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Ankit Jain

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Tesco is one of the worlds largest

retailers with operations in 14

countries, employing over 492,000people and serving millions of

customers every week.

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Tesco is a British multinational grocery andgeneral merchandise retailer headquartered

in United Kingdom. It is the third-largest

retailer in the world measured by revenues

(after wal mart and carrefour) and the

second-largest measured by profits (after Wal-

Mart). It has stores in 14 countries across Asia,

Europe and North America and is the grocerymarket leader in the UK

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The company was founded in 1919 by Sir Jack

Cohen as a group of market stalls.

The first Tesco store opened in 1929 in Burnt

Oak, MiddleSex. His business expanded

rapidly, and by 1939 he had over 100 Tesco

stores across the country

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Tesco is listed on the London Stock

Exchange and is a constituent of the FTSE 100

Index had a market capitalisation of

approximately 24.4 billion as of 15 January

2012, the 15th-largest company of any

company with a primary listing on the London

Stock Exchange

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Businesses

Technika brand name for electronic products

Telecoms operates mobile phone, home

phone and broadband businesses

Fuel Tesco started selling petrol,desil in 1974

Tech support Tesco acquired a small I.T.

support company called The PC Guys in 2008

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FILM MAKING In 2010 Tesco started funding a

small film studio intended to produce Tesco

exclusive direct-to- films

Banking Tesco has a banking arm called Tesco

Bank, formerly a 50:50 joint venture with the

Royal Bank of Scotland

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SWOT Analysis

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SWOT Analysis

Strengths

Tesco is ranked third largest grocery retail company in the world,operating over 4,331 stores primarily within the USA, Europe andAsia. The company held 30.7% share of the UK grocery retail market

in 2010. A strong financial performance has been shown by the company

over the years, which underlines its strategic capabilities. Tesco is a 54billion turnover company recording an increase of 14.9% whencompared to 2008. The foremost strategy that has been adopted bythe company is the product and services customization inaccordance with the market demands. The efficiency inperformance of the company over the last decade can besummarised with the help of growth in following key indicators

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Tescos strategy aims to focus on product affordabilitywhich ensures that customer gets the product to suittheir budget without compromising on the quality.During 2009 the sales from online non-food retail

company Tesco Direct have increased by over 50%(Tesco, 2010).

Tesco has a proven customer retention strategy withthe help of its loyalty scheme called Tesco Clubcard .The company uses data collected from this loyalty

scheme in its powerful CRM systems named Crucibleand Zodiac, and this information is then used foreffective direct marketing and various otherpromotional techniques.

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Tesco online: Tesco.com is the world's biggest online supermarketand year 2011 the group had sales of over 577 million, an increaseof 29% on year 2010. Tesco online now operates in over 270 storesaround the UK, covering 96% of the UK. With over a millionhouseholds nationwide having used the company's online services,

the company has a strong platform to further develop this revenuestream.

Brand value: Profits for Tesco's operations in Europe, Asia andIreland increased by 78% during the last fiscal year. The companyhas a strong brand image, and is associated with good quality,trustworthy goods that represent excellent value. Tesco's innovative

ways of improving the customer shopping experience, as well as itsefforts to branch out into finance and insurance have alsocapitalized on this.

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Weaknesses

Tesco has not been able to perform well over the last

year as compared to its competitors. According to Mintel

(2010), a number of products were recalled by Tesco in

2009 that has resulted in a financial loss as well as

damage to its brand image. These included companys

value lines, which have been marketed as high quality

cheaper alternatives to key brands.

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Reliance upon the UK market: Although international

business is still growing, and is expected to contribute

greater amounts to Tesco's profits over the next few years,

the company is still highly dependent on the UK market

(73.8% of 2003 revenues). While this isn't a major weakness

in the short term, any changes in the UK supermarket

industry over the next year for example, like the Morrison's

group successfully purchasing the Safeway chain could alter

the balance of UK supermarket power, and affect share.

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Opportunities

It is estimated that Tesco's non-food sales will

double over the next four years. Worldwide it

has sales of 7 billion in non-food, some 23%

of the total. Its aim to be 'as strong in non-

food as we are in food.

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Around half of new space opened in the UK last

year was for non-food and the result has been to

increase its market share from 5% to 6% and itsoverall share of UK retail sales has increased by

100 basis points to 12.8%.

It has been predicted that there will be a rise

from 125 billion in 2009 to 145 billion in 2014 in

the food retail market segment. This is mainly due

to the fact that even during times of recession,

food retail is the toughest segment since having

enough to eat is the priority.

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Threats

Wal-Mart/Asda challenge: Since the US shopping giant Wal-

mart purchased Asda, Tesco's rank as the top UK supermarket

has been threatened. Asda can now compete extremely well

on price and range of goods. For the moment, Asda is the

third largest supermarket in the UK, just behind Sainsbury's

and then Tesco. However, Asda closed the gap on Sainsbury's ,

leaving the company to directly challenge Tesco's dominance.

Wal-mart may also decide to wield its buying power more

heavily in the UK, and this could spell the end of Tesco's brand

dominance in the future.

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International expansion: International growth is expensive.

Entering new markets with a new brand requires heavy investment

and marketing, as well as land prices and extra distribution and

operation expense. Tesco's debt may increase before it begins to

decline.

Korea is contributing a good proportion of Tesco's international

profit growth. If profits continue to grow in this way, Korea will

probably represent one-third of Tesco's international profits in

2003. Korean consumer spending is currently quite low, and

coupled with the country's current unrest, and Tesco's large

investment, this represents a high risk area for Tesco

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PESTEL

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POLITICAL

Chinas accession to the WTO has promoted a

free flow of foreign trades by removing allbarriers encouraging Western companies,

including Tesco, to make way into the worldsmost profitable market encompassing over 1.3billion people.

