(2017)
Tesco understands the importance of utilizing multiple marketing channels to reach a wide range of customers. By combining traditional marketing methods with digital strategies , Tesco effectively connects with its target audience.
Tesco employs various traditional marketing techniques to promote its products and services. Television and radio ads play a significant role in increasing brand awareness and driving customer engagement. These forms of advertising allow Tesco to reach a large audience and convey its message effectively. Additionally, print media, such as newspapers and magazines, are utilized to target specific demographics and geographical regions.
Tesco recognizes the power of digital marketing in today’s digital age. The company leverages different digital channels to engage with customers and establish a strong online presence. Social media platforms, including Facebook, Instagram, and Twitter, are used to engage with customers, share product updates, and run promotional campaigns.
Email marketing is another essential component of Tesco’s digital marketing strategy. By sending personalized and targeted emails, Tesco keeps customers informed about special offers, discounts, and new product launches.
Furthermore, online advertising is an integral part of Tesco’s digital marketing efforts. The company utilizes display ads, search engine advertising, and remarketing campaigns to reach potential customers and drive traffic to its website.
Tesco’s multichannel marketing approach allows the company to create a cohesive brand presence across different platforms, both online and offline. By utilizing a combination of traditional and digital marketing strategies, Tesco maximizes its reach and ensures it connects with customers at every touchpoint.
Description | |
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Television Ads | High-impact advertising on TV channels to reach a broad audience. |
Radio Ads | Engaging audio advertisements on radio stations for increased brand awareness. |
Social Media | Strategic use of popular social media platforms like Facebook and Instagram to engage with customers and promote products. |
Email Marketing | Sending personalized emails to customers, providing updates on new products, exclusive discounts, and promotional offers. |
Online Ads | Strategically placing digital ads on websites and search engines to target specific customer segments. |
Tesco’s marketing through multiple channels helps the company maintain a strong presence in both traditional and digital spaces. This multifaceted approach enables Tesco to effectively engage with customers, increase brand visibility, and drive sales.
Tesco, with over 6,800 locations across Europe and Asia, is not only focused on its physical retail presence but also on its innovative digital grocery strategy. As the company aims to become the most successful retailer in the UK and globally, it recognizes the importance of providing a seamless shopping experience for its customers through eCommerce.
Tesco’s digital grocery strategy revolves around offering customers a convenient and efficient way to shop for groceries online. With the increasing popularity of eCommerce, Tesco has invested in its online platform to expand its customer base and enhance customer satisfaction.
Customer service is at the core of Tesco’s digital grocery strategy. The company emphasizes quality, dependability, affordability, and usability to ensure that customers have a positive experience when shopping online.
By leveraging technology and data-driven insights, Tesco strives to provide personalized recommendations and offers to its customers. This not only enhances the shopping experience but also strengthens customer loyalty.
Furthermore, Tesco’s emphasis on customer service extends to its delivery options. The company has expanded its rapid delivery service, “Whoosh,” to reach around 60% of the UK population. This allows customers to receive their groceries quickly and conveniently, reinforcing Tesco’s commitment to seamless and efficient service.
In addition to its robust digital infrastructure, Tesco also focuses on collaborating with suppliers to enhance the overall customer experience. By utilizing online sponsored search functionality and leveraging digital screens in stores, Tesco ensures that customers have access to a wide range of products and promotions.
With an impressive online availability of over 97% and a significant increase in perfect orders year-on-year, Tesco’s digital grocery strategy demonstrates its commitment to meeting customer demands and expectations.
In conclusion, Tesco’s innovative digital grocery strategy combines eCommerce with a focus on providing a seamless shopping experience and excellent customer service. By leveraging technology, data-driven insights, and collaboration with suppliers, Tesco continues to expand its customer base and strengthen its position as a leading retailer in the digital era.
Tesco, one of the leading global retailers, has implemented a range of effective corporate and business-level strategies to drive growth and achieve success in the highly competitive market. These strategies have contributed to Tesco’s strong market position and impressive financial performance.
Tesco has adopted a low price strategy as a core component of its business-level strategy. By offering competitive prices on a wide range of products, Tesco attracts value-conscious customers and maintains an edge over its competitors. Through effective cost leadership, Tesco continuously strives to optimize its operations and supply chain management, allowing the company to minimize costs and deliver savings to its customers.
Customer focus is at the heart of Tesco’s corporate strategy. The company continuously analyzes consumer preferences and behaviors to understand their needs and provide tailored solutions. Tesco’s customer-centric approach enables the development of innovative products and services that meet the evolving demands of its target market. Additionally, Tesco’s market development strategy involves expanding its operations into new geographical regions, tapping into untapped markets, and reaching a broader customer base.
Tesco places a strong emphasis on product development to attract and retain customers. By offering a diverse and high-quality product range, including fresh food and Tesco’s own-branded products, the company stimulates customer interest and strengthens its competitive position. Simultaneously, Tesco utilizes market penetration strategies to drive growth within existing markets. Through targeted marketing campaigns and promotions, Tesco aims to increase its market share and gain a larger portion of customer spending.
Overall, Tesco’s comprehensive corporate and business-level strategies, including its low price strategy, customer focus, cost leadership, market development, product development, and market penetration, have consistently delivered positive results. These strategies have contributed to Tesco’s strong market share, increased revenues, and continuous growth. As Tesco continues to refine and adapt its strategies, the company remains well-positioned for sustained success in the dynamic retail industry.
Market research and competitive analysis play a crucial role in the success of Tesco’s marketing strategy. By understanding the market trends , consumer behavior, and competitive landscape, Tesco can make well-informed data-driven decisions and stay ahead of the competition in the highly competitive retail industry.
Market research provides valuable insights into customer preferences, purchasing habits, and emerging trends. Tesco utilizes market research to identify new opportunities, develop effective marketing campaigns, and customize their product offerings to meet customer demands. By conducting comprehensive market research, Tesco can better understand customer needs and preferences, enabling them to tailor their marketing strategies to target specific market segments .
