Ankit Jain

Tesco is one of the worlds largest retailers with operations in 14 countries, employing over 492,000 people and serving millions of customers every week.

 Tesco is a British multinational grocery and general merchandise retailer headquartered in United Kingdom. It is the third-largest retailer in the world measured by revenues (after wal mart and carrefour) and the second-largest measured by profits (after WalMart). It has stores in 14 countries across Asia, Europe and North America and is the grocery market leader in the UK

 The company was founded in 1919 by Sir Jack Cohen as a group of market stalls. The first Tesco store opened in 1929 in Burnt Oak, MiddleSex. His business expanded rapidly, and by 1939 he had over 100 Tesco stores across the country

 Tesco is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index had a market capitalisation of approximately 24.4 billion as of 15 January 2012, the 15th-largest company of any company with a primary listing on the London Stock Exchange

Businesses
Technika brand name for electronic products Telecoms operates mobile phone, home

phone and broadband businesses

Fuel Tesco started selling petrol,desil in 1974

Tech support Tesco acquired a small I.T.

support company called The PC Guys in 2008

 FILM MAKING In 2010 Tesco started funding a small film studio intended to produce Tesco exclusive direct-to- films Banking Tesco has a banking arm called Tesco Bank, formerly a 50:50 joint venture with the Royal Bank of Scotland

SWOT Analysis

SWOT Analysis
Strengths Tesco is ranked third largest grocery retail company in the world, operating over 4,331 stores primarily within the USA, Europe and Asia. The company held 30.7% share of the UK grocery retail market in 2010. A strong financial performance has been shown by the company over the years, which underlines its strategic capabilities. Tesco is a 54billion turnover company recording an increase of 14.9% when compared to 2008. The foremost strategy that has been adopted by the company is the product and services customization in accordance with the market demands. The efficiency in performance of the company over the last decade can be summarised with the help of growth in following key indicators

 Tescos strategy aims to focus on product affordability which ensures that customer gets the product to suit their budget without compromising on the quality. During 2009 the sales from online non-food retail company Tesco Direct have increased by over 50% (Tesco, 2010). Tesco has a proven customer retention strategy with the help of its loyalty scheme called Tesco Clubcard . The company uses data collected from this loyalty scheme in its powerful CRM systems named Crucible and Zodiac, and this information is then used for effective direct marketing and various other promotional techniques.

 Tesco online: Tesco.com is the world's biggest online supermarket and year 2011 the group had sales of over 577 million, an increase of 29% on year 2010. Tesco online now operates in over 270 stores around the UK, covering 96% of the UK. With over a million households nationwide having used the company's online services, the company has a strong platform to further develop this revenue stream. Brand value: Profits for Tesco's operations in Europe, Asia and Ireland increased by 78% during the last fiscal year. The company has a strong brand image, and is associated with good quality, trustworthy goods that represent excellent value. Tesco's innovative ways of improving the customer shopping experience, as well as its efforts to branch out into finance and insurance have also capitalized on this.

Weaknesses
Tesco has not been able to perform well over the last

year as compared to its competitors. According to Mintel

(2010), a number of products were recalled by Tesco in 2009 that has resulted in a financial loss as well as damage to its brand image. These included companys value lines, which have been marketed as high quality

cheaper alternatives to key brands.

Reliance upon the UK market: Although international business is still growing, and is expected to contribute greater amounts to Tesco's profits over the next few years, the company is still highly dependent on the UK market (73.8% of 2003 revenues). While this isn't a major weakness

in the short term, any changes in the UK supermarket

industry over the next year for example, like the Morrison's group successfully purchasing the Safeway chain could alter the balance of UK supermarket power, and affect share.

Opportunities

It is estimated that Tesco's non-food sales will double over the next four years. Worldwide it has sales of 7 billion in non-food, some 23% of the total. Its aim to be 'as strong in nonfood as we are in food.

Around half of new space opened in the UK last year was for non-food and the result has been to increase its market share from 5% to 6% and its overall share of UK retail sales has increased by 100 basis points to 12.8%.
It has been predicted that there will be a rise from 125 billion in 2009 to 145 billion in 2014 in the food retail market segment. This is mainly due to the fact that even during times of recession, food retail is the toughest segment since having enough to eat is the priority.

Threats
Wal-Mart/Asda challenge: Since the US shopping giant Walmart purchased Asda, Tesco's rank as the top UK supermarket

has been threatened. Asda can now compete extremely well

on price and range of goods. For the moment, Asda is the third largest supermarket in the UK, just behind Sainsbury's and then Tesco. However, Asda closed the gap on Sainsbury's , leaving the company to directly challenge Tesco's dominance.

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

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

International expansion: International growth is expensive.

Entering new markets with a new brand requires heavy investment and marketing, as well as land prices and extra distribution and operation expense. Tesco's debt may increase before it begins to decline. Korea is contributing a good proportion of Tesco's international profit growth. If profits continue to grow in this way, Korea will probably represent one-third of Tesco's international profits in

2003. Korean consumer spending is currently quite low, and

coupled with the country's current unrest, and Tesco's large investment, this represents a high risk area for Tesco

PESTEL

POLITICAL
Chinas accession to the WTO has promoted a free flow of foreign trades by removing all barriers encouraging Western companies, including Tesco, to make way into the worlds most profitable market encompassing over 1.3 billion people. In 2009 an agreement was signed by Tesco to set up a premeditated series of joint ventures for the development of shopping malls in China. This joint venture included three malls: Anshan, Fushan and Qinhuangdao.

