Inquiry Based Learning in Retail Industry: Analysis of Tesco Plc

This report explores the trends in the retail industry, with a focus on the analysis of Tesco Plc. It discusses the impact of Covid19 on the retail sector, the emerging trends in the UK's economy, and provides recommendations for Tesco Plc to adapt to the changing marketplace.

Inquiry Based
Learning

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
The trends in retail industry........................................................................................................3
Analysis of Tesco Plc..................................................................................................................5
Recommendations.......................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Retail industry a business sector in which organisations and business owners meet for
making buying and selling transactions for reaching to end customers. In other simpler words,
retail industry bridges the gap between the buyers and suppliers or amongst manufacturer and
consumers (Lee, 2018). The aim of organisation holding their operations in retail sector is to
keep people satisfied and make everything available to them and fulfilling their needs. The report
is developed over Tesco Plc. A supermarket store which was founded in 1919 by Jack Cohen and
which operates in worldwide locations. The company is headquartered in England, United
Kingdom and serving through most popular markets like India, South Korea, Ireland and few
other. The organisation is one of the leading supermarket store in UK and positioned as 3rd
largest in the world by gross revenue and 9th largest measures by revenues.
The assignment is an inquiry based learning therefore, secondary research is used for first
evaluating the trends of retail industry due Covid19. Moving along company's analysis is
conducted in which external environment is studied by using PESTLE analysis and
organisational competitiveness is evaluated through Porter's Five forces model. At last
recommendations are given in order to make necessary changes and make arrangements for the
firm to work according to the trends in marketplace.
MAIN BODY
The trends in retail industry
United Kingdom a country which is popular in business segments for the stability and
strong economic conditions provided to businesses and organisations operating and also to new
start-ups and small businesses. Recently, the global economy is being struck by a global
pandemic which is going to bring unpredicted recession. In recent months, a research and
advisory firm reported the impacts over sales across the retail industry on global level which is a
drop of around $2.1 trillion and out of $70 million is attributed to United Kingdom and firms will
take few years to recover the losses and stabilize in order to reach to normal sales trends. The
data collected and reported shows that the retail sector is going to face tremendous challenges for
regaining the consumers confidence and their goodwill which they earned in past years.

Illustration 1: COVID-19 to add £5.3bn to UK e-commerce in 2020
(Source: COVID-19 to add £5.3bn to UK e-commerce in 2020)
E-commerce is showcasing boost and adding support to the economy as the shopping
trends are moving to more safer options and offer security to the consumers. People are more
focused over their heath and safety as they do not get in contact with the virus. The graph above
highlights increase in Tesco's sales in comparison with pre and post Covid units in 2020.
Therefore, it is clear that the whole world is going to have sever impacts leading to
numerous changes and difficulties for retailers as they will be in post Covid19 state. It is visible
that retail trends are evolving and emerging trend like Smart Retail is clearly adopted by people.
In such manner more trends are emerging and becoming popular in UK's economy which are
mentioned and elaborated below:
 Brands and products – Trading up, Trading off, Trading down- Due to lockdown
customers have faced availability issues in both brands and specific product category.
This has induced the degree of popularisation in relation to choice of consumer of the
respective brand and offerings (Diallo and Lambey-Checchin, 2017). In study conducted
through BCG matrix, almost 36% of consumers polls are either towards trading up
meaning that people are only buying goods which are expensive or trading off that is
people are often buying good with cheap prices and sometimes go with the brand and

shop expensive things. Lastly, is trading down which means people are buying only
cheaper goods as they are either jobless due to the impact of Covid19 or they are not able
to earn regular income. This reflects that people are moving to extreme corners while
making purchases higher earners are only going for buying branded and expensive goods
that is trading up and others low earners and wagers are either doing trading off's or
trading down. Medium priced goods and brands are going to suffer.
 Localism and Community- Lockdown and fear in people of getting infected by Covid19
is making people to not use or have minimal utilisation of public transport. This have
resulted in people being engaged in local environment making purchases from closest
areas and local retailers. Not just in United Kingdom but in other places of the world such
as Italy, localism is increasing supporting strong community spirit. People are coming
together to fight in such sever situations, supporting one another buying goods form local
retailers and enhancing the power of respective communities for facing the consequences
growing because of Covid19 (Evans and Mason, 2018).
 Shopping confidently – Safety Concerns- People are scared, which is making them
more cautious and aware while making purchase decisions and setting patterns. Every
consumer is making their choices of retailers for buying goods with appropriate safety
and protection factors about how much security and protective actions are performed by
retailers and how secured it is to make purchase form them. The purchasing decision
making process of retailers is evolving and shopping confidence is slowly gained in order
to shop appropriately and keep themselves secured.
Analysis of Tesco Plc.
Tesco Plc. a world renowned and popular supermarket store which offers its goods and
services to conumers through its Supermarkets, Hyerstores, Convenience Shops and Superstores.
Tesco Plc. Is the largest supermarket retail store in the World in relation to its revenue and gross
revenue, dealing in food and non-food items. The store is exposed to several international
economies as it has operations around the globe and the global pandemic that is Covid19 will be
affecting the brands severely as world's economies are impacted and moving towards a global
unpredictable recession.
EXTERNAL ANALYSIS
PESTLE Analysis of Tesco Plc.:

PESTLE DESCRIPTION
Political/Legal Tesco Plc. Must follow several regulations and laws for comply with them in
order to ensure safety and security of its products and operations. It is needed
to keep a tap on all the changing political environment of different regions
(Thomas, Epp and Price, 2020). Coronavirus have changed the dynamics a lot
no economy is stable right now in the world which is causing fluctuation and
drastic changes in political circumstances too including aggressive safety and
security measures which is compulsory for the organisation to follow and also
to keep track for knowing the frequent changes taking place.
Economic Tesco Plc. offers huge range of offerings and products and economic factors
plays a major role in making sales and inducing consumptions of such goods
and services. Imports, exports and taxation policies differs and in today's
Covid19 period the economy is not stable at all. People are losing job, directly
affecting retail sector as income flow is stopped or reduced which is causing
them to buy good for fulfilling basic need and it is negative for Tesco Plc
(Coe, Lee and Wood, 2017).
Illustration 2: Tesco Supermarket: PESTLE, 2020
(Source: Tesco Supermarket: PESTLE, 2020)
Social Social dynamics like every other have changed too, population around the
globe is scared and affected by the global pandemic situation. This brought
changes and fluctuations in social trends, buying behaviours are changing.

Now the most influencing element over purchases made is of safety and
security. Consumers are choosing more local retail stores as they are avoiding
public transport for travelling and moving form one place to another. Tesco
Plc. Have to take measures and follow all guidelines of government for
making sure that people do not lose faith in them and also to keep people
attracted to the brand and ensure their safety.
Technological Technology is playing major role in retail sector in such condition of spread
of sever disease. Smart retail trend was flourishing and now in current
scenario it is the solution to the problem of human contact. As people have
access to all required resources on their phones and by just making few clicks.
Tesco Plc. is a organisation which is techno friendly and offer goods online
which make them potential for maintaining their competitiveness and stick to
its position of market leader (Hüseyinoğlu, Galipoğlu and Kotzab, 2017).
Environmental The environmental factor during and post Covid19 is least affecting Tesco Plc.
But with increasing carbon emission into the air and excessive used of natural
resources is going to affect the atmosphere. Tesco Plc. Is a firm which is
working for reducing its carbon footprints and changing their operations into
more environment friendly and reduce negative impacts of their operations on
the world.
COMPETITIVE ANALYSIS
Porters Five Forces Model:
FIVE
FORCES
DESCRIPTION
Existing
rivalry
Tesco Plc. Is a leading brand but the market is saturated and there is a huge
aggressive competition available in marketplace. Brand like Walmart is
competing with Tesco in all respective aspects.
Bargaining
power of
customers
The bargaining power of customers is low at the moment as their requirements
are needed to be fulfilled and for which they are making efforts to pay the
required prices. The reason is the supply and demand graph is unbalanced