Competitive analysis allows Tesco to assess the strengths and weaknesses of its competitors. By understanding the competitive landscape, Tesco can identify key areas where they can differentiate themselves and gain a competitive edge. This analysis helps Tesco identify market gaps, improve their product offerings, and develop strategies to position themselves as market leaders.
Tesco’s commitment to market research and competitive analysis allows them to make data-driven decisions and stay ahead of the competition. By leveraging the insights gained through these practices, Tesco can anticipate market trends, develop effective marketing campaigns, and deliver tailored experiences to their customers.
Market research and competitive analysis are essential tools for Tesco to stay competitive and achieve their goal of maintaining a 5% extra competitiveness in marketing. These practices enable Tesco to make informed decisions, adapt to changing consumer preferences, and drive growth in the retail industry.
Tesco, as a global retail company, is dedicated to sustainability and focuses on implementing various environmental initiatives. Their commitment stems from their understanding of the importance of protecting the environment, engaging with the community, and prioritizing employee welfare as part of their corporate social responsibility efforts.
One of Tesco’s notable achievements is their commitment to sending zero food waste to landfill in the UK since 2009. They have achieved this by implementing effective waste management strategies and partnerships with organizations that help redistribute unsold food safe for human consumption. In fact, in 2022/23, Tesco redistributed 88% of unsold food, surpassing their 85% target set in 2016.
In addition to tackling food waste, Tesco has made significant strides in reducing overall food waste by 45% since 2016. As part of their ambition, they aspire to halve food waste by 2025 and have committed to achieving this goal five years ahead of the global target set by Champions 12.3 and the UN Sustainable Development Goals.
Beyond their food waste reduction efforts, Tesco demonstrates their commitment to sustainability through investments in renewable energy and sustainable sourcing. They have set ambitious goals to reduce their carbon footprint and increase the proportion of sustainable and fairly traded products in their stores.
Tesco’s commitment to sustainability is not without its challenges. The company faces competition from discount retailers, needs to adapt to changing consumer preferences, and comply with regulatory issues. However, they have shown resilience and adaptability by diversifying into financial services and insurance while maintaining their focus on customer service, innovation, sustainability, international expansion, diversification, and cost management.
With a market share of over 27% in the UK’s grocery retail sector, Tesco’s commitment to sustainability shines through their actions. They were the first FTSE100 company to commit to science-based targets aligned with the Paris Agreement’s 1.5°C target. Tesco aims to achieve carbon neutrality in their operations by 2035 and be net-zero across their entire footprint by 2050.
Through their initiatives, Tesco has achieved significant milestones, including a 52% absolute reduction in emissions from their operations in 2022 compared to a 2015 baseline. Over 90% of Tesco’s emissions footprint is captured by scope 3 indirect emissions within their value chain, giving them a clear focus for reduction efforts.
To support their sustainability goals, Tesco launched a revolving credit facility of 2.5 billion GBP tied to key performance indicators (KPIs), including greenhouse gas (GHG) emissions reduction. They also issued sustainability-linked bonds to finance their efforts, demonstrating their commitment and holding themselves accountable for meeting emission-reduction targets.
Tesco acknowledges the importance of collaboration in achieving their sustainability ambitions. In 2021, they initiated a supply chain finance initiative to help suppliers contribute to lower funding costs and align with Tesco’s environmental, social, and governance (ESG) priorities, with a focus on addressing scope 3 emissions.
These sustainability initiatives have garnered recognition, with Tesco receiving awards such as the Association of Corporate Treasurers Deals of the Year Awards and the Finance for the Future Awards. These accolades highlight Tesco’s dedication to sustainable practices and their positive impact on both the environment and society as a whole.
Table: Tesco’s Sustainability Milestones
Milestone | Year |
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Zero food waste to landfill achievement | 2009 |
88% of unsold food redistributed, surpassing target | 2022/23 |
45% reduction in food waste | Since 2016 |
Aims to halve food waste by 2025 | Ongoing |
Investments in renewable energy and sustainable sourcing | Ongoing |
Ambitious carbon footprint reduction and sustainable product goals | Ongoing |
Commitment to carbon neutrality by 2035 and net-zero by 2050 | Ongoing |
52% reduction in emissions from operations compared to 2015 baseline | 2022 |
Over 90% emissions within value chain (scope 3) | Ongoing |
Targets to reduce scope 1 & 2 emissions by 60% by 2025 | Ongoing |
Revolving credit facility and sustainability-linked bonds | Ongoing |
Supply chain finance initiative to address scope 3 emissions | 2021 |
Recognition through awards | Ongoing |
Despite the challenges they face, Tesco remains committed to sustainability, continually striving to reduce their impact on the environment and make a positive difference in the communities they serve. Through their comprehensive sustainability efforts, Tesco sets an example for other companies in the retail industry and beyond.
Tesco’s marketing strategy case study exemplifies its commitment to customer loyalty, digital outreach, and innovative retail campaigns. The company’s successful implementation of its marketing mix, understanding of buyer personas, and comprehensive digital marketing strategy have positioned Tesco as a leading retailer in the ever-evolving industry. By prioritizing customer loyalty programs, Tesco ensures a personalized shopping experience for customers, building trust and fostering long-term relationships.
Recognizing the importance of market expansion, Tesco has introduced same-day delivery options, emphasizing its commitment to market development. The company’s product lines, Everyday Value and Finest, have become the largest food brands in the UK, solidifying Tesco’s market presence. Despite facing competition from rivals with a wider product range, Tesco’s brand image centered around low prices reinforces its cost leadership strategy, attracting value-conscious customers.
However, Tesco’s journey towards a fully functioning social media marketing system is yet to be completed. Challenges include improving its digital presence, revamping outdated apps, and addressing functionality gaps, such as scheduling orders. To further enhance operational efficiency, a focus on subscription-based services is recommended, aligning with Tesco’s cost leadership strategy by improving planning and logistics.
With a strong financial performance, an extensive online customer base, and a positive brand image among customers, Tesco continues to thrive. As a retail giant offering more than 40,000 products across various store types, Tesco maintains its competitive advantage through strategic promotional offers, loyalty programs, and price strategies, enabling continuous growth and customer satisfaction.
