tesco case study business

TESCO – British Retailer that redefined Grocery Shopping

The first time I visited a ‘Tesco Extra’ store was at midnight, making an emergency run for next morning’s breakfast. The store seemed to occupy the area of an entire football field in Ashby-De-La-Zouch, UK. Even at an ungodly hour, Tesco was well-lit with visiting customers.

Inside, there were never-ending aisles lined up with groceries, food items, clothing, electronics, and whatnot. It was easy to lose way and lose track of time in the colossal supermarket.

I thought to myself that this would be the only store of its kind in the county, but I was wrong.

Tesco has 4008 stores across the UK and Republic of Ireland , with 7005+ stores and franchises across the world. In Europe, Tesco has established itself in Hungary, Slovakia, Czech Republic, Poland and Turkey. In Asia it has stores in Thailand, South Korea, Malaysia, Japan and China.

TESCO is much more than a chain of supermarkets selling a million products. It’s a giant conglomerate, spanning across so many verticals. It’s the equivalent of one of the FAANG companies but in the Grocery & Retail sector. It becomes imperative for business enthusiasts like you and me to understand the business model of this retail giant called Tesco.

It’s considered a part of the ‘Big Four’ supermarkets alongside ASDA, Sainsbury’s, and Morrison’s in Europe.

The Birth of Supermarkets in Britain

Founded in 1919 by a war veteran – Jack Cohen , Tesco began as a grocery stall in the East End of London, making a profit of £1 on sales of £4 on day one. Tesco’s first store was launched in 1929, selling dry goods & its own brand of Tesco Tea. A hundred more Tesco stores were opened in the next 10 years.

With 100+ mom-and-pop stores in Britain, Jack wanted to expand his product range. He traveled to the US in 1946 and noticed the self-service system, where customers would select different products on the shop floor and finally checkout at a counter. Jack brought this concept back to Britain, giving birth to Tesco Supermarkets and changing the face of British Shopping. His motto was to “stack ‘em high, and sell ‘em low (cheap).”

Tesco has a wide range of supermarkets depending upon their size, range of products, and location. This also helps regulate their Supply Chain to reduce wastage.

Tesco Business Model is based on various verticals

Tesco has deep-rooted its businesses in the European market so well, it’s difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are:

A glimpse into the Complex Supply Chain

A supply chain is one of the critical aspects of the business model of a giant retailer like Tesco. Tesco has its priorities set when it comes to procuring products from different parts of the world:

• Use expertise to offer a better range of products at reasonable prices
• Use economies of scale to buy more for less
• Leverage and maintain relations with global branded suppliers
• Grow the brand

It procures goods from over 44 countries, majorly China. A stock of up to 90,000 different products (30% are food & beverages) is transferred via the global sourcing office located in Hong Kong. Keeping wholesalers out of the loop, Tesco procures directly from suppliers. The conglomerate has developed and maintained long-lasting relations with suppliers’ world over—the main ones being General Mills, Kellogg, Mars, and Princes.

Tesco has set up a separate division to regulate its supply chain, “the machine behind the machine” – Tesco International Sourcing (TIS). It can be compared to the East India Company of the 18 th -19 th Century, catering to only one customer – Tesco.

TIS is connected to over 1000+ suppliers across 1200+ factories . It’s responsible for over 50,000 Tesco product lines in terms of quality control, sourcing, production, designing, timely delivery, and sorting trading/customs documentation.

All activities are coordinated centrally at TIS, with just 533 staff members. These staff members undergo rigorous training to detect & analyze Supplier-violations and conduct Auditing.

Tesco coordinates with TIS on a daily basis to procure products in the following ways:

• The local team uses customer insights to create a Product Brief (new or modified) specified for each region.
• TIS analyzes the product brief and develops a Product Sourcing Plan depending upon – stores that need this product and figuring out minimum transport time and cost, as per the region.
• The Plan is executed, and specific demands are handed out to Suppliers all over the world. Expert TIS Buyers make sure the best deal is made.
• Inbound logistics are consolidated at specific Tesco Depot to receive the product efficiently from Suppliers.
• Local teams then make sure the product is distributed to different Tesco stores from the Depots.

Tesco adding eCommerce to the mainstream business model

Being in the Top 50 retailers globally as of 2021 , Tesco’s annual revenue worldwide in 2020 was £58.09B , a 9.1% decline from 2019 (due to the Pandemic & disposing of its Asia operations , to focus on the core business in Europe).

It shifted from Brick & Mortar to Brick & Click stores. The Click+Collect functionality on its website accounts for 43% of E-grocery sales in the UK. The Click+Collect concept enables customers to place their orders online and collect their orders a few hours later at the nearest Tesco Depot. Tesco created these specialized Depots for online orders only.

Despite shutting down most its mall operations, Tesco survived 2020 through its online retail store Tesco.com , with double the orders. Its E-commerce net sales had shot up by 31% from 2019-2021.

A Global Operations & Technology Center in Bengaluru was also set up in 2004. This center serves as the backbone of distribution operations for Tesco worldwide. Its business functions are- Finance, Property, Distribution Operations, Customers & Product. The employees at this Center are Engineers, Analysts, Designers, and Architects.

Tesco’s Marketing Strategy

Tesco has always believed in acquiring loyal customers and regaining stakeholders’ trust. It aims to reach customers from all financial backgrounds. So it launched 2 of its own sub-brands – Tesco finest for the affluent customers and Tesco Everyday Value for the rest of the crowd.

Tesco also launched the Club Card in 1995 as a Membership card, to maintain customer loyalty and keep them coming back. The Card operates on a point-based system with discounts on products, & other subsidiaries like double data on Tesco Mobile. With 5 Million subscribers in the first year , Tesco finally overtook its competitor – Sainsbury’s to become No.1 in the UK.

The Club-card strategy was used to obtain customer data and observe buying habits. This data was analyzed, allowing Tesco to put the right products on shelves while eliminating unpopular ones. Tesco realized that the Club Card isn’t just a quick fix & temporary promotional tool; it’s a promotion in itself. This made the Tesco Club Card unique and long-lasting.

Tesco also realized that spending Billions on traditional marketing efforts and maintaining a ‘one-size-fits-all’ brand image wouldn’t work. It decided to hyper-target specific customers and to earn their trust. For starters, thousands of head-office staff and senior executives were sent to work in stores – to demonstrate how Tesco values its customer. Customization became key for its new marketing strategy; sending out discounts on birthdays via Emails and campaigning from door-to-door.

Tesco also made a partial shift to Digital Marketing which costs much lesser and has a wider outreach. It created well-tailored profiles on all social media platforms. On Twitter, it has more than 15 accounts, separate for each of its business units. The online customer care account on Twitter is active 24-7.

All supermarkets commonly advertised themselves to have quality products at a reasonable cost; Tesco wanted to differentiate itself as a unique brand. It introduced step-by-step Recipes prepared from ingredients available at any Tesco store, with Chef Jamie Oliver as its Health Ambassador . Tesco Food and its variety of recipes were a massive hit. Later on, the monthly Tesco Magazine as a food & lifestyle magazine was also launched, with 4.65Million readers worldwide.

The beginning of the pandemic in March 2020 left people apprehensive about visiting a physical store to buy groceries. To deal with customers’ concerns, Tesco came up with an instructional advertisement in April ‘20. With crisp instructions similar to that of an in-flight safety video, this ad showed customers how to physically shop and behave at Tesco stores. It was considered to be the most effective advertising and communications campaign of 2020 as per YouGov BrandIndex .

Competition

Tesco’s earliest competitor has been Sainsbury’s since the 70s. The Tesco Club Card strategy in 1995 helped it overtake Sainsbury’s to become the No.1 Retailer in the UK, but not for long. The ‘Big Four’ supermarkets in Europe have been in close competition throughout the years. Tesco has acquired a 28% majority stake in the UK market.

The horse meat and accounting scandals were a real setback for Tesco, letting competitors take over the European market. The newest German entrants – Aldi and Lidl had caught customers’ attention and market share in a short span of time.

With a combined market share of 12%, these German retailers posed a threat to Tesco. So much so that Tesco began the ‘ Aldi Price Match ’ campaign to curb the growth of the German discounter and win back customers. Tesco started price-matching thousands of its products with that of Aldi, offering better quality and branded products at Aldi’s prices.

Tesco has a majority market share in Britain, with Sainsbury’s and ASDA in tow:

Tesco Adding Sustainability to its business model – The Little Helps Plan

It’s a well-known fact that giant conglomerate retailers are one of the major causes of rapid climate change and increasing carbon footprints. Tesco realized its impact on the planet and launched the Little Helps Plan as a core part of business in 2017. This plan serves as a framework to attain long-term sustainability. Its four Pillars – People, Products, Planet, and Places are aligned with the UN’s Sustainable Development Goals.

Until now, the Plan has enabled Tesco to:

• Permanently remove 1 Billion pieces of plastic from its packaging
• Redistribute 82% of unsold food, safe for human consumption
• Remove 52Billion unnecessary calories from foods sold

Apart from this, it also aims to increase sales of Plant-Based Meat alternatives by 300% by 2025. At present, it has 350 plant-based meat alternatives on the shelf.

Apart from partnering with various other organizations, Tesco entered a 4-year partnership with World Wide Fund for Nature (WWF) to address one of the biggest causes of wildlife loss – the global food system. It aims to eliminate deforestation from products, promote recyclable/compostable packaging and minimize food waste.

Tesco is one of the few successful retailers in the world, with a compelling history. Tesco has overcome numerous issues across its supply chain, faced global criticism, and still stands undeterred in the European market with its rock-solid business model. It has always adapted to its unpredictable consumers and continues to do so while caring for the planet.

The business is healthy. We said we would rebuild the relationship with the brand and consumers; you will see that in every measure of customer satisfaction we do that. The business is healthy, vibrant and there is a lot of optimism of what we can do going forward. CEO Dave Lewis, who took over Tesco in 2014 (during the struggle years) & stepped down in September 2020

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An Engineering grad, currently working in the fields of Big Data & Business Intelligence. Apart from being immersed in Tech, I love writing and exploring the business world with a focus on Strategy Consulting. An ardent reader of Sci-Fi, Mystery, and thriller novels. On my days off, I would spend time swimming, sketching, or planning my next trip to an unexplored location!

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Tesco Case Study: How an Online Grocery Goliath Was Born

Tesco boasts an impressive history in the UK and abroad. Over the years, the grocery goliath has achieved continued success by remaining at the forefront of retail trends, including everything from self-service shopping to international expansion. More recently, Tesco has made its mark with a sophisticated online grocery strategy that enables seamless digital shopping. There’s a lot that can be gleaned from Tesco’s eCommerce efforts. In this Tesco case study, we highlight the retailer’s long-term emphasis on customer service, which can be seen not only in its physical locations but also in its eCommerce strategy.

Table of Contents – Summary

A Brief History of Tesco

Tesco’s and world’s first virtual store, tesco and scandals, how tesco became a retail case study favorite, tesco’s ecommerce website, interesting technologies that tesco’s uk site uses, impressive tesco stats you may not know, faq on tesco.

• The Tesco Success

To understand current growth and successes and why they warrant a Tesco case study, it helps to understand the retailer’s history. Founded in 1919, the company initially consisted of a group of high-performing market stalls. Founder Jack Cohen conceived the idea shortly after leaving the Royal Flying Corps as World War I drew to a close. He used demobilization funds known as “demob money” to purchase surpluses of fish paste and golden syrup.

Tesco’s initial success could largely be attributed to Cohen’s understanding of mass-market sales. In a time of strict austerity, he employed a rigid business model of “stack ’em high, sell ’em low.” The brand also set itself apart by embracing a self-service approach, which, at the time, was rare in the UK. Following the introduction of its first supermarket in 1956, the retailer entered an era of rapid growth.

After emerging as the UK’s preeminent grocery chain, Tesco released the revolutionary Clubcard. During the 1990s, the chain expanded to include thousands of international locations. This was quickly followed by investments in internet retailing, which led to the chain’s current status as a top eCommerce grocer, netting  £1.3 billion in pre-tax profits  for the year ending in February 2018.

In 2011 Tesco was the first-ever retailer building the world’s 1st virtual grocery store in South Korea. The experiment took place in a subway station and the results were tremendous: the number of new registered members rose by +76%, online sales increased by +130% and Tesco became South Korea’s no1 online grocery retailer, outranking its rivals e-mart, so this experiment was one of the first key steps towards Tesco’s digital transformation.. After this phenomenal success, Tesco opened its first European virtual grocery shop in Gatwick Airport, UK. See how they did it in this brilliant video:

Tesco has occasionally suffered controversy in the last several decades, with 2 shocking moments that everyone remembers:

• The Horse Meat Scandal: Back in February 2013, several products believed to consist entirely of beef were found to contain horse meat. The Food Safety Authority of Ireland tested a range of cheap frozen beefburgers and it found that Tesco’s sample contained 29% horse instead of beef .  The retailer made every effort to appease concerned customers. One of which included a notable promise to tighten up its supply chain and purchase a more significant share of its meat from the UK. Such efforts have likely played into the grocery chain’s recent logistics successes.
• The Accounting scandal: It was 2014 when the news dropped like a bomb: an FTSE 100 firm could get away with “cooking the books”. The company admitted submitting overstated profits by £250 million . The results? £2 billion off the supermarket’s share price in one day.

