TESCO's Innovation Journey: A Report on Strategies and Performance

This report examines TESCO plc's innovation practices, focusing on its history, performance, and future strategies within the retail industry. It begins with an executive summary, followed by an introduction outlining the report's objectives. The main body delves into TESCO's innovation history, highlighting key milestones like the introduction of self-service supermarkets, the Clubcard loyalty program, online platforms, and efforts to streamline product offerings. The report analyzes TESCO's innovation capabilities, including a SWOT analysis that assesses its strengths, weaknesses, opportunities, and threats. Furthermore, the report explores the retail industry's innovation landscape, including the adoption of robots, AI, and emerging trends such as interactive screens and bucket lists. The report concludes by summarizing TESCO's innovation journey and its implications for future success, emphasizing the importance of adapting to industry changes and maintaining a competitive edge. Finally, references are provided for further research. This report is contributed by a student and is available on Desklib, a platform offering AI-based study tools.

Managing Innovation
in Business

EXECUTIVE SUMMARY
Innovational practices considered to be a key to business success as it help in dealing
with changes that get anticipated within the industry. The current report is based on TESCO plc,
a British multinational supermarket that offer range of products and services. This report present
an overview regarding innovation history of company from which it has been found that it brings
up number of innovations which help it in growing within the market. Additionally, it has been
found that TESCO has immense capacity to launch new innovation to keep itself competitive at
marketplace.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................4
MAIN BODY ..................................................................................................................................4
Overview of organisation and its innovation history..................................................................4
Innovation performance and capabilities of Tesco Plc...............................................................5
The industry................................................................................................................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Innovation refers to a new idea, method or device which focuses toward viewing brining
something new in term of application, product or services with an aim to satisfy the need and
want of customers. It is a practice of brining up new ideas within an organisation in order to
maintain a strong position within marketplace while dealing with increasing competition. The
main aim behind conducting this project is gain knowledge regarding the innovation in an
organisation and ways in which it get managed (Altenburg and Pegels, 2012). For accomplishing
this purpose, TESCO plc is taken into consideration which is a retail supermarket headquartered
in England, United Kingdom. This project contains a detailed description regarding overview of
innovation history, innovation capability and industry in term of innovation.
MAIN BODY
Overview of organisation and its innovation history
Innovation involves the process of converting an idea or invention into a product or
services which is unique and new to the market but designed to create value among the
customers. The regular introduction of innovation supports TESCO in maintaining its share
within the marketplace while keeping its services align with the changing customers need and
want. TESCO is one among the largest grocery supermarkets which operates within several
different countries throughout the world and it is headquartered in Welwyn Garden City,
Hertfordshire, England, United Kingdom (Chesbrough, 2012). It maintains around 3400 stores
and approximately 300000 people within their workforce. This company is best known for its
innovative approaches that contributed toward its growth and success. This is so because TESCO
always consider the innovation as their basic tool to achieve growth in its operations and due to
which the innovation TESCO become able to get survive within marketplace for such a long
time period and still performing so well. The rich innovative history of TESCO that supported it
in getting successful within market is mentioned below:
1956:- Tesco established itself as a self-service supermarket this not only support in
providing a more comfortable shopping experience to the customers as they can pick up product
or services as per their own choice but also supported the organisation in saving their expenses
regarding recruitment of huge staff members and their service cost.

1995:- In order to keep the customers align with the organisational offering, TESCO
launches an innovative scheme where they offers the Clubcard customer reward. The main
reason behind launching this card is to develop some sort of loyal base so that more and more
customer base can be increased (Edgeman, 2019). This innovation supported in increasing the
sales as well as revenue of the company as it supported in attracting larger number of customers
to TESCO stores.
2000:- In this year TESCO took up a new step which involve huge investment and risk
but at the same time involve a change of massive market expansion i.e. to organisation entered
into digital marketing platform by developing its own website i.e. Tesco.com. This supported
customers in getting their product while sitting at home which brings up growth and
development within its organisational performance.
2015:- In order to cut off the additional cost of company and simplifying the shopping
activities of customers, TESCO has pulled out around one third of product from their shelve
which doesn't yielding much profit to the company (Tesco’s defining moments, 2019). This idea
contributed up to a great extend in simplifying the shopping experience of the customers.
2017:- This year remains more innovative for the TESCO plc as they deliver the product
for the first time by Robot. In addition to this company also updated its system for simplifying
the operations of the organisation such as bar code scanner as well as voice control.
These all are best innovational practices that are being performed by TESCO within the
marketplace that contributed up to a great extend in the growth and success of business at the
competitive marketplace.
Innovation performance and capabilities of Tesco Plc.
Innovation is consider to be a most crucial part of an organisation which enables it in
holding up the position within market and even improve their operations for enhancing the
profitability as well as productivity. TESCO plc is the part of retail industry which maintains
larger number of supermarket throughout the world (Flanding, Grabman and Cox, 2018). The
company has a great history of innovation which in turn represent that its capability of brining
future innovations. But in order to determine the innovation performance and capability of
organisation it is crucial to ascertain its future plan of innovation. As the technological world is
growing at a rapid pace the future innovations of TESCO would be majorly depends on the
technology. Some of the innovative future project that are most awaited are bucket lists,