POLITICAL
The growth of Tescos international business segment is on the rise and it is predicted to account for one quarter of the companys profit. Immersion of 10 further countries into the European Union (EU ) took place in 2004 promoting trade between Western and Eastern European countries (BBC, 2009). This has provided Tesco with a platform to expand its retail network across the EU.

ECONOMIC
Economic factors are a matter of concern for Tesco since they impact directly on the buying behaviour of customers. Although the UK economy was declared officially under recession in 2008, the governments substantial reduction in interest rates helped to minimise further rises in unemployment during 2009 (Euromonitor, 2010). As a result of this, the spending power of consumers is again on a steady rise as they are more confident about their current financial situation.

ECONOMIC
However, the positive aspect of recession is that the customers eat out less and eat more at home which provides opportunities for grocery retailers like Tesco to increase their output. It must be noted that food is the last thing that customers will cut back on. The percentage of overall consumer spending on food has risen considerably over the years, as shown below.

SOCIAL
An analysis of the UK population shows that there are more retired people than children representing the Baby Boom generation 2010. The ageing population is discouraging for the food retailers older people tend to eat less. They are less likely to travel to supermarkets to shop compared with the younger generation. Although internet literacy level drops over the age of 65 years within the population. It has nevertheless been predicted that the ageing population would find online shopping more convenient.

SOCIAL
Consumers attitude towards food is incessantly changing as they have become more health- conscious. An increase in the demand for organic food has been accommodated by Tesco to reflect this change in demand. Payment by cheques and cash at the checkout was first made possible by Tesco .

TECHNOLOGICAL
One of the key macro-environmental variables that have directly influenced the supply chain, operations and processes of grocery and food retailers is technology. The operation of supermarkets is being affected by the use of the Internet through online grocery retailing, which is showing steady growth. Subscriptions to the Internet have grown by over 50% and it has been estimated that the Internet is being used by 70% of the population in the UK 2010.

TECHNOLOGICAL
Loyalty programs are being introduced through information technology which discourage customers from switching over to their competitors. Mobile technology has also taken off as a platform for distribution within food retailing. New Wine App developed by Cortexica Vision Systems, for example, has been used by Tesco since 2009 via which the customers are directed to Tesco Wine enabling them to buy the selected wine directly from their mobile phone.

TECHNOLOGICAL
Online retail shopping has gained considerable popularity due to the increased access to broadband internet in the UK. It has been highlighted by Keynote (2010) that the number of broadband users in the country is 15.5 million which accounts for 70% of the overall market.

ENVIROMENTAL
Environmentally friendly, reduced packaging is being promoted by the Government. It has been found by the Office for National Statistics (2010) that the percentage of consumers using reusable bags has risen from 71% to 74% and that those trying to cut down the number of plastic bags they take from the shops has risen from 65% to 68%. This assists in reducing the overall cost and is good for Tescos corporate social responsibility image.

ENVIROMENTAL
Due to the consumer awareness of the carbon footprint of the firm (Wood, 2009), Tesco has added carbon footprint data on dairy products, potatoes and orange juice, and aims at expanding it to bread and non-food items in 2010 (Tesco, 2010). Tesco has introduced its Greener Living Scheme to give consumers advice on environmental issues, including how to reduce food waste and their carbon footprint when preparing meals

ENVIROMENTAL
Consumers reusing bags, recycling mobile phones and aluminium cans and preferring bagless deliveries are being rewarded through Tescos green Clubcard points.

LEGAL
It has been predicted that VAT would have to rise to 20% since the Government has to finance a huge budget deficit. This will affect the non-food sectors of Tesco, such as clothing. Drawing upon the Low Pay Commission Report , the 2008 and 2009 combined up-ratings have resulted in an increase in the minimum wage of 15.5%. This will result in an increase of operating costs of supermarkets.

Marketing

Marketing

The Tesco Marketing Philosophy

Understand customers better
Drive trade through than Little Helps Every anyone

Making Tesco available

Delivering the Every Little Helps shopping trip

Drive trade through quality and need

Saying Thank you

Making Tesco Available

Hyper Market
Very large stores offering the maximum food and non-food range Area-7500 sq mt

Super Store
Large stores offering a full range and many non-food products

Area-3600-1900 sq mt

Express
Shops in city shopping areas aimed at workers, shoppers and local residents Petrol station forecourt shops selling a range of everyday products

Delivering the Every Little Helps shopping trip

THE AISLES ARE CLEAR

I CAN GET WHAT I WANT

THE PRICES ARE GOOD

I DONT QUEUE

If there is more then one customer in front of you at the check out, well always aim to open another until all our check out are open

THE STAFF ARE GREAT

To be treated with respect An interesting job An Opportunity to get on

Drive trade through quality and need

INTERNET
Tesco is proud to BE awarded Multi-Channel Etailer of the Year in the prestigious Oracle World Retail Awards 2011 Expanded to international markets Asia and Europe as well

Saying Thank you