname. Encouragingly, 22 economies, including Turkey and Peru, reported near parity. Yet, lagging data and political shifts, like the Taliban's impact on girls’ education in Afghanistan, underscore the ongoing need for focused policy efforts to ensure equal educational access for all children, regardless of gender.

Macroeconomic Data

Emre Aksahin

Chief Learning Officer at Edgenie

Hey Genies, 👋

I got this exact question from one of you recently:

"This sounds silly, but how am I meant to perfect exam technique if there are gaps in my knowledge?"

Brilliant question.

Here's the truth:

Knowing your Economics content inside out isn’t enough. 🙅‍♂️

Why?

Because the examiner isn’t looking for everything you know.

They're looking for your ability to apply it precisely to the question at hand.

Take this typical exam question as an example:

"Evaluate supply-side policies the UK government can use to boost productivity."

Simply knowing market-based or interventionist supply-side policies won’t get you full marks here.

You have to link them explicitly to productivity.

And not just productivity in general—specifically the UK's lagging productivity growth.

So, what's the solution?

✅ When learning content, always link it immediately to potential exam questions.

✅ Practise structuring and writing answers as soon as you cover a topic—don’t wait for perfect knowledge.

✅ Identify gaps by doing questions FIRST, then revise to fill those gaps.

At EdGenie, we teach you how to master this exact approach:

👉 Precisely how to interpret questions.

👉 How to structure your answers around application and context.

👉 How to turn partial knowledge into full marks.

So if you’re stuck trying to perfect your exam technique because of knowledge gaps, we’ve got your back.

Don't just memorise content—master applying it!

Ready to get rid of those gaps and master your exam technique?

Join EdGenie and let’s make that happen.

Cheers,

Emre

💸 Big Investment Incoming: Asda is planning to invest a “pretty significant war chest” to lower prices and add more staff on shop floors. 🛒

📉 Sales & Market Share Slide: The chain is fighting declining sales and market share, despite food price inflation of over 3% last year. 📊

💰 Profit Will Dip – But On Purpose: Chairman Allan Leighton says it’s an “investment warning, not a profit warning” – profits will drop in the short term to fund long-term growth. 💼

🛍️ Focus on Growing Sales: The goal is to boost profits by increasing sales, not cutting costs alone. 📈

🏪 Store Footprint Still Large: Asda operates over 580 supermarkets, nearly 500 convenience stores, and 769 petrol forecourts across the UK. 🏬

📉 Sales Slightly Down, Profits Up: Sales dropped by about 1% to £21.7bn, but underlying profits (excluding debt) rose 6% to £1.1bn. 💷

🥊 Tough Competition: Asda is under pressure from Tesco, Sainsbury’s, and fast-growing Aldi and Lidl. ⚔️

🧺 Tackling Price & Shelf Issues: Leighton highlights the need to fix pricing, stock gaps, and product range – balancing budget and premium lines. 🧃

🏷️ Everyday Low Prices Return: Asda will bring back its “Asda Price” branding next year, dropping complex promotions. 🛍️

👥 More Staff, More Hours: £43m is being spent to add 5.9 million more working hours to improve customer service in stores. 👨‍👩‍👧‍👦

💻 IT Transition Woes: The switch from Walmart’s systems is delayed, costing over £800m and causing shelf stock issues. 🖥️

🧑‍💼 Job Cuts in Tech: Around 200 roles tied to IT changes are being cut, with more tech job reductions expected later in the year. 🧾

🕰️ Long Road to Recovery: Leighton says it could take up to five years to fully turn Asda around after its £6.8bn buyout in 2021. ⏳

🧑‍🔍 Still No New CEO: The search for a chief executive continues, but Leighton says they’re taking their time to find the right fit. 🧐

💼 Strong Assets, Big Debts: Asda has £800m in cash and £9bn in assets, with £3.8bn in debt (excluding leases). Some car parks and land are being sold as routine business. 💳

📉 Debt Burden Hurts Competitiveness: Interest rates are easing, which helps, but £470m in debt repayments last year affected Asda’s ability to compete. 📉

Q. Evaluate whether Asda’s pricing strategy could lead to predatory pricing or limit pricing outcomes in the market.
A. Asda’s everyday low pricing strategy may resemble limit pricing, deterring new entrants like smaller convenience chains by maintaining prices just above marginal cost. However, unless prices fall below average variable cost, it is unlikely to be predatory pricing, which is illegal and unsustainable. Given Asda’s need to protect market share from Aldi and Lidl, the pricing strategy likely aims to signal low-cost efficiency, rather than drive rivals out. Nonetheless, competition authorities may scrutinise intent and outcomes if rivals are significantly weakened.

Q. To what extent does Asda’s strategy help address allocative and productive inefficiency in the supermarket industry?
A. By lowering prices and improving in-store service, Asda may enhance allocative efficiency, bringing prices closer to marginal cost and better matching consumer preferences. Productive efficiency could improve if economies of scale are achieved through increased sales volumes. However, if increased staffing costs outweigh gains, cost structures may rise, reducing overall efficiency. The success of the strategy thus depends on whether productivity gains offset investment costs in the long term.

Q. Assess whether underinvestment in IT infrastructure could be seen as a form of market failure.
A. Underinvestment in IT systems can be seen as a form of productive inefficiency, leading to stock shortages and poor consumer experience. If this results from information failure or misaligned incentives post-ownership change, it could represent a market failure. Moreover, if consumer welfare is significantly reduced due to persistent stock gaps, there’s a potential negative externality affecting broader retail standards. However, since this is a firm-specific issue, it may not constitute a widespread market failure unless industry-wide.

