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tesco strategic plan 2022

Tesco's 2022 Transformation: How New Strategies and Financial Growth Are Shaping the Future of Retail

Tesco Moves Forward with Redefined Purpose and Strategic Priorities

At A Glance

  • Tesco turned the pages on a new chapter in 2022
  • The three focus areas for Tesco as it moves to this new chapter are understanding its strengths, how the market is changing, and what can be done to improve customers' lives
  • Tesco’s group sales accounted for $65.8 billion, 3% up from $64.1 billion in 2021
  • The strategic priorities for Tesco include 'magnetic value for customers', 'I love my Tesco Clubcard', among others
  • Tesco has increased online sales by $2.8 billion and fulfilled over 1.2 million customer orders per week

Tesco turned the pages on a new chapter in 2022. With new strategic priorities and purpose, Tesco strives to build on its existing work and be even more competitive moving forward. The three focus areas for Tesco as it moves to this new chapter are understanding its strengths, how the market is changing, and what can be done to improve customers' lives.

Tesco's Key Strategic Priorities

Creating magnetic value: tesco's customer-centric business strategy.

One of the strategic priorities for Tesco is to create “magnetic value for customers.” This strategy encompasses creating a combination of quality, price, range, and customer experience. The goal is to offer reliable value that eliminates customers’ need for alternative shopping options while providing positive reasons to shop more with Tesco. Hence, it doesn’t come as a surprise that the company has been voted Britain’s Favorite Supermarket for seven years consecutively by customers.

Leveraging Clubcards: Tesco's Approach to Personalized Shopping

Another one of the strategic priorities revolves around Tesco Clubcards, which can be used to leverage insights to make the customer shopping experience more relevant and personalized. This plays an important role in the retail sector, which is now moving towards automation with AI based personalization . More than 20 million households now own Clubcard, which, when combined with the online grocery business, its nine million regular users, and dunnhumby’s capabilities, allows Tesco to bring additional value and improve loyalty. 

'Save to Invest': Tesco's Strategy for Inflation Offset and Investment

‘Save to invest’ is another one of the key strategic priorities for Tesco. The company aims to be as simple, productive, and agile as possible to offset inflationary pressures and invest in its redefined strategic priorities. “We want to make sure we only spend money where it adds value for customers and, in total, we are aiming for around £1bn [$1.2 billion] of savings across a range of areas over the next three years,” said Murphy. 

tesco strategic plan 2022

Tesco's Financial Performance

Tesco’s group sales accounted for $65.8 billion, 3% up from $64.1 billion in 2021. This 3% rise was primarily due to continued growth in the United Kingdom and double-digit growth at Booker. 

Like-for-like sales increased by 8.2% over the previous two years, with growth in both stores and online, as well as in food and non-food categories. Average basket sizes remained higher than pre-pandemic levels across the business, partially offset by lesser shopping trips. 

The adjusting operating margin improved by 94 basis points compared to last year. One of the primary contributors to the U.K.’s strong business growth was high-margin clothing sales, which also included an increase in total price sales to 86% from 77% last year. Tesco’s relentless focus on ensuring customer satisfaction resulted in the company consistently outperforming throughout the year against the market. Tesco’s market share in the U.K. reached its highest level over four years. This increase in market share was both in terms of volume and value, with the former slightly ahead of the latter due to Tesco’s efforts to minimize the impact of inflation as much as possible on its customers. 

 “To be convenient now means serving customers wherever, whenever and however they want to be served. We believe we can do that better than anyone by leveraging our existing reach and strong network,” said Tesco’s Group Chief Executive Officer, Ken Murphy . “We will continue to adapt while at the same time seeking capital-light growth opportunities in the two key growth channels of online and convenience.”

As the pandemic eased and customers chose to return to in-store shopping, online like-for-like sales decreased by 6.5% in the last year. However, the online sales contribution was still nearly 14% throughout the year, with the first quarter observing a peak of 15.5%. Additionally, there has been a 5% increase in online sales contribution compared to the pre-pandemic levels. Tesco has increased online sales by $2.8 billion and fulfilled over 1.2 million customer orders per week, up from 0.7 million pre-pandemic.  

Shalmali Prakash

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Tesco CEO Ken Murphy poses for a portrait outside a Tesco store in Britain

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Tesco Growth Strategy

  • 17 January 2022

Developing a future-proof strategy for own label

The Challenge

It is 2016 and the UK’s largest supermarket is having a turbulent time. Tesco is trading in the large and fiercely competitive £100billion UK grocery market, and its leadership position is under sustained and serious attack.

Shopper habits, which had begun to change during the recession, are now being accelerated by the growth in new technology and the arrival of some formidable new competitors, most notably in the form of Aldi and Lidl.

The ‘discount retailers’ are making ground in the value space, the other big supermarkets are aggressively targeting Tesco’s core business, and more upscale brands like Waitrose and M&S are winning a larger share of the premium segment.

Against this context, many of the things that had once helped Tesco ‘win’ with shoppers were losing their appeal; this problem is also being exacerbated by damage to their corporate reputation sustained as a result of the horse-meat scandal and serious accounting irregularities. It is starting to feel like ‘every little helps’ is more akin to a corporate mantra than a customer promise.

As the largest player in the market, Tesco appears vulnerable from every angle. Understanding how to deal with this competitive challenge went to the very core of the business and thus right to the heart of the own-label strategy.

What own-label strategy should Tesco adopt to counter this multitude of threats?

Where should it focus? How should it structure its portfolio of brands? And what did it need to do in order to reignite shopper interest?

The Approach

We knew from the outset that we would have access to large amounts of data, but the need to quickly provide the business with a new perspective would mean that we would need to lean heavily on our re-sight capability – reviewing and distilling data from a huge range of different sources.

We developed an agile approach designed to make the best use of the available qualitative and quantitative data, and we supplemented this understanding with our own desk research and category expertise.

Our ability and confidence to work with large data sets made a significant contribution to this project.

