Analyzing Tesco's Strategies in the UK Retail Industry: A Report

This report provides a comprehensive analysis of the UK retail industry, with a specific focus on Tesco's performance and strategic positioning. It begins with an introduction outlining the report's objectives, which include assessing current trends, analyzing their impact on Tesco, and formulating recommendations for growth and survival. The report then delves into a literature review, exploring key trends such as sustainability, community-centric approaches, increased technology use, customization, and the rise of digital brands. The methodology section details the use of secondary research and a SWOT analysis of Tesco, highlighting the company's strengths, weaknesses, opportunities, and threats. Based on this analysis, the results and recommendations section suggests strategies such as market penetration, market development, cost leadership, and differentiation. The report concludes by summarizing the key findings and emphasizing the importance of adapting to the evolving retail landscape. The report provides a valuable overview of the challenges and opportunities facing Tesco and the broader UK retail industry.

Inquiry based learning

Table of Contents
INTRODUCTION...........................................................................................................................3
Methodology....................................................................................................................................5
Results and recommendation...........................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES..............................................................................................................................10
Books and Journals...................................................................................................................10

INTRODUCTION
This report is based on analysis of retail industry with its current trends and changes in
UK. It includes various relevant business models which helps in analysing situation in the sector
and company. Its objectives are to frame recommendations for continuous growth and success or
to provide alternatives for the survival of company in retail industry. It is assumed that if
conditions are favourable in retail industry it brings positive changes in company. In this report
trends in the retail industry and its impact is analysed on company. It is important to analyse
various trends and changes leading to impact on the performance of a company. Due to covid -19
and global economic recession, it leads to various changes and has impacted retail industry in
UK (Fernqvist and Göransson, 2020). The chosen company for analysing trends and its impacts
in retail industry is Tesco. In this report it has contributed in finding current changes in retail
industry and its impact on company. It is affected majorly due to changes in trade policy with the
occurrence of Brexit and global recession due to pandemic disease. The rest of the report is
organised as different sections initiating with literature review then methodology and results and
recommendations following with conclusion.
Literature Review
Retail industry is one of the growing private sectors in UK. It contributes largely in GDP
and economic growth of country. Retailing is the combination of various activities with
including core aspect of selling goods and services to final customer. Furthermore, it is consists
of other diverse activities such as buying, advertising, warehousing, transportation, data
processing and maintaining inventory etc. These include big and small companies as well as
private shops which deal in consumer durable and non durable products. The industry has been
facing various fluctuations due to slowdown of economy and occurrence of pandemic disease. It
has faced various macro level changes due to Brexit and trade wars between countries. These
major changes have impacted industry and overall economy of UK. Following key trends can be
observed in retail industry in 21st century.
 Sustainability from Brands- Retail industry and its trends is major subject in UK due to
its high contribution towards the economy. In modern times young consumers have
become more aware for sustainability of brands. This can be observed from customers
demanding transparency and environmental friendly products (Jin and Shin, 2020). This

leads to bring change in the sustainability of products in industry. It is done through
loyalty points and other schemes for consumers returning used clothes.
 Community centric- In this for maintaining good customer relationship it is important
to become more community centric. With building sense of community among brands
helps in establishing strong relationships. In UK community groups
 Increase use of technology- With the increase in development of technology it has led
to various changes in retail outlets. It involves usage of back-end processes and systems
which helps in smoothing of operations. It has also led to increase use of tech products
for inventory management and supply chains. This helps in calculating and maintaining
records for availability of inventory leading to efficiency of processes. Thus, it has led to
better management of inventory and operations of retail stores leading to better
performances(Meslin, 2018).
 Customization and Personalisation- This has become essential for customer
satisfaction and providing great experience. Customization is the process of fulfilling
diverse and specific needs of individuals. This led to instant benefits and satisfaction of
different needs with customization. It is the process of manufacturing goods and services
with considering specific needs of buyers. In UK consumer are more inclined towards
purchasing customised products for gifting and personal consumption.
 Digital brands opening stores – It has become more popular for tech companies
introducing customer experience for their products. In UK they have opened digital
stores for providing customer experience and interactions with tech products. This trend
has changed the retailing prospects in service and digital companies. For example,
samsung and tesla has opened more experience stores which helps in attracting and
purchasing of products with the help of showcasing and testing them to customers.
Thus, retail industry is going through new trends and changes which are essential to be
implemented by Tesla for the success and survival in retail industry. Company should focus on
embracing changes and trends inside stores. This helps them in attracting more customers and
satisfying emerging needs in retailing and shopping of goods and services(Tartaglione, Bruni,
Bozic and Cavacece, 2018).

