M4. Assess how a given business has responded to changes in the market.
In this assignment I am going to assess how Tesco has responded to changes on its market.
TESCO
Tesco is one of the leading retailers within the UK industry, and is also one of the largest
food retailers in the world. Tesco store was founded in 1919 when Jack Cohen started selling
additional groceries from a stall within the East End market of Brixton which is in London.
The general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire,
England, and United Kingdom. In the UK Tesco now has over 2,200 stores ranging from the
large Extra hypermarket style stores to small Tesco Express high street outlets.
CHANGES IN THE MARKET
In order to identify and deal with any potential problems, Tesco should always be aware of
any outside developments and market conditions that could affect the business, and, if
necessary, be ready to respond and change their plans quickly. Tesco should always be
aware of interest and exchange rates - these can have an influence on the general trading
climate and are not just a matter of direct costs. For example, interest rates may affect
Tesco more than others and at different times, and foreign exchange rates could affect how
easy or profitable it is to do business with another country. Their competitors - both existing
ones and new ones, and what their strengths and weaknesses are. And new technologies
and innovations that could change the market and increase or reduce the demand for their
existing product or service.
Due to the covid-19 pandemic, many companies have been affected because their
customers had to stay at home either to avoid getting infected or to quarantine themselves
and the people started to spend only what was necessary since some of them lost their jobs.
Like people, several companies reduce it sales, got into debts and went bankrupt or had to
close for a time leaving their employers with a job. However, Tesco tried not to be so
affected but the pandemic. Tesco had a positive responsive to the pandemic Tesco is
forecast to experience a positive impact to its 2020 sales due to the effects of COVID-19
with increased demand for food & grocery globally as consumers stay at home, resulting in a
sales increase of 9.2% on 2020 vs 2019. Like many around the country, one important
change that the Tesco finance team made in the early days of the crisis was a shift to remote
working. The transition went smoothly, largely because the organisation’s culture was
already supportive of the practice. This meant they were already well versed in the
technology for remote working and their colleagues have been able to collaborate
seamlessly. Tesco’s finance team played a critical role in the company’s immediate response
to the crisis, working with colleagues to support the rapid implementation of vast
operational changes. The business more than doubled its capacity for online grocery
shopping – in April, it became the first UK retailer to fulfil one million online grocery orders
in a week. To cope with swelled demand for online grocery, Tesco has mobilised its logistic
network in the UK and increased the number of delivery slots it offers. Tesco has a large
presence in West Europe (accounting for 78.4% of sales in 2019) and the severe impact of
COVID-19 in this region causing stockpiling early on, has driven sales for the grocer. Tesco is
delivering online shopping using plastic bags as this shortens the time needed to deliver an
, order, thus reducing the risk of infection. Tesco’s performance will be similar to its rivals,
with all supermarket chains benefiting from the rise in demand for food & groceries.
Competition
A high threat of new entrants makes an industry less attractive – there are low barriers to
entry. Therefore, new competitors are able to easily enter into the industry, compete with
existing firms, and take market share. There is a reduced profit potential as more
competitors are in the industry. When a new company enters the market, the variables
that influence the performance of Tesco change and they have to react to maintain its
position. How the new company overcomes the existing barriers to entry can guide Tesco
in its strategic reaction to the new situation. As the market changes, Tesco have to
consider the strengths of the new entrant when forming a strategy to keep their
customers. Tesco is a large U.K grocery firm and retailer whose main competitors are
Sainsbury’s, ASDA, and Morrison’s, which are often called the Big Four in the United
Kingdom. Waitrose is another large chain that trails the Big Four in footprint. In recent
years, German grocers Aldi and Lidl have also become strong competitors in the U.K.
grocery market. Although Aldi and Lidl have both continued to gain market share over the
past 12 months, the established giants of the sector have tried to implement a successful
counter strategy. Tesco’s approach seems to be paying dividends. One feature of its
response is the decision to implement a ‘brand match’ policy and it has also taken on the
discounters by rebranding its own-label offering. Tesco cannot compete with the
discounters only on price. It also needs to offer increased quality and again on this front,
it’s a positive picture for Tesco. The brand’s Quality score has risen from +13 to +18 since
last summer as it attempts to remind customers why they loved Tesco so much in the first
place. Quality is a key part of this.
Customers
Meeting customer needs is crucial for any business looking to retain and attract new
customers. Because, as important as the discovery phase is, knowledge about what Tesco
customer needs from them is only as good as the way they use it. Tesco may even need to
plan, build, and execute on a brand-new facet of its services or products. Tesco’s owners
concluded that shoppers were not deserting the brand completely, but occasionally doing
smaller shops at other retail outlets. As a result, Tesco has placed greater emphasis on the
in-store experience of its customers so that they spent more time in store. More effort has
been put into customer service, with a greater presence of staff on the shop floor.
Statistics indicates the improvements that have been noted among current Tesco
customers. Among those that identify as current Tesco shoppers, the brand’s Index Score
(a combination of Impression, Quality, Value, Reputation, Satisfaction and Recommend
scores) has risen from +24 to +36 since January last year. Many customers also give
feedback, such as their views and comments, to let Tesco, know how they are doing. This is
influential as it can help Tesco develop and change their business in order to meet
customer needs. Customer feedback is necessary as it makes the business aware of any
improvements that are needed, so that they can meet their aims and objectives. For
example, Tesco have a survey for their customers online, it is known as the customer
satisfaction survey. In this survey, customers are asked about their recent experience
In this assignment I am going to assess how Tesco has responded to changes on its market.
