Food Retail and Wholesalers Sector: Challenges and PESTEL Analysis

This report delves into the challenges facing the food retail and wholesale sector, using Tesco as a case study. It identifies key issues such as the rise of online stores and intense competition. The report categorizes these issues using a PESTEL analysis, examining the technological, social, and other external factors influencing the sector. It further explores how these challenges impact the sustainability of businesses, discussing the effects on profitability, competitive advantage, and customer retention. The report concludes with a reflection on the research process, highlighting challenges encountered and lessons learned during the analysis of the food retail industry. The report also includes a discussion about how the company can deal with these issues and sustain in the market.

Report

Contents
INTRODUCTION...........................................................................................................................................3
TASK ............................................................................................................................................................3
Identification and explanation of the issues which is faced by the sector...............................................3
Categorization of the two issues which are discuss above using PESTEL analysis ...................................4
The key issues impacting the sustainability of business ..........................................................................5
Reflection ................................................................................................................................................6
CONCLUSION...............................................................................................................................................6
REFERENCES................................................................................................................................................8

INTRODUCTION
Retailers are the stores which help the company in providing the product direct to the
customers. In a supply chain, the stores of retail said to be the last person or party who directly
makes a sell the product to the customers. Wholesalers are the people who sales the products in
bulk either to the agent or to various retailers. This report focuses majorly upon Food retail and
wholesalers business. And for reference purpose, an example has been taken of a company,
Tesco. Tesco is a British multinational retail store. It has engaged its business in selling the
merchandise at the discounted price. This report discusses about the major issues which is faced
by this sector, categorizing of these mentioned issue in PESTEL analysis and at last the report
consists of the learning and the experience which I had while formation of the report.
TASK
Identification and explanation of the issues which is faced by the sector
There are various problems which every industry or business sector faces. In food
retailing and Wholesalers, this sector also has faced various issues in their operational activities.
Majorly these activities are external to the business sector. External issues or forces are the issues
which are beyond the control of any organization. These are independent from working of an
organization. These forces may include the speedy change in technology, customer preferences,
political factor, legislation rules and regulations, environmental factor and so on. The company
has to make the changes according these prevailing factors as they do affect the business in a
huge way (BANICA and et al., 2017). The problem which is faced by the Tesco Company can be
as follows:
Online stores: As the world is evolving, developing the methods of playing out the work has
likewise advanced and with time the innovative area has additionally made its headway. The
presentation of internet shopping has made the life of clients simple as they currently can
purchase the item independent of where they are sitting and the time, at which they are buying.
The online store are opened for all day and night for client and the client who have the
admittance to web can make the do the shopping independent to the spot he is setting as the
things which he has requested would get conveyed to him by the organization naturally. Online
shopping also facilitates the safe transactions to the customers as they promise to keep the
information and details of the customers totally safe and secure with them only. Apart from this,
the major reason why people or customers go for online shopping is the discount which they
offered to customers. With all these benefits provided by online business the customers
automatically gets attracted to this platform for shopping (Barr and et al., 2018). This has created
big issues for the offline retail stores their customers flow have got decreased. The customers
have change their preferences creating a big loss for retail stores. Online business is the major
problem which Tesco organization is confronting, the stores doesn't have that much client stream
as it used to be before which is making a major misfortune for the organization. The food items

are not getting sold causing them to terminate prior to selling. Aside from this the additional cost
like the power charge, workers compensation, support and other different cost doesn't ready to
get handle by the store.
From the graph which is presented above, the growth in e commerce sector has been shown. In
the year 2012 the growth for e commerce was quite low when compared with other years. And in
the year 2017 the e commerce share in total retail market was above 17%.
Competition: Competition can be seen in every market. The industries where the barriers to
entrance is low there the competition rate would get high as there would be more number of
competitors of the company which can easily get into the industry. Food retailing and whole
selling business is one of them. The barriers of entrance in this sector are very low which has
resulted in high competition (Deasy and et al., 2016). As the opposition in this sector is
extremely high, there is much more probable possibility of client moving from one retail location
to some other store. The client will buy structure from the store where they would discover more
assortment of items and more noteworthy markdown. The company Tesco also has many
competitors; some of them include Sainsbury, ASDA, and Morrison and so on. All these
competitors can be good or greater then Tesco on various grounds like technology adopted,
discount offer, employees hired by the company, variety of products which the store keeps to
itself, customer services like home delivery, customer recognition for their loyalty and much
more. The Tesco has to beat up to all its customers at all these points.

Categorization of the two issues which are discuss above using PESTEL analysis
PESTEL analysis is a framework which is used by an organization in determining the
external forces that affects and influence the working of the same. Through this framework the
organization gets to know about the factors through which their organization can get affect and
the opportunities which further can get explored by the organization. The 2 issues or concerns
which are stated above can get categorized into the following:
From the pie chart presented above, the future about the impact of technology upon retail has
been shown. Some of these factor includes consumption and engagement, visual display and
merchandise offer decisions, big data collection and usage and much more.
Technological factor: This factor takes the technological advancement and innovation in an
organization or in a nation. Technology is something is taking its evolution very fast.
Technology in retail and wholesale sector in be used as management information system.
Management information system is the system in which the organization can store, save and
share their information or data (Hamilton and Webster, 2018). These information encourages
them in settling on the right choice for them. Distinctive association or organizations has
received the different frameworks in their tasks and this likewise makes the upper hand for them.
The framework which is received by the Tesco organization can be development from certain
organizations and furthermore the framework for different organizations can be progressed from
the Tesco. Apart from this the increase in preference of online shopping also lies under this head.
The advancements done in online shopping has created issues for Tesco offline retail store
because the convenience which is provided by the online shopping does not provide by the
Illustration 1:
Journal of Retailing, march 2017