Methodology
Research methodology is one of the important steps in analysing data and finding
alternatives or solutions. These are the methods used for sourcing and accumulating data such as
quantitative and qualitative method, primary and secondary method. For this report, secondary
method is used which is qualitative in nature for collecting data. In this insights are sourced with
the help of various resources which includes magazines, company websites, government forums
and other online platforms etc. After collection of relevant data it has been filtered with the help
of various tools for finding key insights on the topic. Following insights can be gathered from the
analysis of Tesco:
SWOT Analysis of Tesco
Tesco being one of the largest retailer in UK has been affected majorly due to various
current trends in industry. This can be analysed with the helps of SWOT analysis which
identifies strengths and weaknesses company posses internally. Also, it helps in finding
opportunities and threats available in the external market. This helps in formulating strategic
plans to achieve organisational objectives (Kunc and Križan, 2018).
Strengths
 Brand awareness- Company has high brand recognition or awareness among its
customers in UK. It is due to its large size of retailing of goods in the world.
 Market leader- Tesco holds leadership in UK due to large number of stores with rapid
growth in retailing and personal finance.
 Strong financial performance- Company leads with good performance which has helped
in sustaining financial condition. It has strong liquidity position which leads to less need
for external finances and losses in case of crisis.
 Product portfolio- Company offers large range of products and services with diversifying
its range of business in credit purchasing and insurance facilities. Furthermore, company
engages in personal finance services which leads to entrance in banking sector.
 Quality- Tesco offers products with high quality to its customers which helps in creating
strong loyal customer base (Fernqvist and Göransson, 2020).
Weaknesses

 Dependence on UK markets- It can be ascertain that company acquires most of its
business from UK. This leads to high dependence on one market with low market share
in other countries.
 Media interference- Company has faced criticisms from media coverage in UK. It has
faced accusation for corporate social responsibility and poor morale of employees. It is
because of encouraging of child labour for providing less priced goods.
Opportunities-
 Recession- Company has opportunity in recent economic downturns with changing its
strategies to sustain its global leadership. It can reduce its cost which helps in offering
less priced products. It leads to expansion of business and increase in total asset value
with reducing prices of land and property due to recession.
 Non food retailing- Company can increase its business in other retailing services than
food segment. It has been generating profits with high share in total profits.
 Employees- Company has efficient skilled employees which helps in boosting of profits.
It has been gaining satisfactory performance with profit margin all across from retail
services. This leads to expansion of new business with opening of dimensions or grow
existing business (Jin and Shin, 2020).
 International growth- Tesco has opportunity for offering online banking services from
domestic to internationally. Finance is one of the fastest growing business for company
which leads to expansion of operations in international markets.
 Expansion- Company has opportunity for growing its business in other nations as
company is earning good profits in north Asian countries. This leads to further expansion
in other countries with new services along with existing countries such as Asian,
European and American countries.
Threats
 Intense competition- It is one of the major threat for company to operate business with
strong competition available in both national and international market. For example it
faces severe rivalry with ASDA which is the subsidiary of Walmart in UK. Other than
this it faces Sainsbury PLC and Morrisons have large participation in the market which
reflects strong rivalry with company (Meslin, 2018). They have develop strong market