How Tesco thrived in the COVID-19 area

During Q1 2021, Tesco reported that the sales from its online store were “remarkably higher” than before the Covid-19 crisis. As Internet Retailing mentions , Tesco’s sales increased by +22% in 2020, even though the physical stores and hospitality re-opened at some point. It is believed that this success was a result of Tesco’s recent delivery enhancements and doers mentality, implemented during the first lockdown. 

It’s revenue analysis shows that 1.3m online orders were conducted only in spring 2021. This means that the total number of transactions was 81.6% higher than the same period in 2019 (a before Covid-19 year), proving that Tesco actually turned COVID-19 into an opportunity for its business, achieving memorable results by quickly adjusting its business model to the pandemic’s needs.

Despite the horsemeat scandal, Tesco remains a customer favorite throughout the United Kingdom. The Tesco case study has become a common phenomenon, as the chain boasts several unique strengths worth emulating on a broad scale.

Over the years, the retailer has shifted its original “stack ’em high, sell ’em low” approach. While affordability remains a priority, Tesco did not pursue it to the detriment of quality. Instead, it combines reasonable prices with exceptional convenience and customer service. This can be seen in physical stores and eCommerce alike.

Excellent Customer Service

Strong customer service lies at the heart of Tesco’s sustained success. The retailer employs a variety of initiatives to keep consumers happy. Customer-oriented product development, for example, ensures that all stores are stocked with the items visitors actually want. This development process includes rigorous consumer testing to ensure that new products and services are well-received. Customized stores lend further appeal; each is designed based on carefully analyzed demographics.

Quality customer service means making accommodations for all consumers—including those with special needs. Tesco accomplishes this through the use of sunflower lanyards, which allow customers with hidden disabilities to secure additional assistance discreetly. The chain also provides induction loops for hard-of-hearing customers, as well as helpful visual guides for consumers with autism.

Ultimately, Tesco’s impressive customer service derives from its top-down approach, in which a commitment to customer satisfaction permeates every element of the company’s culture. Insight Traction’s Jeremy Garlick tells The Grocer that the key to large-scale retail success lies in “ understanding your customers, anticipating their needs, and giving them what they will value.” Tesco checks off all these boxes. This is true both in stores and with its website, which uses an intuitive layout to ensure that customers can quickly access the products and services they desire.

Product Diversification

Tesco may be best known as a grocery chain, but the retailer provides a surprising array of products and services. It aims to serve as the ultimate one-stop-shop for those who prioritize convenience and quality above all else. Customers can expect to find a collection of produce, dry goods, frozen products, and more. Toiletries, household products, pet food, and even apparel can also be located within Tesco stores and on the retailer’s eCommerce website.

Beyond its many product offerings, Tesco also provides a few key services to enhance customer convenience. Tesco Bank, for example, offers everything from credit cards to pet insurance. These digital offerings play largely into Tesco’s eCommerce strategy, with banking customers capable of accessing their account information online.

Fine-Tuned Logistics

Quality customer service is not possible without an effective logistics and supply chain strategy. Strong relationships with suppliers are essential, especially as Tesco seeks to diversify its already vast product collection further. Efficient routes ensure that produce and other time-sensitive products arrive promptly in stores—and are quickly distributed to customers taking advantage of the chain’s affordable home delivery program.

Ongoing investments in telematics promise to further improve Tesco’s already fine-tuned supply chain. New monitoring tools offer greater insight into the trip status and real-time decision-making—and how these elements play into both profit margins and long-term customer satisfaction.

Digital customers, in particular, appreciate Tesco’s tight supply chain. When they order items online, they can rest assured, knowing that their favorite products will consistently be in stock. What’s more, online customers feel confident that delivered items will be fresh and of exceptional quality.

Insane International Expansion

Tesco may currently dominate the UK grocery market, but it’s also an international force. While the retailer pulled out of the United States in 2014, it has enjoyed sustained growth in Eastern Europe and Thailand.

Just as Tesco targets its international in-store efforts to reflect local populations, it designs its global eCommerce strategy around a diverse consumer base. Different websites are offered in each target country, with text provided in both English and the respective region’s primary language.

Customer Loyalty

Brands such as Costco and Amazon prove that customer loyalty can pay dividends for a company’s bottom line. Tesco demonstrated this long ago with the Clubcard, which encourages customers to prioritize the chain over competitors.

Today, the Clubcard continues to play a crucial role in Tesco’s success. Further transformation is in store, as Tesco recently unveiled a £7.99 per month subscription service called Clubcard Plus . Subscribers will receive significant discounts above and beyond those offered through the traditional Clubcard, including a permanent 10 percent off many of the store’s most beloved brands. Given the current popularity of subscription services, this could prove an excellent opportunity to get existing customers even more enmeshed in the Tesco ecosystem and more responsive to eCommerce marketing automation efforts.

Tesco’s eCommerce strategy reflects the brand’s commitment to value and convenience. These priorities are evident in everything from the logo to the images and even the general layout. Website visits are just as efficient and orderly as in-person purchases at Tesco’s physical locations. Tesco’s website, like its stores, may not be fancy—but it gets the job done. In this Tesco case study, we’ve analyzed several of the key eCommerce strategies that help Tesco’s page stand out in a competitive digital marketplace, as well as a few areas that warrant improvement.

Analyzing Tesco’s Homepage

What We Liked

• Easy to navigate . Today’s impatient customers demand easy-to-navigate websites that almost instantly get them from point A to point B. Tesco’s homepage appeals greatly to convenience-oriented online shoppers, who can quickly find desired products via a simple search tool. Headings highlight main categories, including groceries, clothing, banking, and even recipes.
• Visually-appealing fullscreen displays . Rather than distract website visitors with several separate visuals, Tesco’s website maintains a single, but decidedly bold display. This impactful background stretches across the entire screen and is layered behind text and customer prompts. The homepage, featuring fresh produce, has eye-catching graphics that reflect the commitment to quality that emerges in every Tesco case study
• Minimalist, but not dull . Minimalist displays dominate modern web design. Sometimes, however, white space feels excessive. Tesco strikes an ideal balance by keeping clutter to a minimum without relying on a bare-bones approach.
• Easy logo identification . Customers can always spot the Tesco logo in the upper left-hand corner, surrounded by just enough white space to ensure that it stands out.

What We Didn’t Like

• Customer testimonials . Reviews from happy customers may prove desirable in some contexts, but there is a time and a place. These particular testimonials take up the page’s most prominent space, which could be better served by showcasing exciting deals or products.
• Tabs that open into new pages . Ideally, when clicking on a link that appears to be a tab (such as the Delivery Saver tab), the new content should open in the same page, instead of loading an entirely new page.

Analyzing Tesco’s Category Page

• Sticky cart functionality . As shoppers browse the website and add items to their carts, they can keep track of these intended purchases on the right side of the screen. This intuitive design allows for a seamless Tesco checkout process , thereby increasing the likelihood of conversion.
• Variety of filters . A wide array of filters are provided to allow customers to browse through products based on brands and categories. Furthermore, customers can customize their browsing according to specific dietary filters such as vegan or Halal. This plays into Tesco’s overarching emphasis on personalized shopping.
• Usually bought next . Situated at the bottom of each category page, this helpful section makes it easy to pair similar grocery items. This increases customer convenience while also helping to improve sales and final revenue on Tesco’s end.

What We Didn’t

• Difficult filter navigation . There’s a lot to be said for the variety of filters at customers’ disposal, but the actual process of navigating them can prove complicated, particularly compared to competitor websites.
• Navigating to different items within categories . Navigation can prove surprisingly difficult for those browsing various items within categories. The constant need to return to the homepage could quickly grate on otherwise amenable customers.
• Lack of search functionality within categories . Items cannot be sought via keywords within specific category pages. All searches must be completed using the main search bar on the top of each page. For many users, this may represent the website’s greatest weakness, as keyword category searches are an expected feature among competitors.

Analyzing Tesco’s Product Page

• Time-limited delivery notice . Produce delivery is inherently time-sensitive, as are several other services that Tesco provides via its website. The retailer harnesses the power of time-limited delivery notices to ensure that consumers use products when they’re freshest and most appealing.
• A wealth of product information . Product pages contain a wealth of relevant information, including everything consumers could possibly want to know about each item’s nutritional content, country of origin, and even preparation instructions.
• Customer reviews . Shoppers on the fence about a particular product can read customer reviews to get a better idea of whether they actually want to invest in said item. With a wealth of alternatives available, they can take solace in knowing that other options are always on hand.
• Nondescript Add to Cart button . Tesco’s approach for adding options to its carts may get the job done, but this could be an excellent opportunity for adding a bit of visual flair without detracting from the website’s minimalist approach.
• Too much text combined with too small product images . Many shoppers regularly purchase items without actually knowing their names. Rather, they focus on packaging. Tesco’s small pictures make it difficult for these shoppers to identify the elusive products they want. Some may end up with unexpected and unwelcome surprises upon delivery.
• Too much information . While it’s useful to know the origin of each item, including the exact address may seem like overkill to some users. This detailed information detracts from Tesco’s otherwise streamlined product pages.

Analyzing Tesco’s Checkout Process

• Numerous delivery slots are available . A variety of helpful slots for receiving grocery deliveries are provided on an hourly basis throughout the day. This dramatically improves customer convenience, particularly for those who work long hours and might not be available for the limited delivery times provided by some of Tesco’s key competitors.
• Automatic Click+Collect locations . Those who opt to collect deliveries at Tesco stores can look to this feature to automatically display a variety of nearby locations. This makes in-person delivery collection nearly as convenient as Tesco’s impressive delivery setup.
• Several Delivery plans are available . Shoppers who aren’t in a big hurry can elect to have their orders delivered mid-week for a reduced charge. Meanwhile, demanding customers are asked to pay extra for same-day delivery. Customers love options, particularly when they believe those options prompt significant savings.
• Oddly unavailable Click+Collect hours . Shoppers who plan their grocery pickup several days out will be surprised to find that some collection times up to a week out are unavailable. Hence, while Click+Collect provides exceptional functionality for last-minute pickups, it’s not always ideal for those who prefer to schedule in advance.

Eager to learn more about Tesco’s strategy and the technologic functionalities that make Tesco’s website so easy to use, we harnessed the power of BuiltWith to scan the website. A few of the notable technologies we spotted include:

• Omniture SiteCatalyst . Tesco’s web analytics are provided by Adobe’s Omniture SiteCatalyst — an expensive, complex system when compared to its main competition (Google Analytics). If set up correctly, however, Omniture SiteCatalyst provides excellent customer support.
• Hotjar . One of the world’s most famous screen recording and heatmaps tools, Hotjar offers a range of behavior analytic services ideal for businesses such as Tesco, which aim for a targeted approach based on actual customer behavior.
• Optimizely . This top experimentation platform plays significantly into modern web innovation. Despite its name, however, Optimizely may increase page load times throughout the Tesco site.
• OpinionLab . OpinionLab does an admirable job of collecting customer feedback on every aspect of Tesco’s webpage. This allows Tesco to customize better its web offerings based on actual customer opinions
• SendinBlue . User experience is a huge point of contention for SaaS provider Sendinblue. Clients regularly struggle with forms, automation, and APIs. ContactPigeon may prove a more customer-oriented alternative.

Some of these eCommerce tools are also used by John Lewis, UK’s homeware giant , so we do realize that these technologies play also an important part in a retailer’s business model and online success.

• As of 2019, Tesco boasted over 6,800 shops worldwide.
• Tesco currently employs over 450,000 employees around the world.
• Tesco had a 26.9 percent market share in the UK in 2019.
• Of the UK shoppers who primarily visit Aldi, 45 percent highlight Tesco as their main secondary store.

Breaking Tesco News:

• Tesco changes bonus rules after Ocado success hits pay – Read more here
• Coronavirus: The weekly shop is back in fashion, says Tesco boss – Read more here
• Tesco launches half price clothing sale – but some slam the company as ‘irresponsible’ – Read more here
• Tesco, Sainsbury’s, Asda and Aldi put restrictions on items amid stockpiling –  Read more here
• Tesco sells its Thai and Malaysian operations to CP Group.   Learn more here
• In September 2021 Tesco launched a zero-waste shopping service, providing customers with containers. – Learn more here.

When did Tesco begin?

Tesco technically began in 1919 but did not receive its current name until 1924. The company originally consisted of market stalls, with the first shop that might be recognizable to modern consumers not opening until 1931.

What made Tesco successful?

Tesco is popular in the UK and abroad due to its combined emphasis on quality, convenience, and affordability. The Clubcard plays a huge role in the retail chain’s continued popularity, as it keeps customers coming back for deals.  So why is Tesco so successful? It is because of its customer-centric approach, that it gradually helped Tesco to develop a very loyal customer base and equity and a very powerful multinational brand.

Who is Tesco’s owner?

Tesco is currently experiencing a shakeup in leadership. After serving as CEO for several years, Dave Lewis announced his resignation in 2019. He will be replaced by Ken Murphy in 2020. John Allan currently serves as the chain’s non-executive chairman.

What is Tesco industry sector?

Tesco PLC is a retail company. Its core business is grocery retail but they also are in retail banking and assurance industries as well, as part of their product diversification strategy.

How many stores Tesco has?

Tesco has 6993 stores in 12 countries

How profitable is Tesco?

Tesco’s revenue grew by +12% YoY in 2019 hitting  £63.91 billion.

Is Tesco in the public or private sector?

While Tesco was initially a privately-held company, it became a public limited company (PLC) in 1947 and has continued to operate under this approach. However, despite Tesco’s status as a PLC, it remains firmly part of the private sector.