TESCO
Tesco is one of the leading retailers within the UK industry, and is also one of the largest
food retailers in the world. Tesco store was founded in 1919 when Jack Cohen started selling
additional groceries from a stall within the East End market of Brixton which is in London.
The general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire,
England, and United Kingdom. In the UK Tesco now has over 2,200 stores ranging from the
large Extra hypermarket style stores to small Tesco Express high street outlets.
CHANGES IN THE MARKET
In order to identify and deal with any potential problems, Tesco should always be aware of
any outside developments and market conditions that could affect the business, and, if
necessary, be ready to respond and change their plans quickly. Tesco should always be
aware of interest and exchange rates - these can have an influence on the general trading
climate and are not just a matter of direct costs. For example, interest rates may affect
Tesco more than others and at different times, and foreign exchange rates could affect how
easy or profitable it is to do business with another country. Their competitors - both existing
ones and new ones, and what their strengths and weaknesses are. And new technologies
and innovations that could change the market and increase or reduce the demand for their
existing product or service.
Due to the covid-19 pandemic, many companies have been affected because their
customers had to stay at home either to avoid getting infected or to quarantine themselves
and the people started to spend only what was necessary since some of them lost their jobs.
Like people, several companies reduce it sales, got into debts and went bankrupt or had to
close for a time leaving their employers with a job. However, Tesco tried not to be so
affected but the pandemic. Tesco had a positive responsive to the pandemic Tesco is
forecast to experience a positive impact to its 2020 sales due to the effects of COVID-19
with increased demand for food & grocery globally as consumers stay at home, resulting in a
sales increase of 9.2% on 2020 vs 2019. Like many around the country, one important
change that the Tesco finance team made in the early days of the crisis was a shift to remote
working. The transition went smoothly, largely because the organisation’s culture was
already supportive of the practice. This meant they were already well versed in the
technology for remote working and their colleagues have been able to collaborate
seamlessly. Tesco’s finance team played a critical role in the company’s immediate response
to the crisis, working with colleagues to support the rapid implementation of vast
operational changes. The business more than doubled its capacity for online grocery
shopping – in April, it became the first UK retailer to fulfil one million online grocery orders
in a week. To cope with swelled demand for online grocery, Tesco has mobilised its logistic
network in the UK and increased the number of delivery slots it offers. Tesco has a large
presence in West Europe (accounting for 78.4% of sales in 2019) and the severe impact of
COVID-19 in this region causing stockpiling early on, has driven sales for the grocer. Tesco is
delivering online shopping using plastic bags as this shortens the time needed to deliver an
, order, thus reducing the risk of infection. Tesco’s performance will be similar to its rivals,
with all supermarket chains benefiting from the rise in demand for food & groceries.
Competition
A high threat of new entrants makes an industry less attractive – there are low barriers to
entry. Therefore, new competitors are able to easily enter into the industry, compete with
existing firms, and take market share. There is a reduced profit potential as more
competitors are in the industry. When a new company enters the market, the variables
that influence the performance of Tesco change and they have to react to maintain its
position. How the new company overcomes the existing barriers to entry can guide Tesco
in its strategic reaction to the new situation. As the market changes, Tesco have to
consider the strengths of the new entrant when forming a strategy to keep their
customers. Tesco is a large U.K grocery firm and retailer whose main competitors are
Sainsbury’s, ASDA, and Morrison’s, which are often called the Big Four in the United
Kingdom. Waitrose is another large chain that trails the Big Four in footprint. In recent
years, German grocers Aldi and Lidl have also become strong competitors in the U.K.
grocery market. Although Aldi and Lidl have both continued to gain market share over the
past 12 months, the established giants of the sector have tried to implement a successful
counter strategy. Tesco’s approach seems to be paying dividends. One feature of its
response is the decision to implement a ‘brand match’ policy and it has also taken on the
discounters by rebranding its own-label offering. Tesco cannot compete with the
discounters only on price. It also needs to offer increased quality and again on this front,
it’s a positive picture for Tesco. The brand’s Quality score has risen from +13 to +18 since
last summer as it attempts to remind customers why they loved Tesco so much in the first
place. Quality is a key part of this.
Customers
Meeting customer needs is crucial for any business looking to retain and attract new
customers. Because, as important as the discovery phase is, knowledge about what Tesco
customer needs from them is only as good as the way they use it. Tesco may even need to
plan, build, and execute on a brand-new facet of its services or products. Tesco’s owners
concluded that shoppers were not deserting the brand completely, but occasionally doing
smaller shops at other retail outlets. As a result, Tesco has placed greater emphasis on the
in-store experience of its customers so that they spent more time in store. More effort has
been put into customer service, with a greater presence of staff on the shop floor.
Statistics indicates the improvements that have been noted among current Tesco
customers. Among those that identify as current Tesco shoppers, the brand’s Index Score
(a combination of Impression, Quality, Value, Reputation, Satisfaction and Recommend
scores) has risen from +24 to +36 since January last year. Many customers also give
feedback, such as their views and comments, to let Tesco, know how they are doing. This is
influential as it can help Tesco develop and change their business in order to meet
customer needs. Customer feedback is necessary as it makes the business aware of any
improvements that are needed, so that they can meet their aims and objectives. For
example, Tesco have a survey for their customers online, it is known as the customer
satisfaction survey. In this survey, customers are asked about their recent experience