How many stores does tesco have globally, what is tesco’s marketing mix, how does tesco understand its customers, what is tesco’s digital marketing strategy, what is tesco’s customer loyalty program, how does tesco market through multiple channels, how does tesco approach digital grocery shopping, what are tesco’s corporate and business-level strategies for growth, how does tesco utilize market research and competitive analysis, what is tesco’s commitment to sustainability, related posts:.
Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.
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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.
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 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 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:
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:
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 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 .
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:
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:
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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Change is a necessary part of any business’s growth and success. However, managing change can be a challenging task, especially for a company as large as Tesco.
The UK-based retail giant faced numerous challenges during its journey of growth, including increasing competition, changing consumer preferences, and economic uncertainties.
To overcome these challenges, Tesco embarked on a change management journey that transformed the company and enabled it to become one of the world’s largest retailers.
In this blog post, we will delve into Tesco’s change management case study, discussing the strategies the company employed to manage change, the challenges it faced, and the results and achievements of the change management program.
We will also examine the lessons learned from Tesco’s success story and provide insights into best practices for effective change management
Background of Tesco
Tesco is a British multinational retailer that was founded in 1919 by Jack Cohen. Initially, the company started as a market stall in London’s East End, selling surplus groceries from a stall.
In the 1920s, the company expanded its business by opening its first store in Burnt Oak, North London.
The company went public in 1947 and continued to expand its business throughout the UK in the following years.
By the 1990s, Tesco had become the largest supermarket chain in the UK.
However, despite its success, Tesco faced several challenges in the early 2000s. Increasing competition from discount retailers such as Aldi and Lidl, changing consumer preferences, and economic uncertainties had a significant impact on the company’s growth.
Tesco’s sales started to decline, and the company’s market share was shrinking. To address these challenges, Tesco’s management team realized the need for a change management program that would transform the company and enable it to regain its position as a market leader.
History and growth of Tesco
Tesco’s success story began in the early 20th century when Jack Cohen, the founder of Tesco, started selling groceries from a stall in London’s East End. By the 1920s, Cohen had established his first store in Burnt Oak, North London, under the name Tesco.
The name “Tesco” was derived from the initials of TE Stockwell, a supplier of tea to Cohen, and the first two letters of Cohen’s surname.
In the following years, Tesco continued to expand its business by acquiring other retailers and opening new stores throughout the UK.
By the 1970s, the company had become one of the largest supermarket chains in the UK. In the 1980s, Tesco introduced new products and services, including Tesco Metro stores, Tesco Express, and Tesco Clubcard, which enabled the company to enhance customer loyalty and increase sales.
In the 1990s, Tesco’s growth continued, and the company expanded its business beyond the UK by entering new international markets such as Poland, Hungary, and the Czech Republic. By the early 2000s, Tesco had become the largest supermarket chain in the UK, with over 2,500 stores worldwide.
However, the company faced several challenges in the early 2000s, including increasing competition, changing consumer preferences, and economic uncertainties, which had a significant impact on the company’s growth. Tesco’s management realized the need for a change management program that would transform the company and enable it to regain its position as a market leader.
Key Reasons of making changes at Tesco
There were several key reasons for the changes at Tesco, including:
Steps taken by Tesco to implement change management
To address the external and internal challenges, Tesco’s management team realized the need for a change management program that would transform the company and enable it to regain its position as a market leader. The changes that were implemented included a focus on cost reduction, improving customer service, and enhancing employee engagement.
To implement the change management strategy, Tesco took several steps, including:
Positive outcomes and results of change management by Tesco
The change management program implemented by Tesco resulted in several positive outcomes and results, including:
Final Words
Tesco’s change management program is an excellent example of how a company can successfully transform itself in response to external challenges and changing market conditions. The program was comprehensive and multi-faceted, addressing the company’s challenges from multiple angles. Tesco’s leadership commitment, communication strategy, and focus on cost reduction, customer service, and employee engagement were all critical factors in the program’s success.
The positive outcomes and results of the program demonstrate the importance of change management in driving organizational success. Tesco was able to recover from a period of declining sales and market share, and become a more efficient, customer-focused, and profitable organization. The lessons learned from Tesco’s change management program are applicable to businesses of all sizes and industries, highlighting the need for organizations to remain agile and responsive to changing market conditions.
Related posts.
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.
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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.
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.
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:
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.
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:
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.
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:
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.
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.
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.
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] :
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.
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:
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.
Mba student perspectives.
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:
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]
Exhibit 2: State of the art goods-to-person picking technology [6]
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]
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
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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9. Learning from Others 9.1 Introduction: Grouping by Business Models :Cautionary Tales 9.2 A Start 9.3 Coins International 9.4 Fine Art Ceramics 9.5 Halberd Engineering 9.6 Ipswich Seeds 9.7 Seascape e-Art 9.8 Whisky Galore :Case Studies 9.9 Amazon 9.10 Andhra Pradesh 9.11 Apple iPod 9.12 Aurora Health Care 9.13 Cisco 9.14 Commerce Bancorp 9.15 Craigslist 9.16 Dell 9.17 Early Dotcom Failures 9.18 Easy Diagnosis 9.19 eBay 9.20 Eneco 9.21 Fiat 9.22 GlaxoSmithKline 9.23 Google ads 9.24 Google services 9.25 Intel 9.26 Liquidation 9.27 Lotus 9.28 Lulu 9.29 Netflix 9.30 Nespresso 9.31 Netscape 9.32 Nitendo wii 9.33 Open Table 9.34 PayPal 9.35 Procter & Gamble 9.36 SIS Datenverarbeitung 9.37 Skype 9.38 Tesco 9.39 Twitter 9.40 Wal-mart 9.41 Zappos 9.42 Zipcar
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}
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}
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.
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}
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%
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.
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.
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.
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.
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.
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
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Executive Summary
South Koreans have amongst the longest working hours in the world, with young, upwardly mobile executives often too busy to go shopping for grocery at a traditional store. The UK's giant retailer, Tesco, sought to turn this disadvantage to its benefit. It introduced "virtual stores", which are essentially a display of products on walls of metro stations and bus stops. Commuters, especially the tech-savvy, ultra-busy lot, could scan the QR codes of the products on display with their smartphones, and place their orders even as they waited for their trains or buses. This case study looks at how Tesco "virtually" created a new market based on a country's lifestyle.