Discover more resources about FMCG retailers

• Sainsbury’s Marketing Strategy: Becoming the Second-Largest Supermarket Chain in the UK
• ASDA’s marketing strategy: How the British supermarket chain reached the top
• The Marks and Spencer eCommerce Case Study: 3 Growth Lessons for Retailers
• The Ocado marketing strategy: How it reached the UK TOP50 retailers list
• ALDI’s marketing strategy: The key growth ingredients of the FMCG titan
• Walmart Marketing Strategy: Decoding the Success of the US Multinational Retailer
• Analyzing Lidl’s Marketing Strategy: How the Discount Supermarket Leader Scaled
• FMCG Marketing Strategies to Increase YOY Revenue

The Tesco Case Study: An overnight Success?

As our analysis showed, a variety of factors play into Tesco’s success. The retailer has a long history of using cutting-edge practices (like the virtual store mentioned above) to set itself apart from the competition. Much of its current success, however, relies on its perception as a convenient and affordable chain.

Tesco’s success is not a matter of luck. On its website and in its stores, the retailer emphasizes customer-oriented practices designed to make every shopping experience as seamless and as enjoyable as possible. This simple yet effective approach promises to keep the retailer at the forefront of the grocery industry in years to come.

If you’re looking to emulate the qualities evident in this Tesco case study, don’t hesitate to get in touch. Contact us today to book a free marketing automation consultation.

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How Tesco Became The Biggest Retailer In The UK

Table of contents.

There are certain brands that always seem to attract global attention and one of those is Tesco. It’s one of the largest grocery store chains in the world and over its 100-year history, it has gone through a rollercoaster of ups and downs that have brought it to where it is today.

• Stores: 4,673
• UK Employees: 336,392
• The top retailer in the UK
• Ranks 17th in NRF Top Global Retailers for 2021 
• Q1 2021 Growth in Online Sales: 22.2%
• FY21 Sales: £53.4 bn

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The Origin Story

The giant corporation that we know today had some very humble beginnings. The idea found its roots back in 1919 when Jack Cohen, the son of Polish immigrants, decided that he was going to sell groceries from a stall in East London [1] . For the first few years, that is all it was – a market stall run by a man with a big dream. But over time, as he gained confidence in what he was doing, he began to think that maybe he was destined for something bigger.

To dip his toe in the water, he opened up the very first Tesco store in 1929 in a small town in Middlesex. The brand took off almost immediately, much to the surprise of Cohen, and he realized that there was room for growth. He had stumbled onto a rather simple premise, in terms of providing food and drink in a very affordable and approachable way, and quickly started to work on expanding the concept as far and wide as he could.

Cohen’s unique personality and selling style was something that he engrained in those early sales teams, pushing them further than they ever thought they could go. He was someone who valued hard work above all else and believed that if you were out there working to make things happen, things would conspire for your benefit. This ethos is something that still lives in the company today.

In the years that followed, Tesco grew from strength to strength until it got to a stage in 1947 where it was large enough to list on the London Stock Exchange. In the two decades that followed the listing, the company continued to grow organically but it also made some aggressive acquisitions that rapidly increased the organization’s footprint. At the end of the 1960s, there were around 800 stores in operation, all maintaining healthy profitability and a growing customer base.

The strong brand was then leveraged to venture out of food and beverages specifically, and into a range of other areas including clothing, electronics, financial services, telecoms, media, internet services, and software. They also expanded geographically into the rest of the UK, Europe, and a brief but ultimately unsuccessful time in the USA.

The Tesco of today is a corporation much bigger than Cohen could have ever imagined, and that’s a testament to the company that he was able to build and the business philosophy that still undergirds their success to this day.

Creating Their Own Brands

We’ll start this strategy study properly by diving into what is widely considered the most important part of the Tesco strategy – which is the creation and scaling of their own in-house brands. When the company started they acted simply as a retailer, buying products from suppliers and then controlling the end-user buyer experience and distribution thereof. However, as they began to grow they came to the same realization that is so common for these massive product curators.

They realized that they could compete and win against these other brands because they had access to invaluable sales data, a loyal customer base who was tied into their stores, and the distribution required to bring their own brands to a mass market almost overnight. All of this while regaining a significant portion of the margin as they did so.

This is a key trend that we’ve seen across major retail conglomerates, but it’s received even more attention in the online era as Amazon has taken it to the next level. Especially in the case of common household goods where it is quite difficult to differentiate the product itself, brand and price become all that matters.

Tesco’s clothing line and their food brands provide high-quality items at prices that undercut the other 3 rd party brands that are trying to win shelf space in the stores. This makes it abundantly clear that by owning the customer relationship and the distribution, you have an immense amount of control in the value chain. Manufacturers are dependent on retailers like Tesco because they need to access the consumer market, and this places all the power in the hands of the retailer.

This business model has been incredibly successful over the past 50 years. Tesco has grown a substantial business that customers trust and whenever they want to win back margin, they can create their own white-label brand and use their pricing power to whittle away at the market share built up by other brands. The big question here though is how long will this last? [2]

In modern times we’ve seen a drastic shift away from brick-and-mortar retail and into online shopping. This was obviously accelerated by the COVID-19 pandemic, but it was something that was coming inevitably anyway. As we move to a future of online shopping, Tesco’s early advantage in terms of distribution becomes less relevant. Manufacturers and suppliers can start to build online presences that give them direct access to the consumer market and thus they can eliminate the Tesco leg entirely, provided they have the brand strength to do so.

This is where the world is moving towards, where the middlemen are eliminated over time and we see a rise of direct-to-consumer brands. This is not to say that Tesco is going to disappear. In fact, their online shopping sales have been incredibly impressive. But they have to think differently about the company they are going to be as we shift into this new paradigm.

It’s definitely something on their roadmap and they are making a lot of investments in this vein, but it’s going to be challenging to transform such a large company with so much tied up in the brick-and-mortar of retail stores. Their ability to adapt and adjust will determine whether they remain a force to be reckoned with in the years to come.

Key Takeaway

• If you control the direct relationship with the customer, you have tremendous power in the value chain that allows you to win market share and margins much more efficiently.

Horses for Courses

The next piece of the Tesco strategy that has proven so valuable for them has been their ability to adapt their value proposition for different contexts. When it comes to retail, you have to have a very good understanding of what your customers in that location are looking for, so that you can tailor your offering accordingly.

It’s tempting to think that you can copy-paste a winning formula wherever you want and scale quickly and easily – but that couldn’t be further from the truth. Even with a simple concept like a grocery store, there is a range of different nuances that determine how the store should be set up, what should be stocked, and how they should craft the buying experience.

Tesco operates 5 different types of stores:

• Tesco Extra
• Tesco Superstores
• Tesco Metros
• Tesco Express
• One Stop Shop

Each of these stores has a different use case, and it targets a unique subset of their customer base. The company has worked very hard to identify the specific items, and setup that is best suited for each one. For example, the Tesco Extra stores and the Tesco Superstores are the biggest ones in terms of size and aim to carry as much as possible so that customers can do all their shopping in one place. This is in sharp contrast to the Tesco Metros and the Tesco Express stores which are focused on convenience and speed, rather than a variety of choices.

Every part of the experience for each category is intentional and fit for purpose. Even the training that the staff will go on differs depending on the type of store that they’re going to be working in. What remains consistent is the brand, the product quality, and the prices. Everything else varies according to what that particular customer is looking for.

It’s also interesting to note that these store categories have different trajectories and trends. If you look at the last couple of years (ignoring the pandemic), the big retail outlets have been struggling for growth, while the convenience stores are growing rapidly. This shows a clear trend in terms of consumer behavior and because the stores are all set up differently, the company can respond to these changes.

Essentially, each category of store can be thought about as a different company entirely – allowing lots of flexibility to adapt and adjust accordingly. If they didn’t have this clear separation, it would be difficult to understand the data they were receiving, and they would have less chance of successfully diagnosing the nature of changes in customer behavior.

Taking this one step further, it’s clear that their online shopping vertical is a new type of store and will have unique aspects that set it apart from the rest. As Tesco follows the growth of online shopping they’ll be able to shift their efforts to these new channels because they have the data that they need to be able to do this with confidence.

• Context is everything in business. By separating your operations into subsets that cater to different contexts, you’ll have the data you need to adjust and adapt to changing trends as they arrive.

Sustainability

A key component of Tesco’s forward-looking strategy is to become as sustainable and environmentally friendly as possible. This is not too out of the ordinary in the modern context as companies around the world work towards mitigating climate change, but Tesco has really gone above and beyond to make this a part of their company DNA.

The biggest offenders in their value chain are the delivery vans which are constantly transporting goods from suppliers to warehouses and then eventually to the stores themselves. These vans number in the thousands and they are running almost 24/7 ensuring that stock levels are where they need to be at all times.

Tesco announced recently that they have begun to transition all those vans to electric vehicles in an attempt to minimize the carbon footprint and work towards a more sustainable goal. Their plan is to have their entire delivery fleet transitioned to electric by 2028 which is a very ambitious plan indeed [3] .

This is but one of their sustainability initiatives that are at the forefront of the company they want to become in the future. They are working tirelessly to integrate this into their corporate ethos for a few reasons:

• Sustainability matters. We all have to be more thoughtful about what we’re building because the impact we’re having on our planet is significant. So, from pure self-interest, a company needs to embrace this value if they are to be robust and to last over the next hundred years. Without this focus, we might find ourselves in a very dangerous position in a generation or two’s time.
• Customers demand it. Building on the point above, there is tremendous social pressure for corporations to become more sustainable because of the heightened awareness we now have of the problems that face as a species. Customers are placing sustainability and environmental concerns as key factors in their purchasing decisions and Tesco knows that. So, they are leaning into this as a key value for the future so that they can continue to build the strong brand trust that they have with their existing consumer base.
• Prices are trending downward. As we shift away from fossil fuels and towards renewable energy, the relative prices will come down and that can have a significant impact on Tesco’s profitability. It might require a lot of investment in the short term, but that will pay off by orders of magnitude as the world shifts and economic incentives work their magic.
• Competitive Advantage. Getting in on this early and working to build this into the future of the company could prove to be a significant competitive advantage for competing against their competitors. This is a clear trend that everyone can see, so those companies that get ahead of the curve will be able to leverage the early momentum to capture more and more of the market going forward.
• Opens up opportunities for innovation. Whenever there is a radical shift in thinking, it creates an opportunity to go back to the first principles. For large companies, these moments are few and far between so it’s important to use these natural breakpoints to re-examine your strategy and plot the best path forward. Tesco is definitely trying to do that so that they can remain relevant as we move beyond pure retail and into a hybrid model where you need to serve customers in-person as well as online.

Those are just some of the reasons why Tesco is giving so much credence to how sustainable their operations are. It’s also important to note that they are thinking beyond their direct circle of influence. Another significant contributor to carbon emissions is their customers who drive to the stores themselves. To mitigate this, they’ve begun to roll out thousands of charging points to their larger retail stores to support customers with electric vehicles and encourage more people to move in this direction.

This is something we’ll see a lot more of going forward, and Tesco remains one of those leading the charge, at least in the European context.

• Sustainability is a key value and operational principle that must be at the forefront of any company looking to remain relevant going forward.

The Clubcard Loyalty Program

It seems that every company these days has some form of loyalty program where they try to reward repeat purchasers in exchange for valuable sales data – but Tesco was one of the first to go this route. Their Clubcard program allows regular shoppers to benefit from automatic discounts that are applied at check-out and it makes the already-low prices even more beneficial. This obviously creates loyalty for their key customers who will use the card to get better prices for their groceries, but the more interesting aspect is what it allows Tesco to do with the data.

Before loyalty programs, large retailers like Tesco were unable to tie specific purchases to specific customers. They would be able to access aggregated sales figures about the sorts of items that were being purchased, and they could use that information to adjust their offering accordingly, but you were limited in terms of how useful it could be. Any granular demographic data had to be assumed based on the store itself and this didn’t allow for much nuance.

The modern loyalty programs, like the one that Tesco runs, offer a much more sophisticated set of data that is incredibly valuable for product development, planning, and demand forecasting. By tying each purchase to a specific customer’s card, Tesco gains a range of new insights into purchasing behavior and they can arrive at a much more granular understanding of what is actually happening in their stores.

Here are some of the ways that they can use this data:

• Demographic Analysis. Tesco can identify specific segments of their customer base and analyze purchasing habits in these unique categories. For example, they can compare their male base to their female base. They can look at how age affects the sorts of items that are purchased. They can look at ethnicity and how that impacts the brands that are most in-demand. All of these slices help to break a massive consumer base into smaller segments that can be more effectively sold into. This affects the marketing messaging, the placement of goods in the store, the outbound sales efforts, and much more.
• Lifetime Value Analysis. When you’re able to track specific customers over time, you gain a lot of insight as to how they engage with your brand and how that plays out over time. Through a more nuanced calculation of a customer’s lifetime value, it informs how they invest time and resources going forward – to maximize this value and build a strong core of loyal shoppers. This is also vital in the other direction when looking for red flags that might point to something that is going wrong along the way. When you can track this effectively, you’re in a much better position to make long-term strategic decisions that are data-driven and attached to the real-time data on the ground.
• Shopping Cart Make-Up . If we move up one level of abstraction, we can analyze the make-up of a customer’s shopping cart to understand the relative associations of different items in the store. When Tesco tracks this over time and matches it to key demographic information, they can start to understand the different use cases and common groups of items that are purchased – allowing them to adjust their offering and store placement accordingly.
• Track the performance of marketing campaigns . When Tesco undertakes various marketing initiatives, it can be difficult to track how well they perform in terms of driving sales in various target markets. The Clubcard loyalty program gives them the data that they need to do this effectively, allowing the company to track whether the marketing message is working with their target audience or if things need to be changed. Once they’ve found a winning formula, they can quickly scale that out across the rest of their stores with a lot more confidence that their investment is going to pay dividends.