In order to identify the solution we combined a deep understanding of how shopping habits were changing with a robust analysis of switching habits and category performance. Later, we were able to utilise our understanding of how shoppers behave across categories, to make specific recommendations on how the overall offer should be structured, and how the portfolio of brands should be organised and deployed.

The Solution

An initial review of the data revealed that tesco’s issue wasn’t frequency of visit; the real issue was that when customers visited, they were spending less..

Volume, spend per buyer, spend per trip and average price were all moving in the wrong direction. Our next task was to understand why this was happening and what Tesco could do about it.

The data revealed that winning the shopper (the historic focus of the business) was not enough, they needed to win the shop.

The time when customers would buy all of their groceries at their preferred supermarket in a weekly or fortnightly shop was over. A rise in competitors, convenience formats, online, smaller households and smaller baskets, meant that people were shopping in a completely different way.

Against this context, competitors like Aldi and Lidl were also disrupting the traditional trade off between price and quality. By reducing the quantity of products in store (and simplifying choice), Aldi and Lidl were able to offer both good quality and incredibly low prices.

Customers were no longer choosing to trade up or down within the confines of a single supermarket’s offer; they were now effectively trading across supermarkets.

All of this meant that at Tesco customers were simply moving out of the value range into core and then frequently choosing to place their incremental spend with Aldi and Lidl. And the news wasn’t any better at the premium end of the offer, the simple truth was that others were ‘doing premium’ better – reputation issues and the subsequent erosion of consumer confidence were further compounding this issue.

We were able to unequivocally demonstrate to Tesco that the way people shopped for groceries had profoundly and fundamentally shifted. It was no longer enough to simply win the shopper, the new rules dictated that you had to win the shop .

Strategy into action.

Informed by our initial analysis, we started by developing ‘10 provocations’ , customer specific insights designed to push thinking inside Tesco and unlock opportunity. Most notable among these were:

  • The importance of making customer’s lives easier
  • Extending the idea of ‘every little helps’ beyond just price and promotion
  • Better understanding different shopper missions in order to develop category hero’s and sharpen the distinction between ‘Better’ and ‘Best’
  • Developing a series of more focused and targeted branded propositions
  • Developing a more distinctive offer in fresh food

Having challenged the business to think about the overall shopper context we then turned our attention to the own-label strategy.

Sharpening the tiers

Our key recommendation was the need to revisit the overall tier strategy; the way the overall offer was deployed and presented..

We believed that ‘Good, Better, Best’ (value, core and premium) was still a helpful construct for customers, but the way it was being deployed needed to be fundamentally revisited so that it was better able to met the needs of today’s grocery shopper and counter the competitive threat posed by Aldi and Lidl.

We recommended that Tesco move away from the Everyday Value range as it was predicated on a set of ‘2D’ market assumptions (price vs. quality) that were no longer valid.

Grocery shopping was now being played out in ‘3D’ – simplified choice, great quality and incredibly low prices – Tesco needed to embrace this reality. It needed a simplified set of ‘brilliant basics’ that were available ‘Exclusively at Tesco.’

Screen Shot 2019-01-11 at 11.56.47.png

At the same time we also recommended that ‘Better’ (core) should focus on winning back core shopper missions by targeting ‘Waitrose quality at Lidl prices’. And ‘Best’ should focus on primarily food-driven categories, offering ‘extraordinary products’ that were seen as real rewards and treats by shoppers and their families.

 All of this work was supported by robust analysis and together it provided a clear and actionable plan for Tesco to meet its competitive challenges head-on.

This piece of work resulted in Tesco fundamentally overhauling its approach to own-label.

Tier levels were repurposed and a new suite of brands developed. The offer was sharpened in order to better meet the needs of the shopper and provide a more robust strategy to counter the competitive threat.

The own-label strategy became a cornerstone of Tesco’s push to ‘win the shop’ and reignite growth.

In April 2018 Tesco reported a UK market share of 27.6% and a profit increase of 28% over the prior year and CEO Dave Lewis was able to announce a 9th consecutive quarter of growth.

“More people are choosing to shop at Tesco and our brand is stronger, as customers recognise improvements in both quality and value.” Dave Lewis, CEO Tesco

Food sales rose overall by 3% driven by increases in ‘fresh food and its own- branded products’. Grocery retailing is highly competitive and Tesco will continue to face pressures from all sides, but there is no doubt that Tesco is stronger for having a clear and actionable strategy based on a deep understanding of how customers shop and where they spend their money.

Image credits: Simon Haytack , Tesco website

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Tesco CEO: Greener future comes with cost challenges

  • Strategy and innovation
  • Sustainability

 Tesco CEO Ken Murphy poses for a portrait outside a Tesco store in the UK, 30 September 2020.

Customers and investors want supermarkets to improve their environmental credentials but are not prepared to accept higher prices or lower returns as a trade-off, the head of Britain's biggest retailer Tesco told the Reuters Impact conference.

Addressing the challenge of how the industry can navigate the shift to net-zero emissions, Ken Murphy said it had to strike a balance, for example, cutting the use of plastic packaging without increasing the food waste that might follow.

Asked if customers were willing to pay higher prices for more sustainable goods, Murphy replied: "I think there is always a small proportion of very committed customers who are willing to pay a premium, but actually the vast majority are not is the honest truth.

"What our customers expect us to do is find ways to innovate, to make sustainable products for them."

Investors, he said, also insist that supermarkets increasingly focus on environmental goals but did not want to see a lower return on their investment as a consequence.

"So we're constantly juggling these priorities and, hopefully, doing a decent job," he said.

Net-zero target

Tesco, the 102-year-old supermarket that dominates British retail, has set out plans for its operations to hit a net-zero carbon target by 2035 through using renewable energy, cutting plastic, and encouraging more sustainable diets.

Many environmental campaigners are sceptical about the willingness of major companies to cut emissions, seeing it as more of a public relations exercise. But large companies that have recently set out targets, such as fast-fashion chain Primark, say they can make a difference due to their sheer size.

For Tesco, a company with global supply chains and 360,000 staff, it requires change across many elements of the business.