In 2011, when domestic sales of the UK's retail giant Tesco slumped, it fell back on its second-largest market, Asia, which accounted for 30 per cent of its total profit. Tesco's success in Asia, and specifically in South Korea - currently its largest market outside the UK - is based on its ability to adapt to the local consumer.
Tesco's expansion into Asia has been an important focus for the company since the late 1990s. Following its acquisition of Thailand's Lotus in May 1998, the company announced a 142-million investment in South Korea in March 1999 by partnering with Samsung to develop hypermarkets. Through its tie-up with Samsung, Tesco made a localisation effort to adapt its Homeplus stores to the local consumer.
The latest example of this localisation was the launch in 2011 of its first virtual store, located in a Seoul subway station, an idea based on the observation that the typical Seoul commuter did not have the time to shop at her nearest brick-and-mortar Homeplus store.
The Virtual Store
The virtual stores are set up in public spaces, most often in subways and bus stops with high foot traffic and frequented daily by tech-savvy commuters. This is how such stores work:
- Interested customers download the Homeplus app into their smartphones.
- They then use their smartphones to scan the QR codes of the products they want to purchase. The posters in the virtual stores are designed to resemble the actual aisles and shelves of a regular Tesco store, making the experience very user-friendly.
- The scanned products are stored in the customers' online shopping basket, who pay online once their order is completed. Homeplus reported that the majority of the orders are placed at 10 am and 4 pm, when people are commuting to and from work.
- Customers schedule a time for home delivery. Same-day delivery is the norm, so that customers can get their products by the time they get back home from work.
The virtual store has been a huge success with commuters and drove over 900,000 app downloads in less than one year, making the Homeplus app the most popular shopping app in South Korea. Online sales increased 130 per cent since the introduction of the virtual stores and registered app users increased by 76 per cent. In February 2012, Tesco Homeplus announced it was extending the virtual store concept to 20 new locations across the country. Today, there are 22 Homeplus virtual stores in South Korea, and the brand is the country's No. 1 online retailer.
Understanding the Consumer
South Korea, a country of around 50 million people, is the fourth-largest economy in Asia and the 12th largest in the world. Compared to other Asian countries, South Koreans generally have higher levels of education, higher average household income, and better living standards. Over the past few decades, the country has built itself up with its largest resource - people - and has achieved rapid economic growth through exports of manufactured goods. It is now a major producer of automobiles, electronics, steel and high-technology products such as digital monitors, mobile phones, and semiconductors.
Over the past decade, South Korea has advanced tremendously and has been shaped by constant innovation, technology and westernisation. In today's world, shopping habits and behaviour of South Korean consumers are impacted by several key factors.
Extensive use of technology/connectivity: According to a report by McKinsey & Co., South Korea is one of the most advanced countries in terms of broadband penetration, and has more than 10 million smartphone users. In other words, one in five South Koreans use a smartphone. Additionally, according to Nielsen, households in South Korea are making six per cent fewer shopping trips. When they do shop for products, an increasing number of South Koreans go online.
Long working hours/busy lifestyle: Although the average annual hours worked per person in South Korea is declining, the country still comes out top among OECD countries with 2,193 hours. This is perhaps unsurprising, as the work ethic and lifestyle of South Koreans get shaped at a young age. According to the BBC, South Korean parents spend thousands of pounds a year on after-school tuition on an industrial scale. There are just under 100,000 hagwons or private academies in South Korea and around three-quarters of Korean children attend them.
Travel time on public transportation: South Koreans spend a significant amount of time on public transportation, predominantly between home and work. What has helped is that public transportation is reliable and inexpensive, and is the fastest and most efficient way to get around.
The introduction of Tesco's virtual stores in subways made use of time spent by commuters waiting for public transportation, allowing buyers to use the little time they have available for grocery shopping. Not only did this change the way buyers shopped, it also increased the potential market for Tesco. These buyers may not have otherwise had time to go grocery shopping between their personal and professional lives, opting to buy take-out instead.
All of this implies that grocery customers in South Korea are more time-poor and less price-sensitive. They value convenience and technology to accommodate their busy lifestyle.
Tesco's Value Proposition
Customer segmentation: When you enter a new market/geography, companies need to understand and analyse consumer behaviour trends, including shopping habits and purchasing behaviour, to identify who the valued customers are and how they behave.
Adaptation of value proposition: If the needs, attitudes and lifestyle of the company's "value customer" are different in the new market/geography, the company needs to adapt its value proposition and value network across the entire supply chain.
Power of technology in traditional industries: Technology has a disruptive power in traditional industries, such as retailing. In this case, the predominance of smartphones in Korea allowed Tesco to boost its revenues through an innovative approach.
Innovative marketing: The way marketing can be used innovatively to target captured audiences (such as commuters waiting for the next train in a station).
Brand Extension: One option that Tesco Homeplus may have considered in order to take advantage of is to create a new brand for the virtual stores that would have remained independent from the Homeplus brand and, therefore, limited the risk to the Homeplus brand by increasing prices.
EXPERT VIEW
RETAILERS STRUGGLING TO DEVELOP COMPETENCIES TO SUCCEED GLOBALLY
Despite the popularity of globalisation in retailing, most retailers are still struggling to develop competencies to succeed in global markets. To what extent should the "original" format and merchandise be adapted is a major issue. Walmart learnt this the hard way when its initial entry into China had the wrong merchandise. On the other hand, Mexican customers were disappointed when they did not find enough imported US merchandise in the Walmart stores. Toys R Us has learnt that there are differences in consumption patterns. The Japanese demand electronic toys, other Asian consumers demand educational toys, Europeans favour traditional toys, while American kids prefer television- and movie-endorsed toys.
