Tesco FAQ’s – Competitive Factors Facing Retailing Businesses
1) How are Tesco’s costs and ways of working determined by Government policy on
Trading Hours and Planning Guidance?
Tesco has had to adapt their company and all of their stores to follow the Trading Hours
act. For, The Sunday Trading Act (1994) states that shops are allowed to open on a
Sunday, however shops large than 280m are only allowed to open a maximum of 6 hours
(10am to 6pm). Being allowed to open on Sundays has allowed more profit to come into
Tesco. However, all stores would obviously have to have staff to man the shop which
means that more money is being spent on employees’ wages. But, in the long run, Tesco
probably does not spend very much on wages due to receiving a large turnover.
Tesco has adapted to Trading Hours by opening up smaller convenience stores in order
to gain profit where they can’t in other larger stores. Another way they have adapted to
this is by opening stores up earlier for ‘Browsing Time’. This means that customers can
look at products and gather what they need before they can buy. By doing this can also
mean that people can pick up more products that they may not even need and Tesco can
gain a profit this way.
In order to overcome trading hour issues, such as specific Sunday times, Tesco have
adapted their business into online retailing. This means that they will be able to gain a
profit even if stores are not open and able to take money.
In order to open a new shop, Tesco would have to go through Planning Guidance by the
Government first. This means that they would have to produce reasoning in benefits of a
shop being in a potential location for it to be approved. Being able to open new stores
means that they are able to get even more profit from this and then create more jobs.
Creating more jobs in a community can give Tesco an increased reputation.
In order to apply for planning permission, Tesco would have to go through the local
authority. After they have applied for this, they can then gain permission and start on the
costly process of opening a new store. In order to ensure that they are more likely to get
accepted for the planning permission, they invest in a legal team that means they are
less likely to get rejected.
2) Give two examples to show how the Competition and Markets Authority (CMA)
engages with Tesco in the industry?
The CMA promote competition that benefits consumers and aims to make markets work
well for the consumers, businesses and economy.
An example of the CMA getting involved with a store like Tesco is to ensure their
promotions are correct and appropriate for customers. In July 2015, an article was
written that said ‘Tesco misled shoppers with confusing promotions’. An issue such as
this would be sorted out by the CMA.
Another example of the CMA engaging with Tesco would be to look at their yearly
accounts and see if they are up to standard and have correct information on them.
If Tesco were to take over another business, which they did recently, they would have to
go through the CMA.
1) How are Tesco’s costs and ways of working determined by Government policy on
Trading Hours and Planning Guidance?
Tesco has had to adapt their company and all of their stores to follow the Trading Hours
act. For, The Sunday Trading Act (1994) states that shops are allowed to open on a
Sunday, however shops large than 280m are only allowed to open a maximum of 6 hours
(10am to 6pm). Being allowed to open on Sundays has allowed more profit to come into
Tesco. However, all stores would obviously have to have staff to man the shop which
means that more money is being spent on employees’ wages. But, in the long run, Tesco
probably does not spend very much on wages due to receiving a large turnover.
Tesco has adapted to Trading Hours by opening up smaller convenience stores in order
to gain profit where they can’t in other larger stores. Another way they have adapted to
this is by opening stores up earlier for ‘Browsing Time’. This means that customers can
look at products and gather what they need before they can buy. By doing this can also
mean that people can pick up more products that they may not even need and Tesco can
gain a profit this way.
In order to overcome trading hour issues, such as specific Sunday times, Tesco have
adapted their business into online retailing. This means that they will be able to gain a
profit even if stores are not open and able to take money.
In order to open a new shop, Tesco would have to go through Planning Guidance by the
Government first. This means that they would have to produce reasoning in benefits of a
shop being in a potential location for it to be approved. Being able to open new stores
means that they are able to get even more profit from this and then create more jobs.
Creating more jobs in a community can give Tesco an increased reputation.
In order to apply for planning permission, Tesco would have to go through the local
authority. After they have applied for this, they can then gain permission and start on the
costly process of opening a new store. In order to ensure that they are more likely to get
accepted for the planning permission, they invest in a legal team that means they are
less likely to get rejected.
2) Give two examples to show how the Competition and Markets Authority (CMA)
engages with Tesco in the industry?
The CMA promote competition that benefits consumers and aims to make markets work
well for the consumers, businesses and economy.
An example of the CMA getting involved with a store like Tesco is to ensure their
promotions are correct and appropriate for customers. In July 2015, an article was
written that said ‘Tesco misled shoppers with confusing promotions’. An issue such as
this would be sorted out by the CMA.
Another example of the CMA engaging with Tesco would be to look at their yearly
accounts and see if they are up to standard and have correct information on them.
If Tesco were to take over another business, which they did recently, they would have to
go through the CMA.