It has turned to vertical strawberry farming to cut water usage, introduced unwashed potatoes that have a longer shelf life, and launched reusable packaging. It has also increased recycling of soft plastic packaging that often ends up in landfill and is electrifying its home delivery vehicle fleet.

Murphy said in Britain the move to use less plastic had suffered a setback during the pandemic, when consumers sought out plastic packaging in the hope it would increase safety.

Like the shift to eating more plant-based products and less red meat, Murphy said Tesco could not dictate what its customers should do, but he said the group, the wider industry, and government could help to educate people about the benefits.

(Reporting by Kate Holton and James Davey; editing by Alex Richardson)

Video transcript:

The pressure is on for supermarkets to improve their environmental credentials.

But customers and investors are often reluctant to accept higher prices or lower returns as the trade-off.

That's according to the head of Britain's biggest retailer, Tesco.

Speaking with Reuters, Ken Murphy addressed the challenge of navigating the shift to net-zero emissions:

"I think there is always a small proportion of very committed customers who are willing to pay a premium, but actually the vast majority are not is the honest truth. What our customers expect us to do is find ways to innovate, to make sustainable products affordable for them."

Investors, he said, also insist that supermarkets increasingly focus on environmental goals, but did not want to see a lower return on their investment as a consequence.

"So we're constantly juggling these priorities and hopefully doing a decent job."

102-year-old Tesco has set out plans to hit a net-zero carbon target by 2035 by using renewable energy, as well as cutting plastic and encouraging more sustainable diets.

Many environmental campaigners are sceptical about the willingness of major companies to cut emissions, claiming it's a PR exercise.

But Tesco says it's already made changes.

It's turned to vertical strawberry farming to cut water usage, introduced unwashed potatoes that have a longer shelf life, and launched reusable packaging.

tesco strategic plan 2022

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TESCO SWOT 2024 | SWOT Analysis of TESCO

Written by Brianna Parker | Last updated: Jan 13, 2024

Company:  Tesco CEO:  Dave Lewis Year founded:  1919 Headquarter:  Welwyn G arden City, Hertfordshire, UK Number of Employees (2021):  361,771 Public or Private: Public Ticker Symbol:  TSCO Market Cap (March 2022):  £ 21.57 Billion Annual Revenue (2021): £ 57.8 Billion Profit | Net income (2021): £ 721 Million

Products & Services:  Groceries | F&F Clothing | Tesco Club card | Tesco Bank | Tesco Mobile Competitors:  Argos | Waitrose | Aldi | Icelan d | InstaCart | Safeway | Sainsbury | Morrisons | Giant Eagle | Carrefour | Lidl | Costco | Walmart | Target | Amazon | Whole Foods

Fun Fact: Did you know that Tesco has a grocery retail market share of 27.4% in the United Kingdom?

Table of Contents

An Overview of Tesco

Jack Cohen founded Tesco in 1919 as a group of market stalls. The business expanded rapidly, and within only a few years, Tesco became the largest retailer in UK and second-largest in the world. Dave Lewis is the current CEO Tesco PLC.  

Tesco experiences around 80 million shopping trips per week, serving 66 shoppers every second and earning about £141,000 sales per minute

UK’s favorite and biggest supermarket, Tesco has established itself excellently since its inception.

Explore more about the company in this article and learn facts and figures through its SWOT analysis.

Key facts about Tesco

SWOT Analysis of Tesco

The SWOT analysis of Tesco is demonstrated below:

Tesco’s Strengths

Biggest grocery retailer in the UK – Tesco is the leading grocery retaile r and No.1 supermarket in the UK. It has higher sales and revenue as compared to other supermarket chains in Great Britain. According to Tesco annual report, its revenue is £ 57.8 Billion in fiscal  year  2021 .

Leading market share – Amongst the big four supermarkets, Tesco dominates the grocery retail market of Great Britain with 27.9% of market share . It has been among the most popular supermarket in Ireland.

Geographically diversified – Tesco has a thriving global presence with more than 4673 stores in 14 countries. Apart from Europe and North America, it has a huge market share in Asian markets as well.

A growing number of stores – From 3,751 stores in 2008, Tesco now operates 4673 grocery retail stores worldwide. Its revenue is increasing every year because of the addition of new stores in its operational chain.

Diversified stores – Tesco has launched different forms of stores. Its diversified divisions of stores include Tesco Homeplus , Tesco Metro , Tesco Extra , Tesco Express , One stop , and Tesco Superstores .

Diversified market and product range – Tesco’s diversification strategy has proven to be quite successful for the company. It has clothing range, home-ware items, mobile phones business, music downloads and DVD rentals, school uniforms, financial and telecom services, and cotton fair-trading across the globe.

Europe’s largest private employer – With a workforce of 361,771 people in fiscal year 2021, Tesco provides job opportunities worldwide.  It has been acclaimed as the largest opportunity builder in entire Europe.

Obtained several international awards – Due to its successful commercial performance, Tesco has achieved several awards. These include British’s Favourite Supermarket (among BIG FOUR), The Grocer’s Own Label Food and Drink Awards (25 awards), The Grocer of the Year , ‘ Waste Not Want Not ‘ Award, and Best Grocer Award.

Superior technology usage – Tesco uses technology in the best optimal way to enhance the shopping experience of its customers. It has introduced a new RFID-enabled barcode system to count the products automatically. It also has advanced M-commerce facility and mobile payment app .

Efficient supply chain network – With a simplified business model , reduced incurring costs, and efficient waste management policies , it has created a reliable and efficient supply chain network. Tesco bears profitable relationships with suppliers.

  • Online shopping – Tesco has seen over 60% growth in its online sales compared to pre-covid. Tesco is doubling down on a great online shopping experience and will hire over 16,000 employees to support the online boom.

Tesco’s Weaknesses

Failed operations in the US and Japan – Tesco had to exit from the American and Japanese markets in 2012. Its failed export operations forced the company to close stores in Japan after nine years and the US after 5 years.

Fraud Trial and Accounting Scandal – In 2017, Tesco was charged with fines due to the false accounting declaration and misrepresentation of profits.