The Tesco case in South Korea demonstrates that despite the company's many problems, it has been a leader in developing multichannel solutions. With consumers preferring the convenience and selection of e-commerce, traditional brick-and-mortar retailers are challenged to address how to serve this customer profitably. The home-delivery option is much valued by consumers but cannot be as profitable as the traditional store. Therein lies the dilemma.
VIRTUAL STORES COULD SEE ACCEPTANCE LARGELY FOR TOP-UP OR IMPULSE PURCHASES
Copyright©2024 Living Media India Limited. For reprint rights: Syndications Today
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Tesco PLC is one of the largest retailers located in the U.K. Over the years, the company has been through challenges, ups, and downs. This case study analysis focuses on Tesco’s past performance, future strategy, and its implications. It seeks to look into the areas the company should focus on in order to bolster the company's future financial performance.
Anupam Mehta; Utkarsh Goyal; Sanchit Taneja Harvard Business Review ( W17163-PDF-ENG ) March 13, 2017
What course of action would enable Lewis to improve Tesco’s value for shareholders? What area(s) should be focused on in order to bolster the company’s financial performance?
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Tesco, one of the largest U.K.-based retailers, has been through its ups and downs during the last six years. This memo aims to analyze the company’s past performance, future strategy, and its implications.
Over the last six years, Tesco has improved its liquidity position. The current ratio increased from 0.68 in 2011 to 0.75 in 2016. This increase can be attributed to an increase in cash and cash equivalent, and a simultaneous decrease in accounts payable over the last six years. However, the current ratio and quick ratio are below the standard, i.e., 01.
Moving on, the company also improved its collection cycle. Inventory turnover and accounts receivable turnover increased while, on the other hand, average days of payables outstanding decreased. If one looks at the debt ratio, it increased from 0.65 in 2011 to 0.80 in 2016. This can be attributed to the company’s expansion in the U.K. and internationally.
On the other hand, the interest coverage ratio declined from 11.44% to 1.21%, which can be the result of declining operating profit over the years.
Furthermore, Tesco’s profitability ratios declined over the past six years. The profitability ratios exhibited an upward trend in 2012 as compared to 2011, but since 2013, the profitability has declined until 2015.
One of the main reasons behind this decline could be the slowdown of the U.K. economy, projecting a decline in retail sales by 0.2% every year until 2020. Although the company experienced a decline in profit from 2011-2014, it never experienced a loss.
Shockingly, in 2015, Tesco posted a loss of £6.38 billion, which could be largely attributed to the loss of customer trust due to financial scandals in 2014.
In 2015-16, the company’s CEO focused on cost management, thus reducing the cost of goods sold and operating costs, enabling the company to achieve an operating profit of £1.05 billion in 2015-16.
As per DuPont’s system of analysis, total asset turnover decreased slightly from 2011 to 2016, and the financial leverage ratio increased from 2.85 in 2011 to 5.09 in 2016, but the net profit margin decreased considerably from 4.38% to 0.4% in 2016. In other words, a decrease in net profit margin is the main reason behind Tesco’s declining financial health.
Tesco’s revenue decreased by 2.2% from £60,931 million in 2011 to £54,433 million in 2016. In order to increase the company’s revenue, the company should improve its sales in international stores because of two reasons.
Firstly, in 2016, the company earned about 19.1% of its total revenue from international sales, which means that there is potential to grow internationally.
Secondly, due to the slowdown of the U.K.’s economy, Tesco’s retail sales are projected to decrease each year by about 0.2%, acting as a natural barrier to sales growth in the U.K. One way of improving sales in international stores is by…
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Home » Management Case Studies » Case Study: Tesco’s US Grocery Market Entry
Tesco is currently the UK’s most successful supermarket with a UK market share in excess of 30% and annual profits of some £2bn. It is the world’s fourth largest retailer. The company has developed internationally over the past 10 years particularly in Central and Eastern Europe and the Far East. International expansion is a key element of Tesco’s strategic development particularly as opportunities for further expansion in the UK become increasingly limited.
In February 2006 Tesco announced that it was planning to enter the US retail grocery market. Tesco planned to invest around $400m ( £220m) per annum, over a five year period, in its US venture. This was estimated to be sufficient to pay for between 100 and 150 stores in the first year of operation. Tesco undertook detailed market research including visiting shoppers at home to see what they bought and asking people to keep a food diary to observe what they consumed. A mock store was built in a warehouse on an industrial estate to help develop the model for the US market. This had to be kept secret to avoid competitors obtaining knowledge of Tesco’s plans and the stock for the mock store was purchased in the eastern states of America and shipped to California. The proposed market entry caused a great deal of interest in the USA where Tesco was expected to raise a serious competitive challenge to existing food retailers including Trader Joe’s, 7-Eleven, Kroger, Safeway, and Wal-Mart. Tesco thought that 7-Eleven with more than 5000 stores nationwide and Trader Joe’s (owned by the German company Aldi) with some 300 branches would be their major competitors. Tesco believed that its strategic format would enable it to undercut its main competitors prices, with the exception of Wal-Mart, by between 10% to 25%
Tesco planned to introduce the British model into the USA believing that this would provide an element of competitive advantage in a highly competitive market where small food retail outlets are relatively unknown. It was agreed that the first stores would be located on the West Coast of the USA in California, Arizona and Nevada. Unlike their other international operations it was decided not to use the Tesco brand name. The stores were to be named ‘Fresh & Easy’ and referred to as Neighbourhood Markets. If the initial stores proved successful then a move into other areas of the west coast of the USA would take place.
The first ‘Fresh & Easy’ store was opened on 8 November 2007 in the town of Hemet east of Los Angeles with a further four opening in Las Vegas on 14 November. The company planned to open a further 100 outlets in the following 12 months. By mid – July 2008, 71 ‘Fresh & Easy’ outlets were in business. The format of the new stores came as something of a surprise to American consumers. The muted green branded stores are bright and clean with a bias towards fresh and organic foods much of which is pre-packed, a relatively unusual feature in the USA. Around half of the products are ‘Fresh & Easy’ ‘own brands’ including high ‘value-added’ ready meals. This, again, is unusual in America where brands dominate the food retail scene. First perceptions by some customers at the Hemet store were that prices were relatively high and that people were ‘looking’ rather than ‘buying’. In addition there are no in-store checkout staff and customers are required to scan the bar codes on their purchases before paying. This means that many of the products on sale have to be packaged to carry a barcode which somewhat undermines the company’s environmental claims.
