An Overview of Tesco: SWOT Analysis and Recommendations

Introduction

This essay examines Tesco, one of the leading retailers in the United Kingdom, through a SWOT analysis. We will explore its history, market dominance, and global presence in simpler terms for easy understanding. Additionally, we'll evaluate Tesco's internal strengths and weaknesses, along with the external opportunities and threats it faces. Lastly, we'll provide recommendations to help Tesco leverage its strengths, address weaknesses, seize opportunities, and overcome threats in the highly competitive grocery industry.

Tesco SWOT Analysis

Tesco began in 1919 when Jack Cohen established a group of market stalls. Over the years, it has become the largest retailer in the UK and the second-largest globally. With CEO Dave Lewis at the helm, Tesco serves an impressive number of customers, with around 80 million shopping trips per week. They cater to 66 shoppers every second, generating approximately £141,000 in sales per minute. Tesco is indeed the UK's favorite and biggest supermarket.

Tesco's Strengths

• Market Leader: Tesco is the top grocery retailer and No.1 supermarket in the UK. It outperforms other supermarket chains in Great Britain, with higher sales and revenue.
• Leading Market Share: Among the big four supermarkets, Tesco dominates the grocery retail market in Great Britain, holding 27% of the market share. It is also the most popular supermarket in Ireland.
• Global Presence: Tesco operates in 14 countries, with over 6800 stores across Europe, North America, and Asia. It has a significant market share in Asian markets.
• Expanding Store Count: Since 2008, Tesco has increased its grocery retail stores from 3,751 to 6,966 worldwide, boosting its revenue through these additions.
• Diverse Store Formats: Tesco offers various store formats, including Tesco Homeplus, Tesco Metro, Tesco Extra, Tesco Express, One-stop, and Tesco Superstores.
• Diverse Product Range: Tesco's diversification strategy includes clothing, home-ware items, mobile phones, music downloads, DVD rentals, school uniforms, financial and telecom services, and fair-trade cotton products worldwide.
• Major Employer: Tesco provides job opportunities for over 743,000 employees globally, making it Europe's largest private employer.
• Award-Winning Performance: Tesco has achieved multiple awards, including British's Favourite Supermarket, The Grocer's Own Label Food and Drink Awards, The Grocer of the Year, 'Waste Not Want Not' Award, and Best Grocer Award (2018).
• Technological Advancements: Tesco optimally uses technology to enhance the shopping experience, such as RFID-enabled barcode systems and advanced M-commerce and mobile payment apps.
• Efficient Supply Chain: Tesco maintains a reliable and efficient supply chain network through a simplified business model, reduced costs, and efficient waste management.

Tesco's Weaknesses

• Failed Operations: Tesco had to exit from the US and Japan markets in 2012 after unsuccessful ventures in those regions.
• Fraud and Accounting Scandal: In 2017, Tesco faced fines due to false accounting and misrepresentation of profits.
• Decrease in Operating Profits: Tesco experienced a decline in operating profits, leading to a drop in share prices in October 2018, the worst since the Brexit Referendum.
• Financial Errors: High debts and credit card liability have significantly impacted Tesco's financial profits.
• Low-Cost Strategy: While being the price leader, Tesco's low-cost strategy can lead to reduced profit margins.
• Poor Performance in Certain Markets: Some Tesco stores and outlets underperform in specific countries due to insufficient market research before entering these markets.
• Clubcard Controversy: Tesco faced backlash in January 2018 when it switched its Clubcard scheme without prior notice to customers, resulting in customer dissatisfaction.

Opportunities for Tesco

• Expanding Jacks' Business: Tesco's new discount store, Jacks, has shown significant growth and can compete effectively with Aldi and Lidl as a low-cost rival.
• Strategic Alliances: Partnering with reputed companies can offer an excellent opportunity for Tesco to expand its product range and attract more customers.
• Joint Ventures: Collaborating with local companies in underperforming regions can provide Tesco with market knowledge to improve performance.
• Online Shopping: Tesco can enhance its online shopping business and home delivery services to cater to the growing demand for digital convenience.
• Emerging Markets: Expanding into emerging countries like South Korea, Turkey, and Indonesia presents profitable opportunities for Tesco's business.

Threats to Tesco

• Christmas Ad Controversy: Tesco faced backlash over its 2017 Christmas ad, causing people to boycott the store due to perceived disrespect to the Christian faith.
• 'Fake Farm' Legal Threat: Tesco faced legal proceedings in 2017 over misleading customers with fake farm brand names.
• Brexit Referendum: Britain's exit from the EU has raised trade deal uncertainties and cost concerns for Tesco.
• Competition with Giants: Rivalry from supermarket giants like WalMart (with ASDA acquisition), Carrefour, and Aldi poses a threat to Tesco's market position.
• Economic Crisis and Credit Crunches: Government regulations, legal matters, credit crunches, and economic upheavals can impact Tesco's operational efficiency in critical regions.

Recommendations for Tesco

• Expand into Emerging Markets: Tesco should explore and establish its presence in Asian and African countries to tap into new market potentials.
• Swiftly Address Controversies: When faced with controversies, Tesco should address the issues promptly and communicate transparently with the public.
• Thorough Market Research: Prior to entering new markets, Tesco should conduct in-depth research and analysis to avoid potential failures and losses.
• Enhance Online Business: Invest in upgrading its online shopping platforms and home delivery services to provide customers with an enjoyable shopping experience.
• Consider Customer Feedback: Tesco should seek customer feedback before launching new ads and schemes to avoid any potential backlash.
• Resolve Legal and Financial Matters: Address high debts, tax payments, and credit card crunches to stabilize Tesco's financial performance.
• Boost Marketing Efforts: Invest in marketing and advertising activities to attract more customers and stay ahead of competitors.

Conclusion

In conclusion, Tesco's journey from market stalls to becoming the largest retailer in the UK showcases its strong position in the grocery industry. Through our SWOT analysis, we have evaluated Tesco's internal strengths, weaknesses, as well as the external opportunities and threats it faces.

Tesco's market leadership, diverse product range, global presence, and technological advancements have been key to its success. However, challenges like failed operations, controversies, and competition have affected its performance.

To succeed further, Tesco must focus on expanding into emerging markets, forming strategic alliances, conducting thorough market research, upgrading its online business, addressing controversies promptly, resolving legal and financial matters, and intensifying marketing efforts. By implementing these recommendations, Tesco can enhance its market position, financial performance, and customer loyalty, securing its place as the UK's favorite and biggest supermarket.

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