Decrease in operating profits – In the fiscal year 2021, the company’s operating profit fell 21.3% (£1.7 billion) ; as a result, its share price has struggled. Its share price is down 8% in the first quarter of 2022.

Fined for selling expired food  – Tesco was recently fined £7.5 million for selling 67 expired food items , such as pizza, flavored milk, soup, etc., in 3 stores between 2015-2017. The company was pleaded guilty for undermining consumer safety.

  • Low-cost strategy – Although Tesco is the price leader in the UK market, its low-cost strategy can lead to reduced profit margins.

Poor  operational  performance in specific markets – Few stores and grocery outlets of Tesco are not performing well in certain countries. Experts suggest that Tesco didn’t carry out sufficient market research before entering into these markets .

Clubcard controversy – In January 2018, Tesco switched up its Clubcard scheme (in which points could be doubled or quadrupled) without giving prior notice to customers. It faced a massive backlash from angry customers.

Unfair business practices – It recently emerged that Tesco has been preventing landlords from renting their properties to other supermarkets if it was located close to its stores. Restricting rivals is not only unlawful but also unethical since it goes against the spirit of fair competition.

Retreat from the global arena – Tesco’s global expansion was poorly planned and failed miserably. In 2020, Tesco exited the international marketplace and retreated to a European retailer. It sold its operations in China , Thailand, Malaysia. Tesco now operates only in the UK, Ireland, Czech Republic, Hungary, and Slovakia. 

Exploitative labor – A review of Tesco’s operations in Malaysia and Thailand revealed widespread exploitation and abuse against migrant workers at its distribution centers.

Negative publicity – Consumers hate companies with greedy executives, particularly in trying times. In June 2020, Tesco’s shareholders voted against a greedy decision to inflate the bonuses paid to a departing chief executive by $1.98 million to over $2.8 million.

Emergency Recall of its In-Demand Pastries and Snacks –  The retail giant issued a country-wide recall of some of its popular snacks and pastry items with specific use-by dates . Tesco says that the items may contain salmonella . The products that are recalled include Tesco Pizza Dough 400G, (UK-only) Tesco Rolled Puff Pastry (320G), and Tesco Ready Rolled Puff Pastry 375G. The recall date of all the items was 11 th January 2022. Tesco has urged its customers to return these items at any Tesco location and to completely refrain from using them. The customers will be fully refunded for the items.

Tesco’s Opportunities

Expanding Jacks’ business – Tesco has recently introduced Jacks, a new discount store which has shown significant growth. It has an opportunity to grow this business and can successfully compete as a low-cost rival with Aldi and Lidl .

Strategic alliances with other brands – Developing strategic partnerships with reputed companies can offer an excellent opportunity for Tesco. It will enable Tesco to offer more products and attract more customers.

Joint ventures – There is an opportunity for joint ventures in the regions where Tesco stores are underperforming. The local companies can provide profound market knowledge which can help in improving performance in such regions.

Emerging markets – Although Tesco has stores in many developing countries but expanding its business to emerging countries like South Korea , Turkey , and Indonesia can be a profitable opportunity for the company.

  • Cashless stores – Recent events have highlighted the health risks posed by touching things that are randomly circulated like coins and notes. Most consumers are seeking cashless transaction options. Tesco opened its first cashless store and seeks to open more soon. 

Price matching – Tesco announced recently that it would start matching the prices offered by its rival Aldi on hundreds of items. This strategy offers Tesco an opportunity to stop and reverse the loss of market share to Aldi.

Tesco Offers Opportunity to Pay without a Card or any Cash : Millions of Tesco customers can now pay without credit card or cash . The retail giant has introduced an innovative and enticing way for its 20 million shoppers to pay for their items. Tesco has launched its Tesco Clubcard Pay+ , which can only be used by Clubcard members. The Clubcard Pay+ is a type of a debit card that offers pre-payment features thanks to the Tesco Bank. Clubcard members will now be able to top-up the card using any UK bank account via the Tesco banking application. Customer will also be able to use their debit card to make online purchases . However, you will only be able to spend money that you’ve transferred to the card.

  • One Hour Delivery  – Tesco has introduced a one-hour home delivery service ( Whoosh ) to over 100 stores. It plans to expand to at least 600 stores by the end of 2023. 

Tesco’s Threats

Christmas ad controversy – Tesco faced social media backlash when it launched its Christmas ad in 2017. People boycotted the store claiming a disrespectful act from Tesco against Christian faith.

‘Fake Farm’ legal threat – Tesco was accused of misleading customers with fake farm brand names and marketing its food products under fake name of “ Woodside Farms .” It faced severe legal threat proceedings over the issue in 2017.

Brexit Referendum – With Britain no longer in the European Union, the trade deals and cost matters have posed a threat for Tesco.

Competition with supermarket giants – With rising growth and performance of WalMart (with ASDA acquisition), Carrefour, and Aldi, Tesco’s biggest competitors, Tesco’s market position can be threatened

Economic crisis and credit crunches – Government regulations , legal and tax matters, credit crunches, and economic upheavals can affect the operational efficiency and performance of Tesco stores in critical regions.

Rising costs – Recent events have increased the cost of doing business and affected the bottom line of many companies. Tesco estimated that the extra costs attributed to the recent health crisis to be between $830 million and $1.18 billion . 

Supply chain issues – Tesco’s operations and profitability are threatened by shortages due to supply chain issues. The retailer was forced to limit essential items a customer could buy after its supply chain was disrupted by a recent health crisis. 

  • Faces Hygiene Investigation –  Tesco was the subject of a hygiene investigation after someone found a gnawed bag of popcorn sparking all sorts of food security and handling questions. That particular store location was ordered to immediately carry out an investigation into the matter. Moreover, there was also a secondary complaint that warranted another investigation into Tesco’s East London outlet. The environmental health and hygiene investigators from the WFC (Waltham Forest Council) claimed that Tesco had a very bad cleaning standard across the store where the gnawed popcorn bag was found.