However, Tesco continued to experience problems because of the financial and economic crisis which hit the USA in mid-2007 and which has seen consumer expenditure fall dramatically in some parts of the country. Three of the States (California, Arizona and Nevada) in which Tesco established ‘Fresh & Easy’ have been the most seriously affected by the economic crisis and this has created fresh problems for the company. In January 2009, to counter these problems, a range of 98cent products and $1 special offers were launched along with ‘$6 off’ coupons for customers who spent more than $30 in a single visit. The company has claimed that the 98c packs increased sales by 11%. This is a competitive strategy which may work in the current economic climate and some analysts have argued that ‘Fresh & Easy’ may benefit as shoppers trade down to lower priced stores. Some analysts continue to argue that Tesco’s attempt to enter the US market has been a failure and that the company should withdraw. Piper Jaffray has estimated that if Tesco were to withdraw from the US venture it will have cost the company £1bn.
Tesco’s expansion into the USA has not been without its critics. The company’s environmental claims have come under scrutiny, along with its property strategy, its non-unionization policy in a relatively strongly unionized sector of business and its refusal to sign a community benefits agreement. Community benefits agreements are used by stores in the USA to gain customer loyalty. Tesco, in turn, has countered these criticisms. Tesco’s Annual Review Statement for 2008 contained the following comment on its American venture, ‘The early responses of customers to our offer has surpassed our expectations with our research regularly confirming that they like the quality and freshness of our ranges, as well as the prices and convenient location of the stores’.
Will Tesco succeed where others have failed?
1. Why do you think that Tesco decided to expand into the highly competitive US market when almost all of its previous international activity had been either in the transformation economies of Eastern and Central Europe or the emerging economies of the Far East?
3. Why do you think that Tesco will not achieve its original target for store openings by 2010?
4. How do you think that Tesco should define ‘success’ in terms of its entry into the US market. Should Tesco put a time limit on its market entry activity? If so, what might that time limit be?
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Tesco, a leading UK supermarket, has been utilizing product analytics to revolutionize its operations and customer experience . By leveraging big data, Tesco addresses numerous challenges , such as stock optimization, customer targeting, and even waste reduction.
Tesco, founded in 1919, has grown from a single market stall in East London to one of the world’s largest retailers. With operations in multiple countries and thousands of stores, Tesco serves millions of customers every week. However, like all retailers, Tesco faces significant challenges such as fluctuating consumer preferences, managing a vast inventory, and intense competition.
The retail industry is notoriously dynamic, with trends and consumer behaviors constantly shifting. To remain competitive, companies must be agile, adapting to these changes quickly. This is where product analytics becomes invaluable, allowing businesses like Tesco to respond to market demands with precision.
Product analytics involves collecting and analyzing data related to a company’s products. This data can include sales figures, customer feedback , inventory levels, and online behavior. By leveraging product analytics, retailers can gain insights into their products’ performance , identify trends, and make data-driven decisions to optimize their operations.
Key metrics in product analytics include:
The Problem
Tesco faced a challenge that was familiar to many retailers: managing inventory for perishable goods. With a vast array of fresh produce, dairy, and meat products, Tesco needed to ensure they were stocked efficiently to meet customer demand without wasting excessively.
Data Collection
To tackle this challenge, Tesco leveraged its extensive data collection systems, which included point-of-sale (POS) data, customer loyalty program insights, and online shopping behavior. These data sources gave Tesco a comprehensive view of customer preferences and purchasing habits.
Analytical Tools
Tesco utilized advanced analytical tools, including predictive analytics and machine learning algorithms, to process and analyze the vast amounts of data collected. These tools allowed Tesco to forecast demand accurately, optimize product placement, and adjust inventory levels in real time.
Data Analysis
Tesco’s data analysis revealed that certain perishable items, such as fresh produce, had inconsistent demand patterns that varied by store location and time of year. By analyzing these patterns, Tesco identified opportunities to optimize inventory levels, reduce waste, and ensure that customers always found fresh products on the shelves.
Actionable Insights
One actionable insight was the realization that product placement significantly impacted sales. Tesco discovered that placing high-demand perishables at the front of the store increased their visibility and, consequently, their sales. Additionally, by adjusting the inventory levels based on real-time data, Tesco reduced waste by 20% in specific product categories.
Real-world Example
For instance, in one of its regional stores, Tesco noticed a surge in demand for organic produce during summer. By preemptively adjusting inventory levels and enhancing the display of these products, Tesco not only met the increased demand but also minimized stockouts, leading to a 15% increase in sales for that category.
Key Results
The implementation of product analytics had a profound impact on Tesco’s operations. The company saw a significant reduction in waste, particularly in its fresh produce category. This improved Tesco’s sustainability efforts and led to cost savings. Moreover, the optimized inventory levels ensured customers had access to fresh products, enhancing customer satisfaction .
Long-term Benefits
Beyond the immediate improvements, Tesco’s use of product analytics has provided long-term benefits. The ability to forecast demand with greater accuracy has led to more efficient supply chain management, reduced operational costs, and improved profit margins. Additionally, by continuously refining its product offerings based on data-driven insights, Tesco has strengthened customer loyalty and maintained its competitive edge in the retail market.
Challenges Faced
While Tesco’s journey with product analytics has been largely successful, it was not without challenges. One major obstacle was integrating disparate data sources into a cohesive analytics platform. Ensuring data accuracy and consistency across all systems required significant investment in technology and training.
Best Practices
For retailers looking to emulate Tesco’s success, several best practices can be gleaned:
Scalability
These practices are not limited to large retailers like Tesco. Smaller businesses can also benefit from product analytics by starting with more straightforward tools and gradually scaling their analytics capabilities as they grow.
Tesco’s use of product analytics is a compelling case study for how data-driven insights can revolutionize retail strategy . By effectively managing inventory, optimizing product placement, and reducing waste, Tesco has improved its bottom line and enhanced the customer experience. As the retail landscape continues to evolve, those who harness the power of product analytics will be best positioned to thrive in this competitive industry.
