Tesco is a popular and major British retailer and is third in the world for a grocery retailer. It has various outlets across the USA, Asia, and Europe. Tesco initiated as a one-man business during the year 1919, Jack Cohen, by selling groceries from a store in London.
From his profit on day one, he got excess stocks of tea from a company named T. E. Stockwell. Both, T. E. Stockwell and Cohen joined together and united to brand a tea and that was the original team sold by Tesco. During the year 1929, Tesco started its first store in North London. Even since, Tesco has been in the rise by a combination of various retail services, acquiring new stores, and by adjusting to customer requirements.
The main aim of the company is to serve the customer. The company focus to keep the customers happy as they are likely to relate to the brand again and again. This would be more cost-effective for the business instead of getting new customers.
In the United Kingdom, Tesco has about 2,200 stores that range from big hypermarket kind of stores to small outlets. Tesco has expanded from grocery and general products to banking, electrical goods, insurance services, and telephone equipment. They have adopted one-stop-shopping concept meaning that customers can purchase all the shopping requirements from one place. Also, Tesco has increased its customer’s through their website Tesco.com that attracts almost one million users.
The SWOT analysis of Tesco differentiates all the main strengths, weaknesses, opportunities, and threats of the company. It gives the brand a chance to investigate it and analyze the ways as to how to perform better. Go through this article to know where Tesco stands.
To make sure that Tesco meets the long-term competitive advantage it must address the various concerns highlighted in the SWOT analysis of Tesco.
Let us discuss on the SWOT analysis of Tesco.
- Largest Grocery Retailer – Tesco is the largest grocery retailer and is top in the UK’s supermarket. The brand has high sales and revenue in comparison to the other supermarket chains in Great Britain. It is a powerful retail brand across the world. It is popular as a brand that provides products that is value for money, a wide range of products, convenient, and locally sensitive management.
- Top Market Share – The brand leads the grocery retail market in entire Great Britain having a share of about 27%. Recently, it has become a popular supermarket in Ireland as well. This is a big strength of the brand that has increased its visibility.
- Diversified Across Many Geographical Locations – Yet another strength of the brand is its widespread stores in many countries. Tesco has a booming presence in about 6800 stores in about 14 countries. Apart from countries like North America and Europe, the brand has a huge market share and its presence in the Asian markets as well.
- Increasing Number of Stores – Tesco has a huge number of stores across the world. During the year 2008, there are about 3,751 stores and the brand operates about 6,966 grocery retail stores across the world. Every year its revenue keeps increasing due to its additional stores in its operation chain. As the stores keep increasing, so is its revenue increase.
- Various Forms of Stores – Along with its number of stores being increase per year, it also launches diversified stores, that are various forms of stores. So, a huge number of items available in each store and there is more customer flow into its store. The various diversified stores of Tesco are the following:
- Tesco Metro
- Tesco Homeplus
- Tesco Express
- Tesco Extra
- One Stop
- Tesco Superstores
- Various Product Range – The brand’s divergence strategy has proved to be a successful one for them. Its operation chain covers a huge product range. Few of its products range is:
- Home-ware items
- Music downloads
- Mobile phones business
- DVD rentals
- School uniforms
- Financial services
- Telecom services
All these services are seen across the globe. Due to its wide range of products, customers would love to visit their shop to purchase. This is yet another strength for the brand.
- Largest Private Employer in Europe – Tesco is a big brand and is spread across various locations and it does create a huge employment opportunity for many individuals. The company has about 743 K job opportunities for many employees across the globe. The brand has been praised for providing the largest employer in the whole of Europe.
- Received Many International Awards – Tesco has been successful due to its commercial performance and has been the reason to receive many awards. Few awards that the popular brand received are:
- British’s Favorite Supermarket. This award was received among the big four.
- The Grocer’s Own Label Food and Drink Awards. This award has almost been received 25 times.
- The Grocer of the Year.
- Waste Not Want Not Award.
- Best Grocer Award during the year 2018.
- Being the recipient of many awards, it is indeed been acknowledged and has shown its strength on the same.
- High Technology Usage – Tesco makes use of technology for its business operations in the best optimum way. Its usage of various technology led to an increase in the customer’s shopping experience. The brand has presented a new RFID enabled barcode system that would help them to count the product automatically. It has also advanced M-Commerce features included in the mobile payment app.
- Effective Supply Chain Network – The brand has a simple business model, effective waste management policies, and has created a consistent and effective supply chain network. The brand has a good connection with its suppliers and owns a profitable relationship with them
- Failed Business Operations – The major weak point for the brand is its failed operations from the US and Japan markets. During the year 2012, Tesco had to exit from these markets as it has failed to export operations. This has a major fall on the brand that made the company shut down the stores in the US after about five years and in Japan after nine years.
- Involvement in Scandal – During the year 2017, Tesco was charged for false accounting declarations and profit figures mishandling. This has created a trigger in the brand thereby leading to a negative impact on its sales for a while.
- Decline in the Profits – During the year 2018, Tesco’s market share declined to about 9% as there was a decline in the operating profits. This has been the worst performance for the company and has led to a negative impact on it.
- Financial Issues – Tesco has faced high debts and liabilities over the years and its financial profits are affected deeply. This is a weak point for the brand as its revenue would hit to a great extent.
- Low-cost Approach – Tesco is known for its price across the UK market and is the price leader. Having la ow-cost approach for its products would lead to a reduction in the profit margin.
- Poor Operational Performance – The brand sees poor operational performance in a few markets. In certain countries, few Tesco outlets are not executing well. This is because the company had not done proper market research on it before setting up their business in these markets.
- Jack’s Business Expansion – Tesco has recently started a new discount store called Jacks. This discount store has shown noteworthy growth. Tesco sees an opportunity with this business and can compete successfully with its competitors.
- Alliances with other Brands – Tesco can develop strategic alliances with many other popular companies, and this would provide more opportunities in business for Tesco. This would provide a chance to sell more products and get more customers to their business.
- Joint Ventures – Tesco can see more opportunities in the places where its stores are falling. It can tie-up with the local companies and can provide thoughtful market knowledge that helps to improve the brand’s performance in these regions. This way, it would provide more opportunities for the brand.
- Online Shopping – Tesco can benefit from the opportunity by enhancing its business online and providing home delivery services as well.
- Developing Markets – Even though Tesco has many stores in the developing countries, it can expand its markets to other countries like Turkey, South Korea, and Indonesia. This way it can be a more profitable company.
- Legal Threat – The brand faced a legal threat to mislead customers using fake farm brand names and marketing its food using a fake name called ‘Woodside Farms’. For this, it has faced a serious legal threat. Such issues lead to a threat to the brand.
- Competitors – Independent supermarket giants are a strong competitor for the brand. Having a rising growth and performance of the top brands like Walmart, Carrefour, and Aldi. These competitors are a big threat to the brand.
The SWOT analysis of Tesco mentioned in this article has highlighted the main strengths of the brand that comes up from its brand value, product quality, the biggest retailer in the UK, leading market share, diversified in various geographic locations, increase in the number of stores, various product range, diversified stores, largest employer in Europe, recipient of various international awards, usage of great technology, and effective supply chain network.
The major weakness is seen in its failed operations in the US and Japan, Scandal issues, a decline in the operating profits, financial issues, low-cost strategy, and poor performance in certain markets.
The brand sees a huge opportunity on expanding to Jack’s business, having strategic alliances with other brands, joint ventures, and online shopping. Tesco sees a brand from its competitors and various legal issues.