Those are just some of the ways that Tesco uses this data to inform their business decisions but hopefully, it gives you a sense of why it’s such an important part of their strategy. The data alone is much more valuable than the discounts that they offer in exchange, making it one of the most impactful revenue generation mechanisms that the company has at its disposal.

• Granular customer data is worth its weight in gold and anything you can do to gather and process it effectively, should be a priority for your organization.

The Price Match Guarantee

The world of grocery stores is incredibly competitive and unless you have a specific niche focus, there is going to be a lot of competition around price. In 2014, Tesco was going through a difficult period and found itself losing ground to some up-and-coming chains that were doing anything they could to undercut Tesco’s prices and win customers away from the incumbent. Tesco realized that they couldn’t afford this to happen for very long and so they came up with what they call the ‘Brand Guarantee Scheme’ to try and mitigate against this trend.

The idea was that if a customer got to the check-out and their basket of ten or more branded items was more expensive than what could be found at a rival store, customers would receive the difference as a discount when they paid. These prices were independently verified on a daily basis and gave customers the confidence that there were no better deals out there.

This simple psychology was enough to retain the vast majority of their regular customers and removed the one major objection that might convince someone to switch to another brand. It didn’t matter whether the amount was large or small, it provided peace of mind that when you bought at Tesco, you were getting the best deal that there was.

What makes this more interesting though is that this wasn’t the first time they had tried to implement a price match system to enable this sort of deal. Previously, they would go through the same process of matching prices but instead of giving the discount right away, they would offer a gift voucher to the value of the difference between the Tesco price and what it cost at another store.

It wasn’t until they listened to customer feedback and heard that many shoppers never got to use those benefits because they forgot about the vouchers, did they realize that they needed to remove the friction entirely [4] . Creating vouchers just added another step into the process that actually was a point of potential error. And even though it was completely within the customers’ control, the impression was that they were losing out.

When the company took that away and chose to implement the discount immediately as they paid, this completely disappeared and customers found the process quite magical. They didn’t have to do anything, yet they knew that if there were savings to be had, Tesco would make sure that they got them.

Achieving this took a lot of technological investment and considerable expense to do the requisite daily market research, but it made the purchasing experience a delight and that’s what keeps customers coming back time and time again. It sends a signal to customers that you’re looking out for them and will do whatever it takes to make their grocery shopping a breeze. To this day, the Tesco Brand Guarantee is one of those components that is severely underrated in terms of the company’s success up to this point.

• The more friction you can remove from the customer journey, the more magical the experience becomes, and the more likely customers are to return.

Aggressive Acquisitions

Another key strategy that typifies who Tesco has been as a company has been its track record of large international acquisitions which looked somewhat impulsive in retrospect. They bought a wide range of different brands in countries like Poland, Japan, India, Malaysia, the Czech Republic, Hungary, Slovakia, and more [5] . In each case, they were hoping to grab a piece of the local market and then apply their technology, data, and operational know-how to rapidly scale the operations.

In most cases, they left the brand as is rather than applying the Tesco name to it, giving them diversification but also underplaying the role that they would play in those specific regions. If you look at their growth over the past few decades, a lot of it can be attributed to these deals – though it’s difficult to know exactly how much value was added in the process. Once each acquisition was absorbed under the umbrella, there are just too many variables to make an educated statement on the overall success rate.

What cannot be denied is that this was a very intentional strategy on their part. By taking the financial power that they had built up in the UK, they were able to go into new markets and take risks on brands, knowing that any losses would be subsidized by the market-leading position back home. This might not be the most efficient way to grow, but it does give you scale and speed when certain acquisitions do provide the value you were expecting.

There is lots of debate about the pros and cons of a strategy like this, but Tesco have stuck with it for their entire history and this land-grab mentality rings true today. It’s only possible when you have a significant war chest and an existing set of operations that can sustain the shocks that come with potential market failures, especially when you are moving as fast as they do.

In the next section, we’ll look at an example of where things went wrong and see what we can learn from it.

Aggressive acquisitions should only be considered when you have a large war chest and you can manage the downside risks as they present themselves.

The Failed US Expansion

Tesco hasn’t always got it right and we can often learn as much from the failures as we can from the success stories. Back in 2006, the company decided that they wanted to enter the United States and try to replicate some of the success they had found in the UK. The strategy was to open a chain of small-format grocery stores in a few states in the West of the USA, specifically Arizona, California, and Nevada. These stores wouldn’t carry the Tesco name but instead were branded as ‘Fresh and Easy’.

In the first five months they opened 60 stores, they had 150 by the end of the first year, and over the next 6 years, they expanded to have over 200 at their peak. However, they found it much more difficult to get a foothold in the market than they had originally anticipated.

It’s not entirely clear as to why the stores failed but it’s likely due to a combination of these factors [6] :

• Unfamiliar Shopping Experience. The Fresh and Easy concept was to mimic the small convenience stores from the UK – offering people a shop where you should shop daily for the food and drinks that you needed. This was a stark contrast to the typical American shopping experience which was to purchase groceries in bulk and shop much more infrequently as a result. This difference in culture meant that they could never really get the traction they wanted, and it didn’t seem to fit the buying patterns of American consumers.
• Economic Recession. The timing of this expansion was really unfortunate because it happened in the middle of the worst economic crisis that the USA (and the world) had seen for a long time. As the sub-prime mortgage crisis took hold, unemployment soared, and the purchasing power of the middle class was significantly harmed. This effect was further concentrated in these Western states and so there was a disproportionate impact on the overall demand. This was not something Tesco could have predicted or planned for, but it’s a good reminder that you don’t operate in a silo. You’re reliant on economic conditions around you to sustain whatever operations you’re involved in.
• Misaligned Product Offerings. The one common criticism that the roll-out faced was that the store focused too much on ready-to-go, microwaveable meals – something that was very popular in the UK but had less buy-in across the USA. When it came to convenience food, the US market was much more comfortable with fast-food outlets and that meant that the demand for the Fresh and Easy offering wasn’t as strong as it could have been.

As always, these reasons are purely anecdotal and it’s not entirely clear what role they played, but the key learnings were that you need to deeply understand the psychology and the buying behavior of a new target market before you enter it. If you don’t, you place the entire project at risk and this can have drastic consequences financially as well as from a reputational perspective.

Tesco had reportedly lost around $2bn when they decided to pull out of the country in 2013 and they’ve never gone back. They continue to focus on the UK market which they know very well and select other European and Asian customer bases which provide some diversification.

• When you’re entering a new market, it’s critical that you understand the nuances and psychology of the customers in that new segment. Without this, you might miss the mark and suffer significant financial damages.

Tesco remains one of the most well-known grocery store brands worldwide and their ability to combine retail dominance, strong logistics capabilities, and sophisticated use of customer data is what will be the foundation that they build their future on.

They face many challenges in the year to come as more and more customers shop directly from brands, but the company is well aware of that and is doing all that they can to pivot the company effectively for this modern paradigm shift. In this strategy study, we’ve aimed to highlight some of the key areas that they’re focusing on with the hope that you can learn from them and apply them to your own context.

As a quick refresh, here are those main takeaways from the Tesco story:

• Aggressive acquisitions should only be considered when you have a large war chest, and you can manage the downside risks as they present themselves.

Remember to take the necessary time to understand the customer context, leverage the power of data, and invest in sustainability so that you can remain relevant for decades to come.

Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: Digitization Challenge

Tesco: A digital transformation

Tesco is the leading grocer in the UK, accounting for 25% of all grocery sales offline and 43% of all grocery sales online [1]. In the last 15 years, Tesco has digitally transformed their customer experience, business model and operating model through investments in a state-of-the-art website with click-and-collect functionality, a digitalized in-store experience and a data-driven customer loyalty platform.

How is Tesco using technology to differentiate their Business and Operating Model?

Tesco has continually been investing in technology to develop an omnichannel customer experience and to maintain a competitive edge in an increasingly digitized UK grocery landscape. Three technological advancements that have created opportunities, as well as some challenges, for Tesco have been:

• Moving from ‘bricks and mortar’ to ‘bricks and clicks’ with the emergence of Tesco Direct, an online grocery platform with ‘click-and-collect’ functionality

In the early 2000s, the UK was prime for online grocery shopping and home delivery due to high technology adoption rates and areas of high population density. In 2000, Tesco was quick to respond to this opportunity, adapting their business model by establishing an online grocery channel, ‘Tesco Direct’ (Exhibit 1) [2]. By 2006, online sales were rapidly growing (CAGR of 23%) and in order to meet fulfilment demands, Tesco augmented their operating model by investing in ‘grocery dotcom centres’ [3], warehouses solely for online order fulfilment purposes equipped with innovative ‘goods to person’ picking technology (Exhibit 2) [4]. In 2011, to offer further convenience to customers and to improve business model profitability through lowering home delivery costs, Tesco led the competitive pack by offering an omnichannel ‘click and collect’ function, whereby customers placed orders online and collected bagged groceries at a collection point of their choice. Despite revenue upside, the shift to a ‘bricks and clicks’ omnichannel offering came with challenges for Tesco’s operating model: heavy investment in development of an online platform, investment in ‘grocery dotcom centres’ (approximately £1.5-3.5M per warehouse) [5], investment in a home delivery labour force and supply chain ordering difficulties due to inaccurate forecasting of online grocery orders given a lack of historical data.

Exhibit 1: Tesco Direct online website [2]

Pathways to Just Digital Future

Exhibit 2: State of the art goods-to-person picking technology [6]

• Implementation of a digitalized in-store experience

To improve the efficiency of Tesco’s operating model, Tesco invested in digital in-store initiatives. ‘Scan as you shop’ handheld devices (Exhibit 3) and self-check-out stations (Exhibit 4) were placed adjacent to the usual employee manned check-out stations to provide customers with the technology to perform the check-out function without involvement from Tesco employees [7]. From a business and operating model perspective, this results in efficiency cost savings as fewer employees are required to perform manual check-out [7]. However, self-checkout has not come without challenges – the lack of employee supervision has led to significant levels of fraud for Tesco (approximately ~£8M per year) [8]. Tesco is combating this thievery through digital receipt technology and specialized cameras at self-checkout stations to alert staff real-time to ‘irregular’ customer scanning activity [8].

Exhibit 3: Scan as you shop handheld device [9]

Exhibit 4: Self Service Checkout [10]

In addition, in-store video cameras, such as the ‘broccoli cam’ (Exhibit 5), detect when fruit and vegetable trays in the fresh foods aisles are depleted, sending instant messages to the shop-floor employees for immediate replenishment [7]. Electronic shelf-edge labels (Exhibit 6) circumvent the need for Tesco employees to change 5-10 million paper labels monthly, freeing up valuable employee time to focus on serving customers [7, 11]. Moreover, electronic shelf-edge labels allow for instantaneous price-changes throughout a given day, allowing Tesco to implement promotional prices at a moment’s notice. Finally, employees are equipped with portable smart badges which, upon scanning an item, provide employees with information on stock levels and further product details, allowing shop floor employees to answer customer queries live [7].

Exhibit 6: Electronic shelf edge labels [7]

• Development of Tesco Clubcard – a sophisticated data-driven customer loyalty scheme

The Tesco Clubcard loyalty scheme tags a unique customer ID to every purchase, resulting in the amalgamation of millions of customer purchasing data points [13]. Tesco leverages big data analytics and algorithms to adapt the supply chain and product offering to purchasing trends, predict future customer purchasing habits and generate personalized online and offline discounts [14]. This has created opportunities for Tesco’s business and operating model as approximately 16.5 million customers subscribe to Clubcard in the UK, driving greater customer lifetime value and loyalty through repeat purchases due to personalized discounts and allowing greater accuracy into forecasting customer demand by region and product category [5]. What additional steps Tesco should consider implementing?

Moving forward, Tesco needs to leverage smartphone technology to digitally innovate the in-store customer experience by equipping customers with knowledge and personalization in-store. For example, the existing Tesco App could be expanded provide a functionality to help customers locate specific items within superstores and to replace the ‘scan as you shop’ handheld devices for a seamless digital experience using digital wallets. This could create an operating model opportunity by further decreasing in-store headcount and costs. Finally, Tesco could overcome the difficulties users face scanning barcodes in self-checkout machines by utilizing innovative Toshiba technology which no longer requires barcodes [15].