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In this case study, we explore how mpro5 revolutionises the logbook process, transforming it from paper to an innovative platform for britain's largest retailer., introduction to in-store compliance.
Over a decade ago, we began our partnership with Tesco, supporting them in maintaining store cleanliness.
Now, we have expanded our collaboration to encompass over 30 different service lines. With an impressive 160,000 users equipped with mpro5, they have successfully completed an astonishing 90 million flows and scheduled 113 million tasks. Our mpro5 app offers them a vast selection of over 350 workflows to utilise.
Throughout the years, we have closely worked with Tesco, jointly developing their mpro5 retail solution, which has brought us to this remarkable milestone.
We take immense pride in our contribution to the agile and effective digital transformation of Britain's largest retailer.
Together, we have consistently delivered exceptional value to our customers, revolutionising their processes with our comprehensive and efficient digital service.
"THIS NEW DIGITISED SYSTEM FOR OUR LOGBOOKS IS GREAT, IT’S EASIER TO USE AND HARDER TO GET WRONG"
John Lamont, Head of Capacity at Tesco
We’ve delivered streamlined compliance and operations processes that have saved Tesco millions every year.
Digitalisation of in-store logbooks allowed Tesco to cut the number of daily checks down by 63% and reduce the number of slips and trips claims made against the company by 60%. Our automated corrective actions mean that as soon as an issue is identified, managers know about it and a job is assigned to fix the issue, closing the feedback loop and ensuring nothing gets forgotten. But digitalisation has also had a profound impact on the company culture, driving much deeper insight into their compliance data, and providing employees with a tool they strongly feel has empowered them in their roles. We have also saved Tesco millions every year in paper costs, helping them to create more sustainable retail operations both in-store and in the office.
"MPRO5 IS THE MOST AGILE PLATFORM IN OUR BUSINESS: IT GOT US FURTHER DOWN THE LINE IN 3 WEEKS THAN OTHER SYSTEMS GOT TO IN YEARS."
Senior Legal Ops & Compliance, Tesco
Tesco, one of the leading retail giants, faced a significant challenge due to their reliance on outdated manual and paper-based processes. These archaic methods were not only causing hindrances but were actually detrimental to the overall success of the business.
One of the major consequences of this outdated system was the difficulty in verifying data, particularly when it came to ensuring essential retail compliance. With employees juggling numerous tasks, it became tempting for them to hastily fill out logbooks without properly adhering to the prescribed procedures.
As a result, crucial compliance and operational data became scattered across more than 160 paper logbooks throughout the company. This made it incredibly arduous to navigate through the information and virtually impossible to gain any meaningful insights until the next audit.
The lack of a streamlined process also posed challenges in identifying and implementing follow-up and corrective actions within Tesco's stores. Moreover, tracking these actions at a management level proved to be even more challenging, making it difficult to ensure their completion.
Recognising the need for a transformation, Tesco sought a solution that would alleviate these burdensome processes and enable them to operate more efficiently.
As the business expanded and continued to thrive, it became increasingly crucial to address the challenges posed by the disjointed approach to data management. Resolving this issue was essential not only to enhance compliance measures but also to safeguard the interests of both the customers and the overall business. With a growing customer base and an ever-evolving retail landscape, it was imperative to streamline processes and eliminate the burdensome reliance on manual, paper-based systems.
By doing so, Tesco could ensure accurate and verifiable data, enabling them to not only meet essential retail compliance standards but also gain valuable insights for informed decision-making. This transformation would facilitate easier navigation and visualisation of critical operational data, empowering the company to identify and implement necessary follow-up actions promptly.
Furthermore, it would provide a holistic view to management, allowing them to effectively track the progress of these actions and ensure their completion. Ultimately, by embracing a more efficient and integrated approach to data management, Tesco aimed to protect the interests of their valued customers and fortify the foundation of their thriving business.
"WE NEEDED TO IMPROVE OUR REPORTING INTERNALLY"
Piece by piece, we meticulously transformed complex processes into seamless and efficient workflows that can be effortlessly completed on the go using our innovative mobile app. By integrating mpro5 into Tesco's back-office analytics solution, we provided them with a comprehensive view of their data, tailored to their specific needs and preferences.
Furthermore, we customized mpro5 to automatically generate remedial actions whenever an issue arises. For instance, if a refrigerator temperature check indicates that it is too high, our intelligent system immediately alerts the maintenance team, providing them with precise details regarding the problem's location and nature. This cutting-edge platform then diligently monitors the progress of the assigned task, ensuring that Tesco's managers are promptly informed once the issue has been successfully resolved.
All of these remarkable capabilities unfold in real-time, offering unparalleled visibility into Tesco's operations. Not only does this real-time insight empower decision-making, but it also motivates swift and effective actions, driving continuous improvement across the organisation. By seamlessly integrating technology and processes, we have successfully fostered a culture of innovation and efficiency within Tesco, leading to enhanced performance and unparalleled customer satisfaction.
It was crucial for Tesco to ensure a seamless adoption of mpro5, with a focus on making it user-friendly for their employees. To achieve this, we brainstormed innovative ideas and came up with the concept of 'Bring Your Own Device.' This approach allows users to voluntarily utilize their personal smartphones, promoting convenience and familiarity.
By encouraging employees to use their own devices, Tesco not only eliminates the need for additional hardware expenses but also taps into the convenience of using a device they are already comfortable with. This familiarity enhances the overall user experience, making it easier for employees to navigate the app and quickly adapt to the new digital processes.
The 'Bring Your Own Device' strategy not only ensures a smoother transition but also fosters a sense of ownership among employees. By empowering them to use their own devices, Tesco instills a sense of pride and responsibility, further motivating them to embrace the mpro5 solution and actively participate in the digital transformation.
Through this ingenious idea, we have successfully streamlined the implementation process, making it hassle-free and maximizing efficiency right from the start. Tesco's employees can now seamlessly integrate mpro5 into their daily routines, leveraging their own devices to access the app's features effortlessly.