Swot analysis of Tesco

Recommendations

Tesco has a huge market potential in the grocery industry. With strategic decision-making and effective marketing tools, Tesco can increase its revenues and compete effectively with its rivals . Here are some recommendations for Tesco:

  • Explore the emerging markets and expand its stores in Asian and African countries.
  • Resolve the controversial crisis by addressing the issues quickly.
  • Perform in-depth market research and market analysis before entering a new market to avoid failure and losses.
  • Upgrade its online business and e-commerce sites to provide a pleasant shopping experience for customers.
  • Take customer feedback regarding the launches of new ads and schemes. It can prevent any potential disapproval from the public.
  • Resolve legal and financial matters including high debts, tax payments, and credit card crunches.
  • Boost its marketing and advertising activities to grab more customers than its competitors.

 References & more information

  • Wood, Z. (2020, February 14). Tesco stopped rivals opening nearby stores, watchdog finds . The Guardian
  • Davey, J. (2020, February 25). Tesco completes China exit with a $357 million stake sale . Reuters
  • Lee, L. (2020, May 16). British grocer Tesco’s slavery review reports abuse in Malaysia . Reuters
  • Jahshan, E. (2020, May 31). Tesco faces shareholder revolt over CEO’s bonus hike . Retail Gazette
  • Davey, J. (2020, February 25). Britain’s Tesco tests a cashless store in London . Reuters
  • Vizard, S. (2020, March 5). Tesco becomes the first supermarket to directly price match with Aldi . Marketing Week
  • Davey, J. (2020, April 8). Tesco defends dividend payout as warns coronavirus costs could top $1 billion . Reuters
  • Wilson, B. (2020, March 8). Tesco limits sales of essential items . BBC News

 Tell us what you think? Did you find this article interesting? Share your thoughts and experiences in the comments section below.

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Brianna Parker

Brianna Parker

Personal swot analysis | swot analysis of a person, nestle swot 2024 | swot analysis of nestle.

tesco strategic plan 2022

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tesco strategic plan 2022

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tesco strategic plan 2022

Thanks Alesia, I am glad you liked the article !

tesco strategic plan 2022

Great article, very informative

tesco strategic plan 2022

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Tesco

Tesco (Strategy)

  • CEO Ken Murphy set out plans to capitalise on value, customer loyalty and the growth of Tesco’s digital platforms 
  • Supporting customers through “relentless” focus on value with Aldi Price Match, Low Everyday Prices and Clubcard Prices 
  • Clubcard firmly established at the centre of its evolving ecosystem 
  • Save to Invest scheme to reduce operating overheads and invest in price 
  • Extended partnership with The Entertainer will see the toy specialist supply over 850 Tesco superstores in the UK and Ireland from 2024 

IMG_3232

Following a successful five-year turnaround under former CEO Dave Lewis, Tesco has been radically reshaped to allow it to thrive once more.  

Boots lifer Ken Murphy stepped into the role as Tesco’s chief executive in October 2020 and has set out clear priorities and pillars for the business:  

  • Magnetic value for customers - redefining value to become the customer’s favourite. 
  • I Love my Tesco Clubcard - creating a competitive advantage through digital capability. 
  • Easily the most convenient - serving customers wherever, whenever and however they want to be served. 
  • Save to Invest - taking opportunities to simplify, become more productive and reduce costs.  

Winning back customers through value offers 

Under its magnetic value for customers pillar, Tesco is working hard to improve value perception and retain loyalty, particularly as customers are squeezed by the cost-of-living crisis. It has strengthened its value proposition through Aldi Price Match, Low Everyday Prices and Clubcard Prices in the UK & ROI. 

First introduced in March 2020, Aldi Price Match aims to eliminate the negative price perception that it may be more expensive to shop at Tesco than the discounters and to win back shoppers.  

Tesco price matches Aldi on a wide range of essentials and well-known brands, which are clearly marked instore with a red Aldi Price Match bubble and highlighted online. It initially matched the discounter on around 300 prices instore and online, extended to more than 600 lines by the end of its financial year in February 2023. 

Low Everyday Prices are another weapon in Tesco’s armoury, highlighting its commitment to value. The range was relaunched in mid 2022 with 1,600 products. There were over 1,000 items price-locked until April 2024 at the end of 2023. 

Clubcard Prices were introduced in September 2020, transferring Tesco’s promotional activity to make offers available exclusively to its Clubcard members. The scheme initially launched with 2,000 items, extended in March 2021 to more than 3,000 promotions including general merchandise. In January 2024, it launched its first double Clubcard points drive in over a decade. Tesco said it expected more than 20 million members to benefit. 

As inflation begins to ease in the UK, Tesco was among the first retailers to initiate discussions with suppliers, telling CPG partners in July that it aimed to lower prices faster than competitors.  

Clubcard loyalty and new digital initiatives 

Continuing to drive Clubcard penetration, Tesco has reached 79% penetration in the UK, 77% in ROI and 83% in Central Europe as it leverages its ecosystem for competitive advantage. 

Tesco Clubcard app

There are now 21 million active UK Clubcard households and over 14 million Clubcard app users across the group (11.7m in the UK; 0.7m in ROI and 2m in Central Europe). Clubcard penetration had already reached 86% in large stores by the end of FY2021 and this continues to increase. 

In addition to locking in customer loyalty through its Clubcard ecosystem, accessing rich data and insights is a big opportunity for Tesco as it aims to create a competitive advantage through its “powerful data capability”. 

Tesco has been trialling in-app personalisation with a sub-group of Clubcard members. By February 2023 the grocer had extended digital personalised rewards to 4 million Clubcard holders and issued 89 million targeted in-app coupons. 

Monetisation of its data is also a key driver of growth for Tesco. In November 2021 it relaunched its Tesco media and insight platform with Dunnhumby, introducing a self-serve portal for suppliers to benefit from the reach and scale of Tesco to gain insight, manage promotions and gain access to resources such as Tesco’s instore digital display network. By the end of FY2022, the Tesco media and insights platform was working with more than 450 consumer goods brands. 