offline retail stores. When an organization performs the internet shopping doesn't give by the
disconnected retail locations. At the point when an association plays out the online business, it
can save its expenses at different grounds like power bill and store lease doesn't get cause. The
expense for recruiting the representatives likewise gets saved by the association and there is a lot
other random cost which could get saved through playing out the business at online stage.
Social factor: It includes the taste and preferences of the customers. When the customers get
encounter with the retail store which provides more offers and variety as compared to Tesco,
then they would happily gets shifted to that other store (Ištvanić, Crnjac Milić and Krpić, 2017).
The competition does affect the profit for Tesco Company. For example the discount prices and
offers which are offered by Sainsbury company is much more than the offers offered by Tesco,
therefore this has resulted in shift of customer to Sainsbury company as they prefer less cost and
quality product more.
The key issues impacting the sustainability of business
Sustainability is the factor which focuses on the long duration of the activity. Here in the
business context a sustainable business is the business in which the operational activities are eco
friendly, does not create any harm to the environment and are for long growth of the business.
The issues which are stating at above can impact the sustainability of the business in the given
ways:
Profit: This type of issues can put an incredible effect upon the benefits acquiring of an
association. As the expansion in the moving of client from disconnected retail locations to online
retail locations, the client stream as diminished for disconnected retailing stores. Because of this
some to them as got shut as they bring about no deals for the proprietors. The limits and the
offers gave by these internet shopping locales are tremendous to the point that it can't get bear by
disconnected retailing stores. To make their association maintainable for future development
they additionally need to change their operational exercises. They are encouraged to raise their
business at online stage too.
Positive impact: The Tesco company would establish their business relating to shopping
at the online platform also enable the customers to do their purchase for that platform. This
would help the company in retaining its customer to them only and this may also increase their
profits and customers reach (Ključnikov and et al., 2016).
Negative impact: All the online businesses have diminished the working for the retail
locations that are working at disconnected mode. They have confronted the misfortunes so that
some got compelled to close down their stores. Also, the stores which are as yet working
confronted a misfortune as their client's inclinations for shopping has changed to internet
shopping.
Competitive advantage through offers: To sustain form the prevailing competition the
company should make the strategies or the offers in such a way that they gets different from all

the offers provided by other retail stores. When the offers are given by the Tesco would be
dissimilar and attractive, the consumers would prefer more to visit the company Tesco
automatically for making a purchase. This may result in increasing profits and sales. Competitive
advantages can also be gained through discounts given to the customers.
Positive impact: It may help the company in attracting and gaining many customers
through these discounts and offers provided.
Negative impact: in many scenarios, the company gives out offers and discounts at the
sake of their personal profit costs which can hamper the position of company.
Loss of customers: Every one of these issues would at last outcomes in losing of clients. This
can hamper the manageability of business as the significant source from which an organization
gets benefit is clients itself. The Tesco organization can conquer this issue through surviving or
taking out the answers for every one of these issues.
Positive impact: The Company, Tesco may be able to retain the customers and also might
be able to increase the customer reach.
Negative impact: This is quite a time taking and consuming process due to which the
company can’t able to focus on other major areas.
Reflection
During the preparation of this report, I did face some challenges and issues which I am
pleased that I conquer them with my absolute difficult work and assurance towards my work. A
portion of these issues which I confronted include:
Authentic sources: During the readiness of report, I need to accumulate the data. The significant
test in this movement which I face was for valid hotspot for data. To make sure the information
which I am taking under account in my report is true in its fact and the reader must get rely on
that (Mawejje and Okumu, 2016.). To conquer this issue I paid special mind to the genuine
destinations like organization reports, their procedures and so on I favor the locales which
hotspot for data had realities and vows to of genuineness.
Time duration: This is another issue which I faced while preparing the report. The time which I
was allotted for completing this particular report was very less when compared with the research
work. This was another challenge which I face during my work. To overcome this issue, I made
the framework work and time table under which I took my activities (Rialp-Criado and
Komochkova, 2017). Although to overcome this issue I prepared a framework or a layout
according to which my research work would going to be. This layout has helped me in defying
the area in which I need to pursue my research and put major constrain in my work. This has
enable me in finding or gathering the data easily as I know I sources or the areas till which I need

to limit my research work. Aside from this I additionally made my time table so as to not get
influences a lot of report if there is a deferral in any movement.
CONCLUSION
The report presented above state the issues which are faced by retail and wholesale
sector. Pestel analysis is also performed in the report about the company in which the political,
economical, technological, social and etc factors have been analyzed properly. Two of the issue
includes online shopping and competition. The report also includes how these issues impact the
sustainability of business. Apart from this while making of this work I did face major problem,
the report also includes these issues and the strategies for surmounting those problems. For of
such problem includes time duration and authentic sources.

REFERENCES
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