This forward-thinking approach not only simplifies the adoption process but also enhances employee satisfaction. By allowing them to use their preferred devices, Tesco acknowledges their individual preferences and values their comfort and convenience. This, in turn, boosts morale, increases productivity, and supports a positive work environment.
Overall, the 'Bring Your Own Device' concept has been instrumental in ensuring a smooth and user-friendly adoption of mpro5 at Tesco. By leveraging employees' own smartphones, we have created a seamless and familiar digital experience that empowers them to embrace the mobile app with ease.
"WHEN USING OTHER SOFTWARE, 90% OF OUR COLLEAGUES SAY: 'WHY CAN'T IT BE MORE LIKE MPRO?' "
Here are just a few of the key digital service lines that mpro5 support within Tesco to ensure air tight compliance and efficient and consistent operational standards across all stores.
Not quite convinced yet click below to explore more of our use cases and success stories in different businesses and industries. or head over to our retail page to find out more about the mpro5 platform..
Created a 360 feedback programme to fit Tesco’s culture
Simple 360 reports to inform personal development plans
Faced with a changing retail landscape, Tesco conducted a review of their business, leading to a new strategy and business priorities. One aim was to foster a warmer culture where colleagues feel listened to and inspired by their manager. 360 degree feedback is a first step for managers to understand their strengths and development needs.
Tesco asked us to create an intuitive 360 degree feedback programme. We designed questions that replicate the same language used by Tesco internally, using a conversational style.
The 360 feedback system we devised enables quick completion with users guided through every step. Reports too are designed to be equally user-friendly.
Look and feel is also important for Tesco as Jon Sale, Group Head of Talent at Tesco, explains:
“We needed the 360 tool to feel the same as the other materials our people were already using in relation to the key leadership skills. Everything at Tesco should be simple and we wanted this to be too – quick to use, simple to complete, ensuring our colleagues would ‘get it’ – and more importantly, want to use it.”
“Also, the introduction of a summary report gives our 360 participants a really quick and accessible overview of their results. They’ve found it particularly insightful to see their strengths, development areas and perception gaps in one place.”
Tesco is a great example of how to maximise the benefit of a 360 programme. They use the 360 tool to serve a number of different people programmes. Senior managers and directors participate in 360 feedback as a precursor to the ‘Leaders at Tesco’ training programme. This highlights strengths and development needs versus the new leadership skills. Results then help shape personal development plans. 360 is also proving to be an effective tool for other job levels too. This includes high-potential employees for whom it is helping highlight development needs and inform career conversations. With 360 degree feedback being well established, another identified opportunity is to encourage the use of 360 during the performance review process. The “Inspiring Great Performance” programme aims to re-frame performance management, with an emphasis on constructive, honest conversations. It focuses not only on what an individual has achieved, but equally how they have achieved it. Using the 360 tool as a key measure of the “how” has been a natural evolution.
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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 ...
This case study looks at how Tesco "virtually" created a new market based on a country's lifestyle. In 2011, when domestic sales of the UK's retail giant Tesco slumped, it fell back on its second ...
This paper is an analysis of the case study "TESCO- LOSING GROUND IN THE UK?" written by Perepu (2013). The analysis is about why, Tesco, after dominating the UK retailing for about 25 years, is losing market share? Although the UK and global economic recession created a negative impact on the retail industry, Tesco's
Tesco, a supermarket chain, has been transformed from a third-rate retailer to a global leader in the past ten years. This case describes how that was accomplished. Interviews with Tesco employees explain the company's approach to understanding customers, motivating employees, succeeding on the Internet, and creating an international strategy.
Tesco's science-based target was approved by the Science Based Targets initiative (SBTi) in June 2017. As a member of RE100 , brought to you by The Climate Group in partnership with CDP , Tesco is committed to sourcing 100% of its electricity from renewable sources by 2030 - to include over 50% from PPAs and on-site generation - and has ...
This case study analysis focuses on Tesco's past performance, future strategy, and its implications. It seeks to look into the areas the company should focus on in order to bolster the company's future financial performance. Anupam Mehta; Utkarsh Goyal; Sanchit Taneja Harvard Business Review (W17163-PDF-ENG) March 13, 2017. Case questions ...
Case Study: Tesco's US Grocery Market Entry. Tesco is currently the UK's most successful supermarket with a UK market share in excess of 30% and annual profits of some £2bn. It is the world's fourth largest retailer. The company has developed internationally over the past 10 years particularly in Central and Eastern Europe and the Far East.
The Case Study: Tesco's Use of Product Analytics. The Problem. Tesco faced a challenge that was familiar to many retailers: managing inventory for perishable goods. With a vast array of fresh produce, dairy, and meat products, Tesco needed to ensure they were stocked efficiently to meet customer demand without wasting excessively.
Discover TESCO's customer experience strategy, 6 pillars, digital disruption implications, and strategic recommendations.
2.2 Case study of Tesco. Tesco, currently the largest domestic supermarket brand in the UK, has been expanding through its branding strategy for nearly 30 years, eventually overtaking Sainsburys and taking the lead (Palmer, 2005). The success story of Tesco, the largest domestic supermarket brand in the UK, which has expanded over the past 30 ...
Case Study - Tesco - Free download as Word Doc (.doc / .docx), PDF File (.pdf), Text File (.txt) or read online for free. Tesco is a British multinational grocery and general merchandise retailer founded in 1919 that has grown to become the third largest retailer in the world. It started as a sole proprietorship and incorporated as a private limited company in 1947 to fund future growth.
With an impressive 160,000 users equipped with mpro5, they have successfully completed an astonishing 90 million flows and scheduled 113 million tasks. Our mpro5 app offers them a vast selection of over 350 workflows to utilise. Throughout the years, we have closely worked with Tesco, jointly developing their mpro5 retail solution, which has ...
Tesco asked us to create an intuitive 360 degree feedback programme. We designed questions that replicate the same language used by Tesco internally, using a conversational style. The 360 feedback system we devised enables quick completion with users guided through every step. Reports too are designed to be equally user-friendly. Look and feel ...