interactive screens, micro phone delivery etc. the main aim behind brining these innovative
projects is to make shopping experience of customers more simpler and enjoyable. But in order
to determine the capability for brining new innovation it is crucial to perform internal and
external analysis of business. This can be better perform using SWOT analyses which help in
evaluating the internal environment for identifying the strength and weaknesses. In same manner
it will evaluate about the opportunity or threat by performing external market evaluation. Hence,
the SWOT analysis of TESCO is mentioned below:
Strength:- TESCO is ranked among top supermarket retailers as it maintains a biggest
share in term of sales and profitability as compare to other supermarket. Additionally it enjoys a
global presence while maintaining the store of 6800 among 14 countries which is a biggest
strength of the organisation as it support TESCO in approaching larger customer base which in
turn help them in acquiring the higher amount of sales and profitability (Hamilton and Webster,
2018). In addition to this another major strength of TESCO plc is that it being awarded with huge
number of commercial performance awards such as The Grocer's Own Label Food and Drink
Award (25 awards), British Favourite Supermarket (among BIG FOUR), ‘Waste Not Want Not‘
Award, The Grocer of the Year and Best Grocer Award (2018). These all contributed toward
increasing the brand awareness among the potential customers and further contribute toward
organisational success.
Weakness:- TESCO is a larger multinational retailer but headquartered in UK and
majority of its operations are being financed from UK's economy. But currently the economy of
UK is facing several issues because of Brexit as this event has increased the procurement as well
as transportation costs. This increasing inflation resulted into the cost cutting budget for research
and development department which is engaged in brining up new plans regarding the
innovational practices of TESCO (Kapsali, 2011). Innovation is the biggest strength of TESCO
but as the cost involve in its operations get increased it somewhere affecting the sales revenue.
Threat:- The biggest threat present in front of TESCO is increasing competition from
major players such as Sainsbury, ALDI etc. This is the biggest threat because these all are the
supermarket that deliver same product range and price kept by them are also very much similar
as a result of which the competition always remains at its peak. Another biggest threat is
shrinking of market share as the two giant supermarket i.e. Sainsbury and ASDA get merged that
may decrease the market share of TESCO.

Opportunities:- The TESCO is having a huge capability of innovating its operations and
bringing up new growth opportunity for the business by enhancing the satisfaction level of
customers through offering another benefits. The opportunities present in front of TESCO plc
are,
 Interactive screen:- This innovation will support the organisation in bridging the gap
between the online as well as offline shopping. Research and development department of
TESCO plc is planning to install interactive screens within their stores that enables the
offline customers to order those products or services that are not available on online
(Sommer, 2012). In order to bring out this innovation it can be said that Research and
development department is well capable to develop the technological innovation that
further support them in setting up the milestones. From this it can be determined that the
innovation performance of the organisation is relatively higher as they become able to
develop ideas and bring up innovation which is new to the market.
 Bucket list:- Another innovation which is expected to be launched by TESCO plc is its
bucket list option at webpage. This will enable the customers to upload their shopping list
at the website of TESCO and these all product get delivered to the customer in less
possible time period. This project is planned with the idea of helping customer in gaining
more convenience in shopping. This in turn will support TESCO in brining higher level
of customer satisfaction by brining up small change within their current website which
not only keeping the existing customer happy but will support in attracting other potential
customers.
The industry
Retail industry is one of the fastest growing sector which is currently experiencing
speedy development and expected to get more innovation practices to be experienced within
upcoming year as the technology is developing at a rapid pace. After reviewing the retail
industry, it has been identified that the robot in operations are one of the most trending
innovation which is rapidly getting accepted by the players within industry (Storbacka, 2011).
Additionally, artificial intelligence is also getting introduced by several retail organisations such
as TESCO which used AI in order to develop robot that have the capability to resolve issues of
customers within supermarket. Despite of all this there are certain innovation which is expected
to introduced within retail market such as Shopping with AR, Product customization, Visual