position with introducing competitive strategies for gaining competitive advantage over
Tesco.
 Global financial crisis- Tesco has faced losses from international markets due to global
financial crisis. It has adverse impact on the overall performance which is reflected from
annual sales revenue. It leads to decrease in purchasing power of customers which further
leads to purchasing of necessary goods.
 Price war- Price of products is one of essential factor for attracting customers in market.
This leads to competitive price war between competitors for gaining attention of target
customers. This has been reflected as major challenge for company for sustaining its
market share
 International expansion- Tesco invests large amount for entering international market and
has to face high competition from large retailers outside UK market. This has led to
decrease in generation of profits from some Asian countries.
 Customer buying behaviour- Due to diverse changes in the external market and increase
in standard of living leads to changing consumer behaviour. This can be observed with
frequent change in product selection for retail customers (Tartaglione, Bruni, Bozic and
Cavacece, 2018).
Results and recommendation
From the above secondary research for analysing current trends in retail industry for
Tesco, it is resulted in providing following recommendations. These are:
 It is recommended for the market leader to develop its business in existing or new
market. It is suggested to follow market development and market penetration strategy for
growth and expansion strategy. Market penetration will help company to generate profits
and acquisition of new customers with reaching (Fernqvist and Göransson, 2020) (Jin and
Shin, 2020)(Meslin, 2018)(Tartaglione, Bruni, Bozic and Cavacece, 2018)(Kunc and
Križan, 2018)high potential of market. Tesco has strong brand imager, low prices and
high quality which helps in penetrating existing markets. It can be achieved because of its
loyal customers with the help of sales promotion techniques. Also, it can provide special
treatment for its loyal customers.
 Market development strategy is recommended due to its high performance in
international market especially in developed countries. This leads to great opportunity in

serving customers of developed markets such as European or Asian countries. It is
suggested to offer regular price discounts and other price offers as it is one of the
important factor in attracting customers which further leads to acquisition of market.
 It is suggested for company to continue its cost leadership strategy during the time of
global recession. Due to high competition in food industry price is one of the prime factor
for retaining customers in period of recession.
 Also it is recommended for the company to use differential strategy which will help in
fulfilling diverse needs of international customers. Tesco has always been eager to
introduce customised and innovative products with having wide product range portfolio.
This will help company in expanding business with tapping new opportunities and
gaining competitive advantage of first mover.
 Furthermore, company is suggested to enter international market with the help of merger
and acquisition with foreign players. Also, it can form strategic alliances and joint
ventures with existing big players in foreign countries.
CONCLUSION
From the above report it can be concluded that retail industry is going through a rapid
change in UK. It is facing various challenges with the change in political and economic factors
which resulted in various key trends. Consumers have become more aware for sustainability and
transparency of brands in consumption of goods and services. It has been resulted that Tesco is
going through a rapid change in the market. It needs to develop market with introducing new
customised products to satisfy emerging needs of customers. It is recommended to use
technology products and bring more transparency in serving goods and services. This will help
company in serving customers by satisfying emerging needs and trends. It is Tesco should plan
for community centric activities to ensure its responsibility towards society (Kunc and Križan,
2018).

REFERENCES
Books and Journals
Fernqvist, F. and Göransson, C., 2020. Future and recent developments in the retail vegetable
category–a value chain and food systems approach. International Food and
Agribusiness Management Review, pp.1-24.
Jin, B.E. and Shin, D.C., 2020. Changing the game to compete: Innovations in the fashion retail
industry from the disruptive business model. Business Horizons.
Meslin, H.R., 2018. Food Access in the Age of Online Grocery: An Evaluation of Current Retail
Trends and Their Potential to Alleviate Food Deserts in the US. IU Journal of
Undergraduate Research. 4(1), pp.58-62.
KuncandKrižan2018, J. KuncandKrižan2018 KuncandKrižan2018, F., KuncandKrižan2018.
Changing European retail landscapes: New trends and challenges. Moravian
Geographical Reports. 26(3). pp.150-159.
Tartaglione, A.M., Bruni, R., Bozic, M. and Cavacece, Y., 2018. How the environmental
complexity affects forecasting in retail? Actual research trends. Journal of Marketing
Trends (1961-7798). 5(2).