[766 words excluding exhibits]

References:

[1] Planet Retail, www1.planetretail.net/, accessed November 2016

[2] Tesco Direct website, http://www.tesco.com/groceries/ , accessed November 2016

[3] ‘Tesco goes into the darkness’, Retail Gazette, http://www.retailgazette.co.uk/blog/2014/01/42030-tesco-goes-into-the-darkness , accessed November 2016 [4] ‘Insight supermarkets dark stores’, The Guardian, https://www.theguardian.com/business/shortcuts/2014/jan/07/inside-supermarkets-dark-stores-online-shopping , accessed November 2016 [5] Tesco annual report, https://www.tescoplc.com/media/264194/annual-report-2016.pdf , accessed November 2016

[6] Tesco ‘goods to person’ picking image,   http://www.expo21xx.com/material_handling/13440_st3_conveyor_elevator/default.htm , accessed November 2016~ [7] In-store innovation at Tesco, Tesco PLC presentation by CIO Mike McNamara, https://www.youtube.com/watch?v=noa4SmYhjTA , accessed November 2016 [8] ‘Tesco trials digital receipts and self scanner tech that aims to reduce theft; Marketing Week, https://www.marketingweek.com/2016/10/21/tesco-trials-digital-receipts-and-self-scanner-tech-that-aims-to-reduce-theft/ , accessed November 2016 [9] Tesco scan as you shop image, http://www.tesco.com/scan-as-you-shop/i/diagram.png , accessed November 2016

[10] Tesco self-check out image, https://www.engadget.com/2015/07/30/tesco-automated-checkout-voice/ , accessed November 2016

[11] ‘Tesco is back’, Forbes, http://www.forbes.com/sites/kevinomarah/2016/04/14/tesco-is-back/#5839eaca1c64 , accessed November 2016

[13] ‘Clubcard built the Tesco of today but it could be time to ditch it’, The Telegraph, http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10577685/Clubcard-built-the-Tesco-of-today-but-it-could-be-time-to-ditch-it.html , accessed November 2016 [14] ‘Tesco: how one supermarket came to dominate’, BBC News, http://www.bbc.com/news/magazine-23988795 , accessed November 2016 [15] ‘New Toshiba supermarket scanner does away with need for bar codes’, Digital Trends, http://www.digitaltrends.com/cool-tech/new-toshiba-supermarket-scanner-does-away-with-need-for-bar-codes/ , accessed November 2016

Student comments on Tesco: A digital transformation

I completely agree with the idea of Tesco using technology to enhance the customer’s experience in the store. I also think that Tesco’s biggest advantage is the vast trove of data it is now collecting on shoppers through its mobile app and loyalty program. There are benefits to both the brand and consumer of Tesco having this data.

On the consumer side, Tesco can use this to enhance the customer experience, as you mentioned above. For example, since Tesco knows what a shopper has purchased, and how frequently, on average, either that shopper or similar shoppers replace a specific item, Tesco could use this to remind shoppers to buy something that they may be running low on. They can also use this to delight shoppers by suggest recipes using things they’ve purchased or offering savings on things they might want to try. They will need to handle this carefully as to not venture into “creepy” territory.

On the brand side, Tesco can unite the data from the POS and mobile device to understand which products a shopper was considering, but did not ultimately purchase. This information is extremely valuable to brands and can help them target shoppers in a way that maximizes their spend.

Thanks for a great post! It’s interesting to see how advanced Tesco is compared to US grocery retailers, especially with its online delivery platform. I think the biggest advantage for Tesco here is the data they have been able to collect with its loyalty program. I agree with Katherine that the next step is creating personalized communication at the customer level to enhance the customer experience and increase traffic in stores. My concern here is Tesco’s ability to retain strong margins. Grocery retailers already face low margins, and I’m curious to know how these investments have impacted its performance.

Wow – this is so interesting. I had no idea that Tesco was doing so much…I especially love the Broccoli cam!

One concern I have is how whether consumers actually value all these additional digital applications. A Harvard Business Review article from 2014 (“Tesco’s Downfall is a Warning to Data-Driven Retailers” [1]) discussed Tesco’s declining performance despite all the investments they had recently made in digital technology and data analysis. They quoted a Telegraph article which said “…judging by correspondence from Telegraph readers and disillusioned shoppers, one of the reasons that consumers are turning to [discounters] Aldi and Lidl is that they feel they are simple and free of gimmicks. Shoppers are questioning whether loyalty cards, such as Clubcard, are more helpful to the supermarket than they are to the shopper.”

As a consumer I would agree…although the products discussed above sound interesting…how much do value do they really provide for myself as a shopper?

[1] https://hbr.org/2014/10/tescos-downfall-is-a-warning-to-data-driven-retailers

Great read CC! It’s amazing to know that a 100-year-old retailer such as Tesco has been investing capital and innovating to stay competitive in the digital age. I loved the simple yet far-reaching functionalities of the innovations you mentioned, especially ‘the broccoli cam’ and the electronic shelf labels.

It is well known that Clubcard was pivotal in establishing Tesco as a dominant player in UK [1] but it might be time to update the way it works. With the advent of smartphones, most consumers have their loyalty programs on their phones, with easy real time access to their benefits and rewards. Customers are also happier

Tesco also has a huge potential in updating its supply chain through digital initiatives. More and more firms are relying on technologies such as Sensors & geolocation, robotics, big data and cloud services to gain supply chain efficiencies and cost savings. [2] Things are clearly working in Tesco’s favor as they enjoy fastest growth in three years as Aldi and Lidl slow [3]. Hope they realize the huge potential that digitization has to offer and keep evolving

[1] http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10577685/Clubcard-built-the-Tesco-of-today-but-it-could-be-time-to-ditch-it.html

[2] https://www.atkearney.com/documents/10192/6500433/Digital+Supply+Chains.pdf/a12fffe7-a022-4ab3-a37c-b4fb986088f0

[3] http://www.telegraph.co.uk/business/2016/11/15/tesco-enjoys-fastest-growth-in-three-years-as-aldi-and-lidl-slow/

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Case Study - Tesco

Tesco is one of the world’s largest retailers, with more than 6,000 outlets across Europe and Asia serving millions of customers every week. Here you can read more about Tesco's science-based targets.

Why did you set a Science-Based Target?

Tesco has a long-standing ambition to become a net-zero carbon company by 2050. It has been over ten years since we set our first business-wide carbon reduction targets in 2006. Following the Paris Agreement, we conducted a review of our short- and medium-term plans to ensure that our efforts were aligned with what the science tells us is required to help keep global temperature rise below 2°C. This review showed that although our long-term, zero-carbon ambition (2050) is aligned with this global aim, we needed to set steeper absolute targets over the short- and medium-terms. These targets have informed our revised climate change strategy, comprising energy and refrigerant efficiency, renewables deployment and policy engagement.

What was the process of setting your target?

In order to set our science-based targets we needed to answer three questions:

• What are credible climate change targets for Tesco?
• How can we realistically achieve these targets?
• What would it cost to implement the solutions?

To answer the questions we plotted the 1.5°C and 2°C warming trajectories and found that our long-term, zero-carbon ambition aligns with 1.5°C. We then modelled what it would take to realistically achieve this ambition. While our existing climate change strategy was already focused on efficiency improvements, 60% of our operational footprint comes from our electricity use so it was clear to us that we would need to switch to renewable electricity. We created a costed renewable electricity roadmap which, along with our efficiency projects, gave senior leadership confidence that the new interim targets were achievable.

In terms of scope 3 emissions, we conducted a full supply-chain footprint survey of our product portfolio to identify the hotspots that should be targeted for GHG emission reductions. Through this process we learned that we needed to set different targets for agricultural emissions and emissions from food manufacturing. This reflects the contribution of these life cycle stages to our overall supply-chain footprint and provides the best route to working with our suppliers to keep the global temperature rise below 2°C.

What are you achievements so far?

Efficiency improvements: Since 2006 we have invested over £700 million in energy and refrigeration efficiency improvements. This has reduced emissions from our stores and distribution centres by 41% per square foot and delivered absolute reductions against our 2006 baseline despite significant floor area growth. We will continue to invest in efficiency improvements to meet our targets.

Renewables: We have switched to 100% renewable electricity in the UK and the Republic of Ireland. In Asia, we invested £8 million in onsite generation in 2016, with a plan to expand renewable onsite generation further. We have successfully developed a cost-neutral renewable electricity plan to 2030 for the whole company. This includes a commitment to ensuring that the majority of our renewable electricity comes from renewable onsite generation and PPAs (i.e. less than 50% from certificates).

What the benefits of having a science-based target?

Climate change mitigation: The science-based target illustrates our commitment to the Paris Climate Agreement and quantifies Tesco’s rightful contribution to achieve the goals set out under it.

Motivation: Our target has also been a source of motivation and pride for colleagues.

Supply chain engagement: Our targets act as an example and offer us the opportunity to cooperate with our suppliers to address climate change impacts and risks.

Reputation: The targets demonstrate our seriousness in tackling climate change, both to our investors and our other stakeholders. It is also part of meeting our business purpose to serve our shoppers and our communities.

Did you encounter any problems?

We successfully addressed a number of potential obstacles to ensure our science-based targets were approved.

Awareness and education: Outside of the sustainability and climate change team, the idea of science-based targets was new and we needed to raise awareness of the concept before securing buy-in from others in the business.

Coordination: As a food retailer, our science-based targets touch on various functions from property to procurement. This required active engagement and coordination across many internal teams to ensure their support and input.

Agricultural emissions: Emissions from agriculture represents around 70% of our supply chain emissions, while the world is also expected to produce more food to feed our growing world population. We incorporated these projections into our model to set a separate reduction target for agricultural emissions from other scope 3 contributors to recognise its unique challenge.

Implementation strategy: In order to secure executive approval for our science-based targets we developed a costed strategy with the Energy, Property, and Treasury functions of our business, demonstrating that the targets could be realistically delivered in the timescales proposed.

What is the wider impact of companies making such commitments?

Science-based targets have helped us, for the first time, to align our efforts to act on climate change with those of the global community. This alignment signals the direction of travel in the fight against climate change to all of our stakeholders – including our investors, suppliers and customers. With more and more businesses setting science-based targets we also have the opportunity to encourage policymakers to raise their national ambitions, which will be vitally important as they look to increase the levels of their Nationally Determined Contributions (NDCs) every five years.

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9.38 tesco plc.

Though still still essentially UK-based, Tesco has diversified geographically and into widely-separated market sectors: retailing books, clothing, electronics, furniture, petrol and software, financial services, telecom and Internet services, DVD rental, and music downloads.{10}

Competition

Tesco is an aggressive company benefiting from Internet technologies, as indeed are its main UK rivals. {9} Sainsbury's and Morrisons cater for more affluent customers, and Asda focuses on the more cost-conscious. Market share as of 2008 was: Tesco 30.5%, Asda 16.9%, Sainsbury's 16.3, and Morrisons 12.3%.{10} A cost breakdown is given below. {9}

Tesco has built its fortune on two business elements: an unrelenting drive to provide value to customers, and continued investment in the latest technologies — today customer relationship management, Internet and mobile phone shopping, and supply chain management (probably a private industrial network, though details are not available).

Back in 1995, however, Tesco was losing market share, causing Terry Leahy, the new CMO, to reexamine its market position and propose a three-pronged solution: {11}

1. Stop copying Sainsbury's and develop its own strategy. 2. Listen to customers throughout the company, at every level. 3. Offer goods and services as the customer valued, not what Tesco could do (i.e. adopt an outside-in strategy).

Customer Relationship Management

Tesco went to extraordinary lengths to understand its customers and add value to their lives.

1. Marketing was aimed at sensible, middle-class families, from its slogan 'Every little helps' to its no-frills website. {11} {14} 2. A loyalty card ('Clubcard') was introduced in 1995, and data subsequently fed into Customer Management Systems. {10} 3. American preferences were studied by embedding staff with US families prior to launching its USA operation in 2007. {11}

Internet Technology

Tesco has been particularly forward-looking. It was one of the first to: {10}

Outlook: Pestel Analysis

A Pestel analysis identifies the forces with most impact on Tesco performance.{9}

Tesco benefited from access to the world's most profitable market of 1.3 billion people, notably by:

1. Britains' joining the European Union, and the inclusion of 10 more countries in 2004. 2. China's entry into the WTO.

The continuing recession has made supermarket customers:

1. More cautious and cost-conscious. 2. More inclined to eat in that go out to restaurants.

As the UK's population changes (especially ages), customers:

1. Tend to eat (and therefore buy) less food. 2. Have become more health conscious, met by Tesco's increased stocking of organic foods. 3. Have been retained by Tesco loyalty programs.

Technological

Tesco were early leaders in Internet shopping, supply chain management and customer relationship management. These continue to be vital today with:

1. Customer loyalty cards and Internet shopping records providing CRM information. 2. Growth of Internet use and broadband access fueling growth in Tesco online shopping. 3. Mobile phone shopping, introduced with Cortexica Vision Systems for Tesco Wines, etc. 4. Supply chain management: rumored to be the world's best, still being extended. {4}

Environmental

Tesco has responded to Government environmental initiatives by:

1. Encouraging reuse of plastic bags. 2. Rewarding bagless deliveries with Tesco's green Clubcard points. 3. Providing practical advice of environmental issues. 4. Adding carbon footprint data to its products.

1. European VAT increases will affect nonfood sectors like clothing. 2. Increase in the UK's minimum wage will increase Tesco operating costs.

Outlook: Swot Analysis

The SWOT {9} analysis regards the UK concentration of business as a weakness, though this is a market Tesco knows well, and which saw further expansion in 2011. {13}

Outlook: Value Chain Analysis

As defined by Lynch (2006), {19} the value chain is the value added at each link in a company's key activities. For Tesco, the values are: {9}

1. Use of leading market position and economies of scale to achieve low costs from its suppliers. 2. Constant upgrading of their ordering system, approved vendor lists, and in-store processes.

Operations Management: 30%

Sources and Further Reading

To read this content please select one of the options below:

Please note you do not have access to teaching notes, retail multinational learning: a case study of tesco.

International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 1 January 2005

This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process.

Design/methodology/approach

This research draws on a dataset of 62 in‐depth interviews with key executives, sell‐ and buy‐side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion.

The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or “shocks” in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step‐by‐step incremental approaches to expansion.

Research limitations/implications

The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations.

Practical implications

This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self‐reflection seriously.

Originality/value

The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process.