search, Pop-up shops, Same-day delivery through drone, Interactive screen and Bucket list (15
Innovative Retail Trends to Watch in 2020, 2020). In order to effectively analyse the retail
industry Porter's five force model is implemented that help in evaluating five major forces of
industry and the analysis of retail industry is mentioned below:-
Threat of substitute products and services:
The threat of substitute is relatively lower in term of food items and for non-food items it is
moderate. TESCO operates its business within in food and grocery item where the substitute
threat is relatively lower. Hence, it has an opportunity to perform its operations in order to gain
maximum market share.
Threat of new entrant:
The retail industry is growing rapidly and at the same time earning higher profit which
attract the new player to bring up their idea for starting up business within this sector (Taylor,
2018). But as the competition is high it require the new entrant to invest more for achieving
sustainability in marketplace.
Intensity of competitive rivalry:
Competitive rivalry within retail industry is relatively higher as there are larger number of
players that are operating from years and maintain a sort of monopoly in their operations.
Therefore it is riskier for Tesco as it is facing higher competition from the its rivals such as
Sainsbury’s, Waitrose and many more that can affect its performance as well.
Bargaining powers of buyers:
The bargaining power of buyers is relatively higher as the number of supermarkets are
operating in the market whose offerings and price are similar without any sort of discrimination.
For example, the grocery items that TESCO is offering is also being offered by Waitrose at same
price which may result into brand switch when any of the organisation increases it product price.
Bargaining power of suppliers:
The bargaining power of supplier is relatively lower as there are larger number of
supermarkets that operates in market and due to which supplier is also high. Therefore, the retail
players has the power to ask for high quality product at lower price as they hold other options to
switch their suppliers.

From this analysis it has been identified that the retail industry is very much profitable and
growing sector for existing players if they regularly upgrade their innovative practices but in case
of new players it require more investments.
CONCLUSION
From the above mentioned information it can be summarised that innovational practices
is most crucial part of an investigation as it help an organisation to stay ahead within the
competition while satisfying the expectation of customers with the changing market scenario. As
with the advancement of technology the trend among the organisations related with technological
development and enhancement is also getting increased day by day. But for brining up new
innovation it is crucial that an organisation must analyse its internal as well as external capability
with the help of SWOT analysis so that plans get successful. On the other hand before brining up
any innovation an organisation must also perform industrial analysis with the help of porter's five
force model to determine most favourable and against factor.

REFERENCES
Books & Journals
Altenburg, T. and Pegels, A., 2012. Sustainability-oriented innovation systems–managing the
green transformation. Innovation and development. 2(1), pp.5-22.
Chesbrough, H., 2012. Open innovation: Where we've been and where we're going. Research-
Technology Management. 55(4), pp.20-27.
Edgeman, R., 2019. Performance Management and Enterprise Excellence Through Sustainable
Business Models. In Sustainable Business Models (pp. 317-359). Palgrave Macmillan,
Cham.
Flanding, J. P., Grabman, G. M. and Cox, S.Q., 2018. The Technology Takers: Leading Change
in the Digital Era.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Kapsali, M., 2011. Systems thinking in innovation project management: A match that works.
International journal of project management. 29(4), pp.396-407.
Sommer, A., 2012. Managing green business model transformations. Springer Science &
Business Media.
Storbacka, K., 2011. A solution business model: Capabilities and management practices for
integrated solutions. Industrial Marketing Management. 40(5), pp.699-711.
Taylor, T., 2018. Strategies to Improve Business Performance with Information from Social
Media.
Online
15 Innovative Retail Trends to Watch in 2020. 2020. [Online]. Available through:
<https://tinuiti.com/blog/ecommerce/retail-trends/>
Tesco’s defining moments. 2019. [Online]. Available through:
<https://www.thegrocer.co.uk/promotional-features/tescos-defining
moments/596508.article>