Over time, Tesco anticipates its retail media opportunity becoming a key profit generator for the business, as it rolls out more than 6,500 campaign screens to its stores and improves reporting tools for suppliers to allow media planning agencies to integrate its retail media as part of their total media planning proposition. 

In March 2023 Tesco consolidated its separate Clubcard app into the main Tesco app. With all its apps now integrated into a single solution, it is even easier for shoppers to leverage this for online and instore shopping. Users of the app can redeem vouchers and rewards (preloaded for speed), place and track Whoosh orders, create shopping lists, order online or shop frictionlessly at GetGo. 

In cost-cutting measures, Tesco announced that it would downgrade its Clubcard partner programme from June 2023, awarding customers 2x the value of their Clubcard voucher (rather than 3x) when they exchange these for restaurant vouchers and days out. Many customers expressed disappointment at the move.  

Online grocery leadership and flexibility to serve 

Tesco aims to serve customers wherever, whenever and however they want to be served. This flexibility is allowing the retailer to adapt to rapidly changing consumer behaviour and shifting channel priorities.  

When the coronavirus pandemic hit, Tesco expanded its grocery home shopping capacity by 20% in the space of just two weeks to deliver 1.5 million orders each week. Online grocery sales jumped 77% during the year to February 2021, as Tesco expanded capacity and gained new customers. 

The post pandemic return to shopping instore has seen online sales fall back. Tesco’s online sales declined by 6.5% in FY2021 to February 2022 and by 5.4% in FY2022, but now appears to be stabilising at around 13% share of sales. By the end of FY2022 Tesco was processing 1.1 million online orders per week and had 700,000 Delivery Saver members. 

The retailer benefits from the flexibility of its hybrid model, which allows for store picking capacity to be ramped up or down in line with demand. Profitability of the online channel remains a challenge, however. In early 2023, Tesco introduced an online fulfilment fee for suppliers to reflect the fact that the online business is now 60% larger than it was pre-pandemic. The company claimed to be making progress in discussions with suppliers, despite some reported pushback. 

The opening of new urban fulfilment centres (UFCs) is helping Tesco’s online performance. The grocer now has six in operation in West Bromwich, Lakeside, Bradford, Horwich, Rutherglen and Bar Hill, Cambridgeshire. Tesco had planned to add “at least” 25 urban UFCs over time but is now taking a more open-minded approach to the rollout. Pick rates at a UFC are around four times higher than store-based picking. 

Tesco fulfilment centre

Tesco has continued to expand its Click & Collect offer, with 563 locations open by February 2023, allowing it to reach more than 70% of households within 25 minutes. 

Tesco Whoosh, the retailer’s superfast delivery service, was introduced in early 2021 to leverage stores for rapid delivery in 60 minutes to customers. By the end of 2021 there were more than 200 stores offering the service, and by February 2023 the service was offered from 1,000 stores. Tesco has refined the proposition to offer customers more than 2,600 products for delivery slots between 7am and 11pm. 

Tesco has also established partnerships for rapid delivery. In May 2022 the company partnered with Uber to expand the reach of Whoosh from 20 of the grocer’s stores in Edinburgh, Bradford, Norwich, Portsmouth, St Albans and Letchworth. 

Ongoing range improvements 

Tesco continues to make improvements to its core offer to improve value perception, including the development of the ‘Exclusively at Tesco’ stable of entry-level brands to help it better compete with the discounters.  

Tesco’s product range of 90,000 SKUs in the UK has also been cut significantly (which the retailer describes as eliminating “range duplication”) to simplify the shopping experience for customers and reduce costs. At the same time, it has made more space for products that are matched against Aldi to make them easier to find and to enhance its commitment to value. 

In line with customer trends and in support of its sustainability initiatives, Tesco has committed to increase sales of its Wicked Kitchen plant-based meal alternative range 300% by 2025. Introduced in 2018, by the end of 2021 the range comprised more than 500 SKUs and included a Wicked Kitchen meal deal. 

As shoppers rein in spend on eating out due to the cost-of-living crisis, Tesco has strengthened its premium Finest range, expanding the range by 13% during the first half of FY2022. Quality perception has also increased, and this has been a key focus area for the business, with 1,612 product improvements made during H1 2022. Tesco’s quality perception from customers increased 492bps in the year to February 2023. 

Reducing operating overheads 

Tesco has taken a number of extensive initiatives to reduce overheads and increase the profitability of its business. The grocer has made changes to the way it runs its stores, simplified its distribution network and streamlined its central European transport function. It has also implemented energy reduction initiatives to improve efficiency. 

Under its Save to Invest programme, Tesco is working to make progress across four streams: goods and services not for resale, property, operations and central overheads. By the end of FY2022, the group had expected to deliver savings of around £500m, but this came in at £550m as the group accelerated its plans. It is now seeking to deliver its original three-year plan of reducing costs by £1bn across these streams a year early, by February 2024. 

In January 2023, the grocer announced a raft of changes to stores, including closing its remaining counter services and cutting the number of team and lead managers in its superstores, impacting around 1,750 workers. Additionally, Tesco is closing eight pharmacies, moving overnight roles to daytime in 12 stores, reducing hours within some post offices, cutting a number of headquarter roles and closing an operating centre in Milton Keynes. 

Checkout-free GetGo stores using Trigo technology 

In October 2021, Tesco rolled out its GetGo checkout-free technology to its first Express branch in High Holborn, London, launching the tech with customers after having tested it at its headquarters in Welwyn Garden City for two years beforehand. 

Tesco-GetGo-USE

The Trigo technology uses a combination of cameras and weight sensors to establish what products shoppers have selected and charges them directly via their app when they leave the shop. It tracks shopper body movements around the store. Anyone buying age-restricted products from GetGo must use a separate exit, where a member of staff can verify their ID. 

In November 2022 Tesco announced the expansion of its GetGo stores trial, with three new sites that will operate in a hybrid format. These gives shoppers the ability to choose which checkout experience they prefer when using the store - either checkoutless using GetGo via the Tesco app, or a more traditional checkout via a manned or self-checkout. Those that opt to check out manually just need to scan their store receipt at the gate to exit. 