• International business
• Multinational companies

Palmer, M. (2005), "Retail multinational learning: a case study of Tesco", International Journal of Retail & Distribution Management , Vol. 33 No. 1, pp. 23-48. https://doi.org/10.1108/09590550510577110

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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Tesco Corporation’s Internationalization Strategy Case Study

Introduction, analysis of the existing strategy, costs and benefits of the strategy, environmental challenges, resources/capabilities, new strategic directions.

Tesco is one of the leading UK retailers that started its international expansion in the 1990s. The company’s focus on internationalization was a successful strategy that led to remarkable growth in many regions and considerable profits that reached $3.8 billion in 2011 (Wrigley, Lowe, & Cudworth, 2013). However, success in some regions was accompanied by major failures in other areas, which led to significant losses, both financial and reputational. This paper includes a brief analysis of the company’s strategy, as well as challenges the company faces and new strategic directions to adapt to address these challenges.

The focus on international expansion was determined by the growing regulatory and competitive pressures Tesco had to handle in the domestic market. The first areas of expansion were countries of Central Europe that were undergoing major transformations in the 1990s after the collapse of the Soviet Union. Regulations in those countries were minimal, and competitors were also quite a few, which enabled the company to earn a significant share of the market (up to 27%) in 2011 (Wrigley et al., 2013). At that, Tesco experienced the most unprecedented growth in Asia, specifically in South Korea. The company is now the second-largest retailer in the country, with revenues of over £5 billion (Butler & Neville, 2013). The company is successfully penetrating the markets of India and China.

Nevertheless, the expansion into the US market that started in 2007 proved to be a failure as the company announced that all the stores would be closed and sold in the near future (Ruddick, 2013). It is noteworthy that Philip Clarke, the company’s CEO, understood the complexity of operating in the USA as the market was saturated, and the competition was rather fierce. However, the decision was to enter the American market with a focus on fresh food (which was quite expensive).

The internationalization of Tesco has a number of peculiarities. First, the company made some partnerships. One of the most successful partnerships was implemented in South Korea (Wrigley et al., 2013). Tesco and Samsung collaboration was successful as Tesco managed to address various issues associated with operating in new markets. First, the retailer managed to learn the peculiarities of the country’s legislation and regulatory policies.

Customers’ needs and characteristic features were also acknowledged. Tesco also managed to establish a retail chain that seemed fully domestic. Another peculiarity of Tesco’s expansion was the focus on its private labels rather than manufacturers’ products. The company also tried to be customer-oriented. However, in many regions, Tesco failed to achieve this goal, which led to failures and losses (Yoder, Visich, & Rustambekov, 2016). The company did not meet the needs of customers in the USA, Japan, and other regions.

It is necessary to note that internationalization is often an effective strategy used when the competition in the domestic market becomes too fierce, or other environmental challenges come into play (Wrigley et al., 2013). The expansion to other markets allows companies to improve profits through the increase in sales. The company can allocate funds wisely and invest in profitable projects. Operating in new markets helps companies become more flexible and innovative.

On the one hand, businesses learn about different regulatory policies and laws. On the other hand, they learn how to adjust to such environments. This flexibility is essential in the contemporary globalized world as regulations and norms existing in some countries tend to be adopted in other regions as well. There are chances that the norms and regulations existing in a foreign market will be used (with some differences) in the domestic market as well.

Nonetheless, the costs associated with the use of this strategy are also substantial. First, any expansion requires significant financial investments (related to acquisitions, alliances, construction of facilities, and so on). For instance, Tesco invested £1.25 billion to enter the American market (Wrigley et al., 2013). Clarke stated that this kind of investment was affordable for the company, and it could become transformational for Tesco in case of success. The CEO also stated that the major reputational loss in case of failure was associated with his name, not the company. Nevertheless, the reputational loss is apparent, and its negative effect can become visible soon. Unsuccessful expansion can come at a high cost, and Tesco’s failures in some regions can be seen as illustrations of these costs.

Tesco’s failures are associated with a number of wrong decisions as well as environmental challenges. First, the company entered the American market a year before the global financial crisis of 2008 (Butler & Neville, 2013). The environmental factor was accompanied by the inability to adjust and the inability to address customer needs (Yoder et al., 2016). For example, Fresh & Easy stores offered high-quality products, but they became unaffordable for price-sensitive Americans.

Furthermore, the focus on private labels was also ineffective in the US market. Martinez-Ruiz, Gonzalez-Gonzalez, Jimenez-Zarco, and Izquierdo-Yusta (2016) stress that American customers often become loyal to particular brands. People’s needs and preferences were not addressed, which resulted in failures. Customers’ peculiarities were not taken into account in other regions as well. For instance, in Poland, people prefer convenience stores to large hypermarkets while Tesco focuses on this type of retail units in that region (Ruddick, 2013). Apart from the inability to identify people’s needs, Tesco also faced issues related to the introduction of new regulations.

For instance, the changes in the Indian legislature has a negative effect on the development of the company and its further expansion in the region (Butler & Neville, 2013). Finally, many countries are trying to address serious financial issues and introduce new taxes, which also has an adverse impact on the company’s growth.

When discussing the resources and capabilities of the international retailer, it is necessary to note that Tesco has substantial funds to invest in numerous projects. The company’s billion profits show that significant funds can be allocated to innovate and expand. Apart from the obvious financial resources, the company also has other resources and capabilities. For instance, Tesco has a positive experience associated with the collaboration with companies operating in new (for Tesco) regions (Wrigley et al., 2013).

This experience can be helpful when expanding to new markets (in India and China). Tesco’s experience in collaborating with other companies can generate value as the company will be able to employ it in other regions (collaborating with other companies). The use of this strategy can help the company reduce costs, understand new markets better, and develop a proper image in the new market.

The company also tries to innovate and come up with new products and services. The development of private labels is one of the areas where Tesco has succeeded in many regions. For example, its tablets have acquired significant popularity (Warman, 2013). Hence, the development of private labels can help the company meet the existing and potential customers’ needs in a more efficient way.

The company is also expanding its e-commerce operations. Tesco’s management claims that being online is one of the major competitive advantages in the retailing industry (Warman, 2013). The company has quite effective information systems that can be used to implement marketing research, share knowledge within the company, and so on. The data obtained can help the company create value-added products and services that can attract more customers and meet the needs of the existing customers.

It may seem that the most appropriate strategy for Tesco is the focus on the domestic market and the most successful foreign markets (such as South Korea). However, the UK market is saturated, and the competition is very serious. The company needs to expand, but the expansion strategy should be based on the lessons learned from previous years. First, Tesco should launch large-scale market research with a focus on customers’ characteristic features (profile).

It is essential to understand what people need and want. One of the successful methods to learn more about new customers is the development of partnerships and alliances. Tesco can collaborate with local businesses to develop a successful marketing strategy.

Yoder et al. (2016) note that ineffective supply chain management contributed to Tesco’s failures. The company should implement research concerning the most efficient locations of stores and other facilities. This task is closely connected with another area of concern. The company should analyze the existing competition in new markets. Tesco should properly evaluate the existing competition and (based on this analysis) decide whether new Tesco stores can be set or other locations should be chosen. It is also important to identify Tesco’s competitive advantage to be able to win the competition or, at least, remain a successful player in the market.

Finally, Tesco should focus on innovation as this strategy has proved to be effective in South Korea and many other countries. The use of technology is instrumental in achieving this goal. For example, South Korean customers enjoy so-called virtual stores (Wrigley et al., 2013). These advances can be equally successful in western countries as well. The use of mobile technologies is also on the rise. E-commerce is another area to develop.

In conclusion, it is possible to state that Tesco has chosen an effective strategy that implies internationalization. This strategy is associated with numerous opportunities, including larger profits, growth, flexibility, organizational learning, etc. However, it is vital to avoid the mistakes the company has made. For instance, Tesco should reconsider its supply chain management, especially when it comes to the choice of location. The company should implement extensive research concerning customers’ needs and preferences.

It is also critical to evaluate properly the existing competition in different markets as well as environmental issues as macro and micro-economic factors affecting the development of countries and regions. Tesco should maintain its focus on innovation, but the use of advanced technologies and marketing strategies should be based on extensive market research. Although the company is still facing numerous internal and external issues, Tesco can still retain its leading position and improve its operations in different markets.

Butler, S., & Neville, S. (2013). Tesco’s empire: Expansion checked in UK and beyond . The Guardian . Web.

Martinez-Ruiz, M. P., Gonzalez-Gonzalez, I., Jimenez-Zarco, A. I., & Izquierdo-Yusta, A. (2016). Private labels at the service of retailers’ image and competitive positioning: The case of Tesco. In M. Gomez-Suarez & M. Martinez Ruiz (Eds.), Handbook of research on strategic retailing of private label products in a recovering economy (pp. 104-126). Hershey, PA: IGI Global.

Ruddick, G. (2013). Is Tesco’s dream of building an international empire unravelling? The Telegraph . Web.

Warman, M. (2013). Tesco Hudl tablet takes on Kindle and iPad . The Telegraph . Web.

Wrigley, N., Lowe, M., & Cudworth, K. (2013). The internationalization of Tesco: New frontiers and new problems. In G. Johnson, R. Whittington, D. Angwin, K. Scholes, & P. Regner (Eds.), Exploring strategy: Text and cases (pp. 657-661). Harlow, UK: Pearson.

Yoder, S., Visich, J., & Rustambekov, E. (2016). Lessons learned from international expansion failures and successes. Business Horizons , 59 (2), 233-243.

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IvyPanda. (2021, July 21). Tesco Corporation's Internationalization Strategy. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/

"Tesco Corporation's Internationalization Strategy." IvyPanda , 21 July 2021, ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

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1. IvyPanda . "Tesco Corporation's Internationalization Strategy." July 21, 2021. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

Bibliography

IvyPanda . "Tesco Corporation's Internationalization Strategy." July 21, 2021. https://ivypanda.com/essays/tesco-corporations-internationalization-strategy/.

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Tesco Case Study: CSR, Values, Strategies and Performance Improvement

Tesco case study - Vision, values and business strategies

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Managing Business Strategy: Tesco Case Study – Vision, Values and Business Strategies

This case showcased the journey of the company Tesco from its beginning when it was founded as a market stall in London by its owner Jack Cohen in 1919. The mighty giant has built its fortune by pursuing two business strategies; firstly, by pursuing a consistent drive for providing the best value to its customers and secondly, by continuous investment in the latest technology. “The four essentials” help in achieving these ambitions which are; trading responsibly, working on reducing its impact on the environment, making sure that it is a great employer, and helping in making local communities better. These four essentials help Tesco guide how to use its huge scale for good purpose and make it competitively better as well. The Three big ambitions are the steps towards using the scale for a good journey. Tesco is committed to making zero wastage of the food that can be consumed healthily by the customers. Tesco has a consistent growth strategy, allowing it to strengthen its retailing and other group businesses. The “seven-part strategy” followed by Tesco in its business activities is very crucial in the development of successful and long-term strengthening of this position. The six KPIs are used by Tesco for monitoring and evaluating of the performance, and its results for 2017 shows its strong performance.

Introduction: Tesco

This case revolves around the company Tesco, which was founded as a market stall in London by its owner Jack Cohen in 1919. Now, it is considered as one of the largest retailers in the world. Its business in the UK accounts for the majority of the total revenues and profits, about 60% of the total. Of all the retailers in the UK, Tesco has the widest range of variety (Clark & Chan, 2014). The case focuses on the reasons for the success of Tesco to move from a market stall to such heights. It discusses its strengths, right leadership decisions, vision, values, strategies, and community work which made it successful.

1.      Responsible Retailer

1.1. competitive advantage of tesco.

The retailer giant Tesco did not become the largest retailer in the world in days, and with luck only. It worked on many little things in the right way to get to this success. The mighty giant has built its fortune on two business elements. Firstly, by pursuing an insistent drive for providing the best value to its customers and secondly, by following continuous investment in the most relevant and advanced technology. However, this has not been the case from the beginning. During 1990’s, the company was losing its market share, and this caused the then CMO to reposition its strategy and proposed a three-folded solution. It focused on stopping Tesco from following the strategies of Sainsbury and devising its strategy by listening to the customers on every level of the company. Based on this, it urged Tesco to offer the services and goods preferred and valued by the customers as compared to those which Tesco can provide. It is also known as an outside-in strategy which was adopted by Tesco in the 1990s. It aimed its marketing at the middle class. Tesco launched its slogan “Every little matter” and marketed itself as the customer-oriented retailer. Its loyalty club card was introduced in the 1990s and from then on data has been used to feed into the customer management systems.

1.2. Tesco as Responsible Retailer

The term “Responsible Retailer,” shows the awareness and realization of a retailer company of the effect of its actions, priorities, and contributes to its internal and external environment. Tesco considers itself as a responsible retailer. It’s slogan of “Every little help” and the philosophy of putting the customers, employees and the community at the heart of everything that they have made it a responsible retailer. The core values of this retailer include its commitment to the use of its huge scale for good causes. It is evidently seen by its various community preservation investments and initiatives. In its encouragement of its customers of reusing of the plastic bags, and awarding them with club card points for bag-less deliveries, and the addition of the carbon footprint details on each of its products showcases its commitment to the good causes. By winning the Green Retailer Award of the year in 2012 for its contribution to the community in the form of opening zero-carbon stores in Ramsey, its commitment is evident. Tesco has the vision to become fully zero carbon by the year 2050 (Tesco, 2014).