In 2009 an agreement was signed by Tesco to set

up a premeditated series of joint ventures for thedevelopment of shopping malls in China.

This joint venture included three malls: Anshan,Fushan and Qinhuangdao.

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POLITICAL

The growth of Tescos international business

segment is on the rise and it is predicted to

account for one quarter of the companys profit.

Immersion of 10 further countries into theEuropean Union (EU ) took place in 2004

promoting trade between Western and Eastern

European countries (BBC, 2009). This has provided Tesco with a platform to

expand its retail network across the EU.

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ECONOMIC

Economic factors are a matter of concern for Tescosince they impact directly on the buying behaviour ofcustomers.

Although the UK economy was declared officially underrecession in 2008, the governments substantial

reduction in interest rates helped to minimise furtherrises in unemployment during 2009 (Euromonitor,2010).

As a result of this, the spending power of consumers isagain on a steady rise as they are more confident abouttheir current financial situation.

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ECONOMIC

However, the positive aspect of recession is that

the customers eat out less and eat more at home

which provides opportunities for grocery retailers

like Tesco to increase their output. It must be noted that food is the last thing that

customers will cut back on.

The percentage of overall consumer spending onfood has risen considerably over the years, as

shown below.

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SOCIAL

An analysis of the UK population shows thatthere are more retired people than childrenrepresenting the Baby Boom generation 2010.

The ageing population is discouraging for thefood retailers older people tend to eat less.

They are less likely to travel to supermarkets toshop compared with the younger generation.

Although internet literacy level drops over theage of 65 years within the population.

It has nevertheless been predicted that theageing population would find online shoppingmore convenient.

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SOCIAL

Consumers attitude towards food is

incessantly changing as they have become

more health- conscious.

An increase in the demand for organic food

has been accommodated by Tesco to reflect

this change in demand.

Payment by cheques and cash at the checkout

was first made possible by Tesco .

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TECHNOLOGICAL

One of the key macro-environmental variablesthat have directly influenced the supply chain,operations and processes of grocery and foodretailers is technology.

The operation of supermarkets is being affectedby the use of the Internet through online groceryretailing, which is showing steady growth.

Subscriptions to the Internet have grown by over50% and it has been estimated that the Internetis being used by 70% of the population in the UK2010.

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TECHNOLOGICAL

Loyalty programs are being introduced throughinformation technology which discouragecustomers from switching over to theircompetitors.

Mobile technology has also taken off as aplatform for distribution within food retailing.

New Wine App developed by Cortexica VisionSystems, for example, has been used by Tesco

since 2009 via which the customers are directedto Tesco Wine enabling them to buy the selectedwine directly from their mobile phone.

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TECHNOLOGICAL

Online retail shopping has gained considerable

popularity due to the increased access to

broadband internet in the UK.

It has been highlighted by Keynote (2010) that

the number of broadband users in the country

is 15.5 million which accounts for 70% of the

overall market.

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ENVIROMENTAL

Environmentally friendly, reduced packaging isbeing promoted by the Government.

It has been found by the Office for National

Statistics (2010) that the percentage ofconsumers using reusable bags has risen from71% to 74% and that those trying to cut down thenumber of plastic bags they take from the shops

has risen from 65% to 68%. This assists in reducing the overall cost and is

good for Tescos corporate social responsibility

image.

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ENVIROMENTAL

Due to the consumer awareness of the carbonfootprint of the firm (Wood, 2009), Tesco hasadded carbon footprint data on dairy products,potatoes and orange juice, and aims at expandingit to bread and non-food items in 2010 (Tesco,2010).

Tesco has introduced its Greener Living Scheme

to give consumers advice on environmentalissues, including how to reduce food waste andtheir carbon footprint when preparing meals

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ENVIROMENTAL

Consumers reusing bags, recycling mobile

phones and aluminium cans and preferring

bagless deliveries are being rewarded through

Tescos green Clubcard points.

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LEGAL

It has been predicted that VAT would have to riseto 20% since the Government has to finance ahuge budget deficit.

This will affect the non-food sectors of Tesco,

such as clothing. Drawing upon the Low Pay Commission Report ,

the 2008 and 2009 combined up-ratings haveresulted in an increase in the minimum wage of

15.5%. This will result in an increase of operating costs of

supermarkets.

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Marketing

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Drive trade

through

Every Little Helps

The Tesco Marketing Philosophy

Understand customers better than anyone

Delivering theEvery Little

Helpsshopping trip

Drive tradethrough

quality andneed

SayingThank

you

Marketing

MakingTesco

available

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Making Tesco Available

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Hyper Market

Very large stores

offering the maximum

food and non-foodrange

Area-7500 sq mt

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Super Store

Large stores offering a

full range and many

non-food products

Area-3600-1900 sq mt

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Express

Shops in city shopping

areas aimed at workers,

shoppers and local

residents Petrol station forecourt

shops selling a range of

everyday products

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Delivering the Every Little

Helps shopping trip

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THE AISLES ARE CLEAR

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I CAN GET WHAT I WANT

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THE PRICES ARE GOOD

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I DONT QUEUE

If there is more then one customer in

front of you at the check out, well always

aim to open another until all our checkout are open

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THE STAFF ARE GREAT

To be treated with respectAn interesting job

An Opportunity to get on

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Drive trade through quality and

need

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INTERNET

Tesco is proud to BE awarded

Multi-Channel Etailer of the

Year in the prestigious Oracle

World Retail Awards 2011

Expanded to international

markets Asia and Europe as well

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Saying Thank you

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