This overcomes the challenges for passing customers that do not want to download the Tesco app simply to use the store; or for those that are worried about sharing their personal data. 

The first hybrid Tesco Express format opened in November 2022 at Chiswell Street in Central London. In December a further hybrid GetGo store was added in Fulham, with a third at Aston University in Birmingham opening in February 2023. 

Booker expands reach in convenience and foodservice 

Tesco completed its £3.7bn merger with Booker, the UK’s leading food wholesaler, in March 2018. Through its ownership of the Budgens and Londis symbol groups and its 200 or so wholesale outlets in the UK, Booker has strengthened Tesco’s presence in convenience and given it access to the foodservice sector.  

Tesco’s Booker business needed to respond to rapid shifts in demand throughout the coronavirus pandemic, as restaurant closures impacted its catering customers but boosted retail demand for deliveries to its symbol stores. Margins in catering are higher than those from Booker’s retail business. 

A strong post-pandemic recovery meant that Booker revenue boosted Tesco’s overall results for FY2022. Booker grew sales by 12% on a like-for-like basis, driven by a sharp recovery in catering demand as the group introduced a price freeze on 450 key catering lines. The retail business also continued to grow with the addition of new customers. 

Supplier collaboration 

Tesco is involved in a number of initiatives designed to foster collaborations with and among suppliers, including the Tesco Supplier Network, an interactive platform that promotes knowledge sharing and best practice, as well as connecting suppliers directly to Tesco’s teams. 

Members of the platform can learn more about Tesco’s strategy and are also able to connect to peers facing similar challenges, for example around meeting sustainability goals or on issues such as energy and food waste. 

Tesco now carries out an annual Supplier Viewpoint survey. In the year to February 2023, 86.6% of suppliers responded positively when asked how satisfied they were about working with Tesco, a year-on-year increase of 0.2%. Just 55% responded positively to the same question in FY2014. 

Partnerships and acquisitions bolster proposition: Toy concessions with The Entertainer expanded 

In September 2022 Tesco and The Entertainer announced a partnership to open 35 toy concessions in larger Tesco stores from the following month.  

Ranging, pricing and merchandising all come under The Entertainer’s remit and there is a calendar of free events and character visits.  

The partnership has been extended to 759 Tesco superstores in the UK and 94 in Ireland from March 2024. Tesco has also entered a supplier agreement with The Entertainer for the supermarket’s stores across Central Europe. 

Paperchase acquisition and relaunch 

In January 2023, Tesco acquired the Paperchase brand and IP out of administration, a move expected to enhance and elevate Tesco’s offering in non-food. 

Tesco relaunched Paperchase in 120 of its supermarkets around the UK from October 2023. 

Ikea tie-up 

In October 2022 Tesco partnered with Ikea to offer a Collect Near You service for the Swedish furniture retailer, allowing customers to order online and collect their orders from car parks at larger Tesco stores.  

The first collection service launched in Blackburn, with six further stores offering the pilot service by the end of the year. Plans to extend the service were announced in November 2023, with a further 70 Tesco locations now scheduled for roll-out by Autumn 2024. 

Homebase trial

In March 2022, Tesco announced a partnership with Homebase, with the DIY retailer moving into some of the grocery giant’s stores. The partnership was launched at Tesco’s Borehamwood store later that month, with Homebase taking space in two more Tesco stores from April.  

Sustainability high on agenda 

Sustainability is high on Tesco’s agenda. It has accelerated its commitment to reach net zero carbon emissions, bringing this goal forward to 2035 from 2050. 

By 2030 the grocer is pushing to use 100% renewable energy across the group. In late 2019 Tesco unveiled plans to source green electricity directly from wind and solar farms and added solar panels to 187 UK stores in support of this.  

Among its sustainability commitments, Tesco aims to increase the sale of healthy products to reach 65% of sales by 2025. Part of this commitment involves growing its Wicked Kitchen plant-based meal range by 300% between 2020 and 2025. It will also make Tesco products healthier through reformulation and halve the environmental impact of the UK shopping basket. 

In May 2022 Tesco introduced Better Baskets, aiming to help the two thirds of the UK population that want to live sustainably with inspiration for items that are healthier and sustainable, whilst at the same time affordable, easy, relevant and inspiring. 

The campaign aims to remove barriers including price, confusion, taste and waste, visibility time and effort, skill and inspiration, to make sustainability easier for shoppers. 

International business reduced 

Consolidation of its business in Central Europe has left only three international markets in Czech Republic, Hungary and Slovakia. Tesco is focused on strengthening its operations and value proposition in these remaining markets. 

Clubcard penetration is a key focus with Tesco rolling out Clubcard Prices and Low-Price Guarantee across all countries during 2021. Customers responded positively and this has driven Clubcard penetration up in all three countries, contributing to growth in the region. 

By the end of FY2022 Clubcard penetration in the region was 83%, up from 60% a year earlier. 

In FY2022 Tesco completed the sale of 17 malls and one retail park in the CE region, generating proceeds of £203m. The company will continue to operate the Tesco hypermarkets in these locations on a long-term leasehold basis. 

Across mainland Europe, Tesco’s focus has been on pulling out of unprofitable stores and improving returns, with any investment focusing on lower-cost routes such as convenience, online and franchising. With all of its Central European businesses still fairly modest in scale, Tesco consolidated its country teams in the Czech Republic, Hungary, Poland (now sold) and Slovakia into a single regional team. 

Tesco also operates franchise stores in the Czech Republic, allowing the group to expand its presence while maintaining low overheads. 

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How Tesco Became The Biggest Retailer In The UK

Table of contents.

There are certain brands that always seem to attract global attention and one of those is Tesco. It’s one of the largest grocery store chains in the world and over its 100-year history, it has gone through a rollercoaster of ups and downs that have brought it to where it is today.