1.3. The Essentials

Another major component of the core values of the company Tesco is their comprehensive ambitions and aims of each of the business activities that they perform. One of these is the “The Essentials.” It is a comprehensive summary of the core values of Tesco followed in their daily operations to make them different from others. It evidently showcases how Tesco gives importance to every little detail of business activities which then collectively benefits it in the form of strategic advantage. The Essentials are a set of core values which Tesco follows to reduce its food wastage global. These four essentials help Tesco guide how to use its scale for good and make it different.

• By trading responsibly, Tesco puts its customers first and build a strong relationship with its customers by providing best quality products.
• By reducing the impact on the environment of Tesco’s activities, through their aim of becoming a zero-carbon business by the year of 2050 and responsibly utilizing of the scarce resources especially in the supply chain as well.
• By being a great employer, the company Tesco offers and creates opportunities that make the colleagues of Tesco content and proud for being a part of Tesco.
• By supporting the local communities, Tesco tries to be a good neighbor and run its business to the highest standards (Tesco, 2014).

1.4. Tesco’s CSR

The CSR is at the heart of Tesco and not just a subsidiary or side activity. It is not done for promotion or gaining good will. It is embedded in the values of Tesco, and it believes firmly on the paying back to the society and community for the profits and trust that they offer. The CSR programs are developed by the Corporate Responsibility Committee of the company. Tesco’s dependence on the CSR initiatives has been far greater now than ever because of the various scandals that it faced during the last years regarding the unethical profit reporting, and bad supplier treatment.

Food Waste:

It was one of the only retailers to publicize its data on the UK food waste from its operations. It is also committed to making zero wastage of the food that can be consumed healthily by the customers.

It has cut short the sugar content in its soft drinks in the UK by 5% a year. It provided free fruit to the children in all stores in the UK. It raised £ 13.7 million for Charities foundation.

Human Rights and Labor standards:

Tesco has supported through various programs about 450,000 people from whom the source resources were supplied.

Environment:

Tesco reduced its carbon emissions by 3% on year on year basis. It joined the sustainable agriculture initiative (Tesco Plc, 2016).

These activities aid Tesco in positioning itself in a competitive position in the retail market.

1.5. Three Big Ambitions

The Three big ambitions are the steps towards using the large scale of Tesco for a good journey. The Three big ambitions are all about the intention and performance of the company regarding its journey of using its large scale for good (Cohen, 2014). The three big ambitions are:

To become the leading organization in the reduction of food waste globally

For this purpose, Tesco has identified and published the key areas of wastage in their supply chain and operations. The next step is to tackle the food wastage hotspots across the supply chain identified by it. Then the surplus of the food will be donated to those in need.

To improve the health and tackle the obesity crisis

For this purpose, Tesco has invested a lot in researching the drivers of health choices and habits. The “healthy little differences tracker” is the central approach used to measure the nutritional content of the shopping baskets, and identify the drivers of healthy and unhealthy food choices. It has removed three billion calories from the soft drinks by the “ Tesco eat happily project.”

Creating new opportunities people

For this purpose, Tesco has invested in studying through research, study groups, the need for the young professionals and the challenges they face. The establishment of vocational training programs in the Thailand business is one such step (Tesco, 2014).

2.      SWOT Analysis of Tesco

2.1. strengths of tesco.

The strength of Tesco Plc is evident in its historical baggage of knowledge, experience, and values. Its increasing market share evidently in the year 2016 is its strong point. After 2011, Tesco has recovered its market share from 28.1% to 28.2% a year after. Still, it is the leading shareholder of the UK grocery market and can win back its lost position (BBC.com, 2016). Its strong financial position and its large size give it the immense strength in negotiations to win it from the largest manufacturers as well. Its low-cost leadership is another strength which makes it competitive in the grocery market.

2.2. Weaknesses of Tesco

The product recalls by Tesco has the potential of affecting its position. Furthermore, the scandal of inappropriate profit recording has sabotaged the position of the company very gravely. The company has been in the recovery phase from then on, working on regaining its past customer’s trust (BBC.com, 2016). The company’s reliance purely on the UK market can become a weakness as it depended totally on the profits from UK operations. Any changes in the UK supermarket industry would substantially affect the company Tesco Plc. One example of such major effect can be if Morrison group took control of the Safeway chain then the dynamics of the supermarket industry would change drastically affecting the power share tremendously. Its debt obligations and tied up capital in long-term operations like in the opening of new stores in space has left less cash for any other operations.

2.3. Opportunities For Tesco

Being the market leader in the grocery market of UK and with constant market growth, Tesco has the potential to exploit many opportunities. The company has the potential to diversify and expand its operations more in the non-food retail business. Through its large brand worth, Tesco has successfully diversified (McCaughren, 2017) and has the potential to further get benefit from diversifying opportunities. The telecom venture and the Tesco bank are some of the operations which have been purely disconnected with the core business but have used the brand name to be successful. There are plenty of markets which are still untapped by the retail giant and is in the planning phase of expanding internationally in the markets of Central Europe, Middle East and Korea (Butler, 2015).

2.4. Threats For Tesco

The financial downturn faced by Tesco after the scandal of the inappropriate reporting of the profits, decreasing income, and increased competition can become a threat to the company, if not tackled successfully. The concentration of the business majorly in the UK can also become a threat to the company if any drastic changes in the market share or regulations of the supermarket industry will emerge. The pricing war in the UK supermarket industry can also hurt Tesco in loss of market share. Furthermore, the expansion plans and acquisitions of firms can become unsuccessful because of the cultural unfit, or lack of synergy. The potential merging of any of the retail giants can cause threat for the Tesco as it did when purchasing of ASDA by the US retail giant Wal-Mart made it stronger in competitive pricing, making difficulties for Tesco on its retail position (Fernie et al., 2013).

2.5. Competitive Strategy of Tesco:

Tesco has a consistent and well-established growth strategy, allowing it to strengthen its core retailing business in the UK and also allows it to expand in the international market as well. The dependency of the retail business on the information provided by the customers to build the gap and offer the products and services as per the demand of the customers has been the strategy which has made it competitive in the market. Its cost leadership and strong financial strength give it the ultimate power in negotiations. The approach to sustainability, environment-friendly, and zero carbon imprints has led it to have a special place among its rivals.

3.      Strategic Planning of Tesco

Tesco has a core vision which always remains constant, but the strategies and business activities change over time with the changing needs and demands of the customers.

3.1. Vision & Values of Tesco

The vision of the Tesco is composed of five elements that show what type of company it wants to become.

• The company Tesco Plc wants to become needed and wanted all over the world. It means that it wants to align its business activities with the needs and wants of the world.
• The company Tesco PLC has aspired to be a growing business always offering opportunities. It means that it wants to become the best and largest employer, expanding its operations worldwide.
• Furthermore, the company Tesco wants to be identified as an innovative, modern company. It means that it wants its customers to be attracted to the new unique services and products that it offers.
• It also wants to win locally and globally. It means that Tesco wants to use its knowledge and experience gathered from local practices on global operations successfully.
• Lastly, it wants to be inspired and earns the trust as well as the loyalty of the customers, communities, and colleagues around the world. It shows that the company wants to contribute to the lives of each with whom it gets in touch.

The mission statement of Tesco, “We make what matters better, together” shows how it is derived from the vision and is further embedded into the strategies implemented in the company at all levels.

The values of the company Tesco are:

• We treat everyone how we like to be treated.
• No one tries harder for customers.
• We use our scale for good. (Tesco, 2014)

3.2. Tesco’s Seven-Part Strategy

These seven strategies are:

To grow in the core business of the UK

As shown, this involved the increment of the staff numbers by 20,000 within two years. It also included the renovation of the existing stores and new promotional introduction at these existing stores.

Creation of highly valued brands

For this purpose, the company involved itself in the development of the own-labeled brands like the Tesco Finest, and F&F clothing for providing the best-valued brands to the customers.

Outstanding International Retailer

For this purpose, the company has generated 30% of its group profits from the international business. The opening of the new F&F stores in new markets like Azerbaijan, Saudi Arabia, Georgia, Kazakhstan, and in the Middle East come under this strategy.

Growth in Retail Services in all Markets

For this purpose, the company Tesco Plc has generated over £ 1 billion of revenue in the year 2012. The latest revenue of £ 157 million in Tesco bank shows the company’s efforts in growing the retail services in all markets (Tesco Plc., 2017).

Serving Communities:

The report above shows the tremendous input in this part-strategy by serving the community. Tesco has made its responsibilities to the community the core value and strategy of the business. The three big ambitions underpinned by the four Essentials demonstrate this strategy at best.

Building Team

The most important asset of any company is its people; its human resource. Tesco values its people and trains them to live by their values to work in a manner that is best for the customers. Within the Group, each director is given appropriate training and development programs after discussion of the training needs within the board and the chairmen (Tesco Plc., 2017, p.43).

Getting Strong into Non-Food Sector

Food has been the strongest point for Tesco, but it has and needs to strengthen its position in the non-food industry as well (Lawson, 2012). The continuous diversification and addition to the wide range of products and services in the form of Tesco Bank and telecom venture are evidence of this strategy.

3.3. Monitoring & Evaluation

Tesco utilizes a wide range of techniques to collect the data for monitoring of the progress and compare it against the set targets. The club card scheme and the telephone-based research with the help of the online panel of customers help in the determining of the customer’s needs and how it was satisfied or not satisfied by Tesco.

3.3.1.      Key Performance Indicators:

The performance is monitored at Tesco on a regular basis and evaluated against the set targets for each of the KPIs. The six KPIs used by Tesco for monitoring and evaluating of the performance and its results for 2016 are as follows:

Group Sales:

In 2016, the company increased its revenue by increasing the number of transactions and by increased volume. The increase in the group sales was found to be 1.1% as compared to last year. The target achieved was the target and stretch mark.

Source: https://www.tescoplc.com/media/392341/tesco_ar17_kpis.pdf

Group Operating Profit:

The group operating profit was also found to be among the target and stretch figure with 24.9% growth on a year-on-year basis.

The cash flow target was achieved by Tesco by increasing it to 9.1%. With a strong operating cash flow of running the business and allowing it to reinvest it makes it financially strong (Tesco Plc, 2016).

Customers Satisfaction:

In 2015, customer satisfaction and recommendation of Tesco to others and their coming back to Tesco gave it 7 points. In 2016, it scored 5 points.

Colleagues Satisfaction:

The increase in this KPI by two points is earned because of the 83% score for it is a great place to work, and 48 points for it being the great place to shop (Tesco Plc, 2017).

Trusted Partnerships:

A 7 point increase in the last year, 77% group supplier satisfaction shows its commitment to strong partnerships.

The analysis of the KPIs and its monitoring and evaluation strategies show that the company has well-devised strategies for the implementation and then controlling of the plans ensuring good performance.

4.      Analysis of Tesco’s Strategy

As discussed in the case, the retailers like Tesco achieve long-term success with their continuous focused approach. Their basic vision does not change the business activities, however, and strategies followed by the company changes with time along with the changing preferences of the customers. As shown in the above sections, Tesco has adopted a well-established strategy and performance measurement program which has strengthened its main retailing business. The dependency of the retail business on the information provided by the customers to construct the gap and propose the products and services as per the requirement of the customers has been the strategy which has made its aggressive in the market. The strategy of cost leadership with the baggage of strong financial strength gives it the ultimate power. The company adopted the strategy of using the information from the customers to build its core business and offer the products as per their demands and preferences. Many large manufacturers cannot say no to it.  Its height of customer orientation can be witnessed by the fact that it studied the American preferences before initiating its operations in the USA by embedding its staff with the families. Its continuous strives to be the best in the eyes of the customer and to remain a constant priority for its customers has led it to be purely innovative and relevant. It can be witnessed by its forward-looking approaches adopted in the past. It was one of the first ones to introduce online shopping; the first one to use cameras and tills for reduction of the long queues on counters; and also the first one to use private industrial networks.

4.1. Comparison with Local Supermarket-Sainsbury:

Sainsbury is the company considered as one of the rivals of Tesco. The supermarket company operates in three business segments. Retailing, financial services, and property investment are these operating units. Founded in 1869 in London, it has remained a market leader until Tesco stole its position. It is now the third largest retailer in the UK after ASDA.

Its current position of a market challenger is well earned, and it is one of the only supermarkets which has escaped and witnessed as the better one from the horse meat scandal. The scandal of using horse-meat in the supermarkets made the entire supermarket lose their market share. Tesco was the only one who escaped from it as it did not use any horse meat. Moreover, it also does not engage in price wars and tries to influence by giving the customers with quality and tasty food at fair prices.

4.2. Recommendations to follow Locally

Sainsbury can learn from Tesco to regain its lost positions. Sainsbury was the leading retailer before Tesco stole its position in the 1990s. A few years back with scandals like inappropriate reporting of the profits, and horse-meat usage in the supermarkets, Tesco lost substantial profits and customer loyalties. However, after constant effective strategies, Tesco has been successful in regaining its lost position and has also shown increment in profits. The key is looking at the business with the eyes of the customers. It has changed its business approach by solving the problems and not just promoting more discounts. With this type of customer perspective in the eyes of the management, the company Sainsbury can also regain some of its market share (Varley, 2014).

The in-depth analysis of the values, vision, and strategies of Tesco shows that its commitment to be of importance in the eyes of its customers, its colleagues, and its community has led it to become customer-centric and community friendly. The values followed by Tesco are universal and has insight for any business to be followed of the aim of achieving long-term success.

BBC.com, 2016. Tesco sees first market share rise since 2011 . [Online] Available at: http://www.bbc.com/news/business-37682262 [Accessed 23 January 2018].