(Wood, Coe and Wrigley, 2016).
Bargaining
power of
suppliers
Bargaining power of suppliers is moderate as Tesco is self dependent but
currently the factories are closed due to lockdown and company have to be
dependent upon external suppliers for retailing activities.
Threat of
substitutes
Threat of substitutes is low because economy is not at all stable and barriers to
entry is huge which are not easily manageable in current Covid19 situation.
Threats of new
entrant
The threat of new entrant is low as well, existing businesses are facing
problems in surviving in the market new entrant can not face the challenges
going on in the market and in industry.
Recommendations
Tesco Plc. A world renowned brand and holding 9th position amongst the largest retailing
organisation on the basis of their revenue and 3rd on the basis of their gross revenues. Despite of
such strong brand name all over the globe, potential product portfolio and best company's profile
the firm is still sufferings in an unpredictable and deprived condition of Coronavirus Pandemic
or Covid19 disease. In above section of secondary research where trends are analysed and
company's profile is examined for gaining knowledge about the influence Covid19 had over the
operations it is clear that the firm is affected and soon is going to face sever depriving
consequences (Ko, Phau and Aiello, 2016).
Few recommendations or suggestion for Tesco Plc. In order to face the challenges that
are occurring and are going to occur in near future due to Covid19 are as follows. These will
render a little bit clarity to the management and temporary solutions for the problems which if
effective can be applied in future for longer period.
 Compliance with Government rules and regulations- The political environment is
going to be more and more strict and complicated in United Kingdom. As the economy
was just trying to overcome the issues related to Brexit and a challenge of global
pandemic arises. This pandemic will not just the UK operations of Tesco but it will be
impacting all the operational units. Tesco Plc. Is required to and suggested as well for
following up with all the guidelines and safety regulations stated by the respective areas
government. This will enable the firm in gaining customers trust back and keep it safe
from any undue legal penalties.

 Effective use of Technology and digital tools- Smart Retail a trend flourishing from
years and is very effective. In today's situation of Covid19 it is most focused upon, Tesco
Plc. make use of digital tools and technology for making sale and earning revenues
(Elms, De Kervenoael and Hallsworth, 2016). Currently the firm has to be more
productive and efficient in field of online services and operations. Nowadays people are
ignoring the option of going out of their houses and shop. For safety and health purposes
people are shopping online and making purchases of their required good from their
homes in a safe environment.
 Understanding customers concerns and rendering solutions- Consumers are afraid
and insecure about the external environment and their safety due to the extreme spread of
the virus. For the same people are facing challenges and not satisfied, Tesco Plc. Is
suggested to make use of their relationships with people and gain understanding about
their behaviours and accordingly offer them goods for making them satisfied and
rendering them what is expected from the brand (Hagberg, 2016).
CONCLUSION
The report above is constructed over retail industry for gaining knowledge and learning
form the current pandemic of Covid19 concluding that the businesses operating in the industry
have to be very attentive and ensure that people are trusting them for surviving in the market.
Company needs to known the requirements of people and need to comply with the regulations of
government for being safe form any legal charges and protecting both their business and
consumers by keeping them safe and rendering them all their essentials.

REFERENCES
Books and Journals
Lee, K. C., 2018. Grocery shopping, food waste, and the retail landscape of cities: The case of
Seoul. Journal of Cleaner Production, 172, pp.325-334.
Diallo, M. F. and Lambey-Checchin, C., 2017. Consumers’ perceptions of retail business ethics
and loyalty to the retailer: The moderating role of social discount practices. Journal of
business ethics, 141(3), pp.435-449.
Thomas, T. C., Epp, A. M. and Price, L. L., 2020. Journeying Together: Aligning Retailer and
Service Provider Roles with Collective Consumer Practices. Journal of Retailing, 96(1),
pp.9-24.
Hüseyinoğlu, I. Ö. Y., Galipoğlu, E. and Kotzab, H., 2017. Social, local and mobile commerce
practices in omni-channel retailing. International Journal of Retail & Distribution
Management.
Ko, E., Phau, I. and Aiello, G., 2016. Luxury brand strategies and customer experiences:
Contributions to theory and practice. Journal of Business Research, 69(12), pp.5749-
5752.
Hagberg, J., 2016. Agencing practices: a historical exploration of shopping bags. Consumption
Markets & Culture, 19(1), pp.111-132.
Elms, J., De Kervenoael, R. and Hallsworth, A., 2016. Internet or store? An ethnographic study
of consumers' internet and store-based grocery shopping practices. Journal of Retailing
and Consumer Services, 32, pp.234-243.
Wood, S., Coe, N. M. and Wrigley, N., 2016. Multi-scalar localization and capability
transference: exploring embeddedness in the Asian retail expansion of Tesco. Regional
Studies, 50(3), pp.475-495.
Coe, N. M., Lee, Y. S. and Wood, S., 2017. Conceptualising contemporary retail divestment:
Tesco's departure from South Korea. Environment and Planning A: Economy and
Space, 49(12), pp.2739-2761.
Evans, B. and Mason, R., 2018. The lean supply chain: managing the challenge at Tesco. Kogan
Page Publishers.
Online:
Post COVID-19 Emerging Retail Trends, 2020. [Online] Available Through:
<https://www.gordonbrothers.com/insights/article/2020/post-covid-19-emerging-retail-
trends/>