Q. Analyse how Asda’s shift to “everyday low pricing” could affect the price elasticity of demand for its products.
A. Everyday low pricing may reduce perceived price variation, potentially making demand more price inelastic, as consumers become less responsive to individual price changes. However, by promoting price consistency, it could attract more budget-conscious shoppers, increasing elasticity for particular product categories. The overall impact depends on substitutability and brand loyalty—if rivals offer similar value, elasticity could rise despite the pricing shift.

Q. Using a cost and revenue diagram, illustrate and explain the possible impact of price cuts on Asda’s total revenue and profits.
A. A cost and revenue diagram would show a movement down the demand curve, potentially increasing total revenue if demand is elastic. However, average revenue may fall faster than average cost, squeezing profit margins. In the short term, profits may decline, but if sales volume grows significantly and fixed costs are spread more efficiently, long-run profits could improve. The outcome hinges on cost elasticity and how well additional sales offset the lower price per unit.

Q. Using the kinked demand curve theory, analyse why Asda may be reluctant to increase prices, even during periods of high inflation.
A. Under kinked demand curve theory, firms in oligopolies expect rivals to ignore price increases but quickly match price cuts, creating a kink in the demand curve and price rigidity. Asda may fear loss of market share if it raises prices while Tesco or Aldi do not follow suit. Hence, it prefers holding prices steady despite inflation, absorbing cost pressures instead of risking consumer defection, which explains reluctance to pass costs on to shoppers.

Q. Evaluate how increased investment in staff and lower prices can be seen as forms of non-price competition in an oligopolistic market.
A. Improved staffing enhances customer service quality, differentiating Asda’s offering beyond price and building brand loyalty—a key form of non-price competition in oligopolies. Everyday low pricing, though price-based, can also signal value reliability, fostering consumer trust without constant promotions. These strategies help avoid destructive price wars and instead compete on experience and perception. However, rivals may imitate these efforts, reducing their impact unless Asda can maintain a sustainable service advantage.

Infographic of the Week

In 2023, China led the world with the largest trade surplus, reaching $593.9 billion—more than the combined surpluses of the next three countries—driven by its booming export sector amidst sluggish domestic demand. Germany followed in second place, with a $249.9 billion surplus largely attributed to its automotive exports, particularly to the United States. Ireland, Singapore, and Saudi Arabia also featured prominently in the top rankings, with the latter bolstered by its crude oil exports. Notably, five of the top ten surplus nations were European, highlighting the continent’s strong export presence. The data, sourced from the World Bank, reflects shifting global trade patterns amid rising geopolitical tensions and potential trade barriers, particularly between the U.S., China, and the EU.

Chart of the Week

Over the last five decades, global education levels have seen remarkable progress, particularly for girls. However, gender disparities in lower secondary school completion still persist across regions. According to World Bank data from 2018 to 2023, some countries still exhibit stark inequalities. In Afghanistan, for instance, girls were significantly underrepresented, with a -30.4 percentage point gap. Other countries such as Iceland, Albania, Mauritius, and the Democratic Republic of Congo also showed fewer girls completing eighth grade. Conversely, several countries reveal a reverse gender gap, where boys are underrepresented—most notably in the Cayman Islands (34.5 p.p. gap), Tuvalu, Sierra Leone, Palau, and Suriname. Encouragingly, 22 economies, including Turkey and Peru, reported near parity. Yet, lagging data and political shifts, like the Taliban's impact on girls’ education in Afghanistan, underscore the ongoing need for focused policy efforts to ensure equal educational access for all children, regardless of gender.

Macroeconomic Data

Emre Aksahin

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Home > Edgenie Sunday Schroll: Newsletter > "Edgenie Sunday Scroll - 88th Edition"

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​Can Starbucks be turned around?​

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A Level Economics Questions:

Possible A Level Economics 25 Marker Question

Infographic of the Week

Global Growth Slows in 2025 Amid Tariff Turmoil

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Has Globalisation Peaked? Trade Openness Faces Setbacks

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​Asda to invest in price cuts to battle drop in sales and market share

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A Level Economics Questions:

Possible A Level Economics 25 Marker Question

Infographic of the Week

Global Trade Leaders: Countries with the Largest Trade Surpluses

Chart of the Week

Gender Gaps in Lower Secondary School Completion: A Global Snapshot

Macroeconomic Data

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Home > Edgenie Sunday Schroll: Newsletter > "But how can I perfect exam technique if I have gaps in my knowledge?🤔"

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"But how can I perfect exam technique if I have gaps in my knowledge?🤔"

​Asda to invest in price cuts to battle drop in sales and market share

Summary

A Level Economics Questions:

Possible A Level Economics 25 Marker Question

Infographic of the Week

Global Trade Leaders: Countries with the Largest Trade Surpluses

Chart of the Week

Gender Gaps in Lower Secondary School Completion: A Global Snapshot

Macroeconomic Data

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Home > Edgenie Sunday Schroll: Newsletter > "But how can I perfect exam technique if I have gaps in my knowledge?🤔"

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"But how can I perfect exam technique if I have gaps in my knowledge?🤔"

​Asda to invest in price cuts to battle drop in sales and market share

Summary

A Level Economics Questions:

Possible A Level Economics 25 Marker Question

Infographic of the Week

Global Trade Leaders: Countries with the Largest Trade Surpluses

Chart of the Week

Gender Gaps in Lower Secondary School Completion: A Global Snapshot

Macroeconomic Data

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Can Starbucks be turned around?

Asda to invest in price cuts to battle drop in sales and market share

Asda to invest in price cuts to battle drop in sales and market share

Asda to invest in price cuts to battle drop in sales and market share