Butler, S., 2015. Tesco beyond Britain: how supermarket is faring abroad . [Online] Available at: https://www.theguardian.com/business/2015/apr/22/tesco-supermarket-abroad-china-asia-ireland [Accessed 23 January 2018].

Clark, R. & Chan, S.P., 2014. A history of Tesco: The rise of Britain’s biggest supermarket . [Online] Available at: http://www.telegraph.co.uk/finance/markets/2788089/A-history-of-Tesco-The-rise-of-Britains-biggest-supermarket.html [Accessed 23 January 2018].

Cohen, E., 2014. Three Big Ambitions at Tesco . [Online] Available at: http://csr-reporting.blogspot.com/2014/05/three-big-ambitions-at-tesco.html [Accessed 23 January 2018].

Fernie, S., Fernie, J., Fernie, a. & Moore, C., 2013. Principles of Retailing . Routledge.

Lawson, A., 2012. Tesco expected to improve non-food range . [Online] Available at: https://www.retail-week.com/sectors/grocery/tesco-expected-to-improve-non-food-range/5033896.article?authent=1 [Accessed 23 January 2018].

McCaughren, S., 2017. Tesco invests €70m in stores as growth returns to Ireland . [Online] Available at: https://www.independent.ie/business/irish/tesco-invests-70m-in-stores-as-growth-returns-to-ireland-36414705.html [Accessed 23 January 2018].

Tesco Plc., 2017. Tesco Annual Report 2017 . [Online] Available at: https://www.tescoplc.com/media/392373/68336_tesco_ar_digital_interactive_250417.pdf [Accessed 23 January 2018].

Tesco Plc, 2016. An update on our Corporate Responsibility Commitments . [Online] Available at: https://www.tescoplc.com/media/391787/corporate-responsibility-update_nov-2016-final.pdf [Accessed 23 January 2018].

Tesco Plc, 2016. Tesco Strategic Report 2016 . [Online] Available at: https://www.tescoplc.com/media/264195/strategic-report-2016.pdf [Accessed 23 January 2018].

Tesco Plc, 2017. Our Big 6 KPIs. [Online] Available at: Source: https://www.tescoplc.com/media/392341/tesco_ar17_kpis.pdf [Accessed 23 January 2018].

Tesco, 2014. Tesco and Society Report 2014 . [Online] Available at: https://www.tescoplc.com/media/1453/tesco_and_society_review_2014.pdf [Accessed 23 January 2018].

Varley, R., 2014. Retail Product Management: Buying and Merchandising . Routledge.

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Tesco accused of using cash and carry to ‘squeeze’ village stores out of business

Exclusive: Independent retailers, many running post offices, say wholesale arm Booker is restricting supplies and deliveries

Village stores have sounded the alarm over what they claim is a battle for survival, accusing the supermarket group Tesco of using its cash-and-carry arm to “squeeze” them out of business by restricting supplies and deliveries of groceries.

Independent retailers, many of them also running the local post office, have told the Guardian that a series of changes recently introduced by Tesco’s wholesale arm, Booker, were adding to pressures at a time when some villages had been left with just one small shop – or none at all.

They claim Booker has:

Reduced the range of items available by up to 30% at some sites.

Withdrawn customer favourites at some sites including Yorkshire Tea, Rowntree’s sweets and Colman’s mustard.

Reduced the availability and reliability of deliveries.

Andrew Goodacre, the chief executive of the British Independent Retailers Association (Bira), called on the UK competition watchdog to examine the issue and said he would be raising the matter with Kevin Hollinrake, the minister for small business.

“I think it’s shocking,” Goodacre said of the problems reported by small retailers. “This shows the worst of a large company bullying little shops. Communities want these small shops and these are not businesses making millions of pounds.”

Seven years ago, the competition watchdog took a much-criticised decision to wave through the acquisition of Booker , the country’s biggest grocery wholesaler, by Tesco, its biggest supermarket chain.

Via Booker, Tesco also controls the Londis, Budgens and Premier groups, which are made up of thousands of independent stores tied into buying deals with the wholesaler.

In 2017, at the time of the Booker takeover, rival wholesalers wrote to the Competition and Markets Authority warning it would hand Tesco “incontestable power over the procurement of all grocery categories in the UK”.

Jonathan Cobb, who runs the village shop and post office in Miserden, Gloucestershire, said it felt like the fears raised then were now a reality. His local Booker has stopped selling sought-after brands including Colman’s mustard, Tuc and Cheddars biscuits.

The alternatives provided are often branded with the Jack’s label, supplied by Booker, which has packaging displaying the catchline: “part of the Tesco family”. Cobb said he did not wish to sell Jack’s products “as it says Tesco on it”.

As much as 30% of the range he previously bought from Booker could no longer be sourced, said Cobb, and it felt like Tesco was “slowly pushing us aside”.

He cannot order enough for a delivery as there is nowhere to store those goods in his small shop. He also wants to continue supporting local farms by buying fresh meat, fruit and vegetables from them and does not want to be solely reliant on one wholesaler.

The Guardian interviewed five small retailers and was shown comments by others from online forums. Shop owners agreed that as much as 20% to 30% of the lines they usually bought from Booker had been affected.

A wider number of items can be sourced from Booker if a retailer requests a delivery. However, many small stores, which may only make sales of £1,400 a week, cannot reach the £1,200-a-week minimum order.

One village shop owner said she did order enough to get deliveries, spending about £1,500 a week, but she said Booker now charged £40 for delivery and had reduced its range by a “significant amount” so that she was having to try and find alternative sources of supply.

She added that she was no longer able to order just the one or two packs of frozen chips and fish fingers she needed because Booker now demanded a minimum of a whole case and there was not space in her freezer.

She said she had spent hours searching for alternative sources of supply but most were too far away or required additional work such as inputting every item into the till system by hand, whereas Booker provides the information electronically for a quick download.

She said she felt like Booker was “deliberately trying to squeeze us out of the market so everybody has to go to the big Tesco”.

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“It’s not going to put me out of business but I am going to lose customers and that will make everything harder. If they carry on the policy it could just be a matter of years before I go out of business,” she added.

Another village shop owner said: “Since Tesco have taken [Booker] over it has got harder and harder to get products for the shop. Only two weeks ago they discontinued 400 retail lines.”

She said her local Booker would not provide a delivery as she was not a catering business, for which the minimum order the wholesaler requires is £150.

“Our local pub has a delivery nearly every week. They only have to spend [about] £100 with no delivery charge. The lorry goes right past the shop,” she added.

One industry insider said the changes were hitting the smallest village stores the hardest, particularly those in rural areas that might have little choice of wholesalers.

The well-placed source said: “Tesco wants to move into the catering trade and that is its main objective. There has been a lot of increase in catering stock and in order to make space for that it has reduced retail stock.”

He added that Booker had recently bought larger delivery lorries that struggled to access small country lanes and this had also meant cutbacks to delivery rounds.

Booker has said it is not aiming to increase its catering market share at the expense of its retail trade and recently invested in a distribution centre to grow retail capacity. It confirmed it did not deliver to some rural areas in the south-west but said that had not been changed recently.

Retailers that could get deliveries said they were no longer seen as a priority and so could find deliveries delayed at the last minute.

“It’s harder and harder to get a delivery,” the well-placed industry source said. “There is an imbalance of power between local shops and a large supplier.”

Booker announced in February it would be tightening up its range for retailers which it said had become “a little bloated”, according to a report in the trade journal Better Retailing. The wholesaler said it would also be introducing more Jack’s own-label and more fresh produce after reviewing 151 different grocery categories last year. It promised to “respect regional and local lines”.

Sheila Gallagher, Booker’s commercial director, said the changes would make the wholesaler’s range “more effective” with “better efficiencies”.

A spokesperson for Booker said: “We remain absolutely committed to serving community shops across the UK either through branch or delivery.

“Last year, we reviewed our range across all branded and own-brand products to ensure we have the right offer and in response to feedback that customers want more consistency across branches. As part of that review, we removed products that customers weren’t choosing, to make more space for products that really matter. Overall feedback has been positive and we’ve already seen improvements in availability.”

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Tesco loses appeal in trademark row with Lidl over yellow circle branding

The UK's largest retailer says it will update its Clubcard Prices logo soon to reflect the judgment but insists the ruling has no bearing on the scheme itself.

Business reporter @SkyNewsBiz

Tuesday 19 March 2024 13:28, UK

Tesco has lost an appeal in a row with discount rival Lidl over the use of a yellow circle against a blue background in its Clubcard branding.

The High Court ruled last year that the UK's biggest retailer had taken "unfair advantage" of the Germany-based firm's distinctive reputation for low prices when it brought in the Clubcard Prices discount scheme.

However, the judge in the case last April rejected the claim that Tesco had "the deliberate subjective intention of riding on Lidl's coat tails".

Lidl has traditionally used a yellow circle on a blue background in its main logo.

Money latest: Washing powder 'shrinkflation' exposed by shopper

While the Court of Appeal backed the earlier finding that Lidl's trademark had been infringed, it also overturned a decision on copyright in Tesco's favour.

Lidl brought the case in 2020, shortly after Tesco launched the discount scheme to complement its existing Clubcard offer.

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A Lidl spokesperson welcomed the decision, saying in a statement: "We expect Tesco now to respect the court's decision and change its Clubcard logo to one that is not designed to look like ours."

Tesco said it planned to update the logo shortly and it was understood the change would be rolled out within weeks.

"We are disappointed with the judgment relating to the colour and shape of the Clubcard Prices logo but would like to reassure customers that it will in no way impact our Clubcard Prices programme," a spokesperson added.

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Use of Abortion Pills Has Risen Significantly Post Roe, Research Shows

By Pam Belluck

Pam Belluck has been reporting about reproductive health for over a decade.

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On the eve of oral arguments in a Supreme Court case that could affect future access to abortion pills, new research shows the fast-growing use of medication abortion nationally and the many ways women have obtained access to the method since Roe v. Wade was overturned in June 2022.

The Details

A study, published on Monday in the medical journal JAMA , found that the number of abortions using pills obtained outside the formal health system soared in the six months after the national right to abortion was overturned. Another report, published last week by the Guttmacher Institute , a research organization that supports abortion rights, found that medication abortions now account for nearly two-thirds of all abortions provided by the country’s formal health system, which includes clinics and telemedicine abortion services.

The JAMA study evaluated data from overseas telemedicine organizations, online vendors and networks of community volunteers that generally obtain pills from outside the United States. Before Roe was overturned, these avenues provided abortion pills to about 1,400 women per month, but in the six months afterward, the average jumped to 5,900 per month, the study reported.

Overall, the study found that while abortions in the formal health care system declined by about 32,000 from July through December 2022, much of that decline was offset by about 26,000 medication abortions from pills provided by sources outside the formal health system.

“We see what we see elsewhere in the world in the U.S. — that when anti-abortion laws go into effect, oftentimes outside of the formal health care setting is where people look, and the locus of care gets shifted,” said Dr. Abigail Aiken, who is an associate professor at the University of Texas at Austin and the lead author of the JAMA study.

The co-authors were a statistics professor at the university; the founder of Aid Access, a Europe-based organization that helped pioneer telemedicine abortion in the United States; and a leader of Plan C, an organization that provides consumers with information about medication abortion. Before publication, the study went through the rigorous peer review process required by a major medical journal.

The telemedicine organizations in the study evaluated prospective patients using written medical questionnaires, issued prescriptions from doctors who were typically in Europe and had pills shipped from pharmacies in India, generally charging about $100. Community networks typically asked for some information about the pregnancy and either delivered or mailed pills with detailed instructions, often for free.

Online vendors, which supplied a small percentage of the pills in the study and charged between $39 and $470, generally did not ask for women’s medical history and shipped the pills with the least detailed instructions. Vendors in the study were vetted by Plan C and found to be providing genuine abortion pills, Dr. Aiken said.

The Guttmacher report, focusing on the formal health care system, included data from clinics and telemedicine abortion services within the United States that provided abortion to patients who lived in or traveled to states with legal abortion between January and December 2023.

It found that pills accounted for 63 percent of those abortions, up from 53 percent in 2020. The total number of abortions in the report was over a million for the first time in more than a decade.

Why This Matters

Overall, the new reports suggest how rapidly the provision of abortion has adjusted amid post-Roe abortion bans in 14 states and tight restrictions in others.

The numbers may be an undercount and do not reflect the most recent shift: shield laws in six states allowing abortion providers to prescribe and mail pills to tens of thousands of women in states with bans without requiring them to travel. Since last summer, for example, Aid Access has stopped shipping medication from overseas and operating outside the formal health system; it is instead mailing pills to states with bans from within the United States with the protection of shield laws.

What’s Next

In the case that will be argued before the Supreme Court on Tuesday, the plaintiffs, who oppose abortion, are suing the Food and Drug Administration, seeking to block or drastically limit the availability of mifepristone, the first pill in the two-drug medication abortion regimen.

The JAMA study suggests that such a ruling could prompt more women to use avenues outside the formal American health care system, such as pills from other countries.

“There’s so many unknowns about what will happen with the decision,” Dr. Aiken said.

She added: “It’s possible that a decision by the Supreme Court in favor of the plaintiffs could have a knock-on effect where more people are looking to access outside the formal health care setting, either because they’re worried that access is going away or they’re having more trouble accessing the medications.”

Pam Belluck is a health and science reporter, covering a range of subjects, including reproductive health, long Covid, brain science, neurological disorders, mental health and genetics. More about Pam Belluck