  • Stores: 4,673
  • UK Employees: 336,392
  • The top retailer in the UK
  • Ranks 17th in NRF Top Global Retailers for 2021 
  • Q1 2021 Growth in Online Sales: 22.2%
  • FY21 Sales: £53.4 bn

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The Origin Story

The giant corporation that we know today had some very humble beginnings. The idea found its roots back in 1919 when Jack Cohen, the son of Polish immigrants, decided that he was going to sell groceries from a stall in East London [1] . For the first few years, that is all it was – a market stall run by a man with a big dream. But over time, as he gained confidence in what he was doing, he began to think that maybe he was destined for something bigger.

To dip his toe in the water, he opened up the very first Tesco store in 1929 in a small town in Middlesex. The brand took off almost immediately, much to the surprise of Cohen, and he realized that there was room for growth. He had stumbled onto a rather simple premise, in terms of providing food and drink in a very affordable and approachable way, and quickly started to work on expanding the concept as far and wide as he could.

tesco-storefront-1919

Cohen’s unique personality and selling style was something that he engrained in those early sales teams, pushing them further than they ever thought they could go. He was someone who valued hard work above all else and believed that if you were out there working to make things happen, things would conspire for your benefit. This ethos is something that still lives in the company today.

In the years that followed, Tesco grew from strength to strength until it got to a stage in 1947 where it was large enough to list on the London Stock Exchange. In the two decades that followed the listing, the company continued to grow organically but it also made some aggressive acquisitions that rapidly increased the organization’s footprint. At the end of the 1960s, there were around 800 stores in operation, all maintaining healthy profitability and a growing customer base.

The strong brand was then leveraged to venture out of food and beverages specifically, and into a range of other areas including clothing, electronics, financial services, telecoms, media, internet services, and software. They also expanded geographically into the rest of the UK, Europe, and a brief but ultimately unsuccessful time in the USA.

The Tesco of today is a corporation much bigger than Cohen could have ever imagined, and that’s a testament to the company that he was able to build and the business philosophy that still undergirds their success to this day.

Creating Their Own Brands

We’ll start this strategy study properly by diving into what is widely considered the most important part of the Tesco strategy – which is the creation and scaling of their own in-house brands. When the company started they acted simply as a retailer, buying products from suppliers and then controlling the end-user buyer experience and distribution thereof. However, as they began to grow they came to the same realization that is so common for these massive product curators.

They realized that they could compete and win against these other brands because they had access to invaluable sales data, a loyal customer base who was tied into their stores, and the distribution required to bring their own brands to a mass market almost overnight. All of this while regaining a significant portion of the margin as they did so.

This is a key trend that we’ve seen across major retail conglomerates, but it’s received even more attention in the online era as Amazon has taken it to the next level. Especially in the case of common household goods where it is quite difficult to differentiate the product itself, brand and price become all that matters.

Tesco’s clothing line and their food brands provide high-quality items at prices that undercut the other 3 rd party brands that are trying to win shelf space in the stores. This makes it abundantly clear that by owning the customer relationship and the distribution, you have an immense amount of control in the value chain. Manufacturers are dependent on retailers like Tesco because they need to access the consumer market, and this places all the power in the hands of the retailer.

This business model has been incredibly successful over the past 50 years. Tesco has grown a substantial business that customers trust and whenever they want to win back margin, they can create their own white-label brand and use their pricing power to whittle away at the market share built up by other brands. The big question here though is how long will this last? [2]

In modern times we’ve seen a drastic shift away from brick-and-mortar retail and into online shopping. This was obviously accelerated by the COVID-19 pandemic, but it was something that was coming inevitably anyway. As we move to a future of online shopping, Tesco’s early advantage in terms of distribution becomes less relevant. Manufacturers and suppliers can start to build online presences that give them direct access to the consumer market and thus they can eliminate the Tesco leg entirely, provided they have the brand strength to do so.

This is where the world is moving towards, where the middlemen are eliminated over time and we see a rise of direct-to-consumer brands. This is not to say that Tesco is going to disappear. In fact, their online shopping sales have been incredibly impressive. But they have to think differently about the company they are going to be as we shift into this new paradigm.

It’s definitely something on their roadmap and they are making a lot of investments in this vein, but it’s going to be challenging to transform such a large company with so much tied up in the brick-and-mortar of retail stores. Their ability to adapt and adjust will determine whether they remain a force to be reckoned with in the years to come.

Key Takeaway

  • If you control the direct relationship with the customer, you have tremendous power in the value chain that allows you to win market share and margins much more efficiently.

Horses for Courses

The next piece of the Tesco strategy that has proven so valuable for them has been their ability to adapt their value proposition for different contexts. When it comes to retail, you have to have a very good understanding of what your customers in that location are looking for, so that you can tailor your offering accordingly.

It’s tempting to think that you can copy-paste a winning formula wherever you want and scale quickly and easily – but that couldn’t be further from the truth. Even with a simple concept like a grocery store, there is a range of different nuances that determine how the store should be set up, what should be stocked, and how they should craft the buying experience.

Tesco operates 5 different types of stores:

  • Tesco Extra
  • Tesco Superstores
  • Tesco Metros
  • Tesco Express
  • One Stop Shop

Each of these stores has a different use case, and it targets a unique subset of their customer base. The company has worked very hard to identify the specific items, and setup that is best suited for each one. For example, the Tesco Extra stores and the Tesco Superstores are the biggest ones in terms of size and aim to carry as much as possible so that customers can do all their shopping in one place. This is in sharp contrast to the Tesco Metros and the Tesco Express stores which are focused on convenience and speed, rather than a variety of choices.

Every part of the experience for each category is intentional and fit for purpose. Even the training that the staff will go on differs depending on the type of store that they’re going to be working in. What remains consistent is the brand, the product quality, and the prices. Everything else varies according to what that particular customer is looking for.

It’s also interesting to note that these store categories have different trajectories and trends. If you look at the last couple of years (ignoring the pandemic), the big retail outlets have been struggling for growth, while the convenience stores are growing rapidly. This shows a clear trend in terms of consumer behavior and because the stores are all set up differently, the company can respond to these changes.

Essentially, each category of store can be thought about as a different company entirely – allowing lots of flexibility to adapt and adjust accordingly. If they didn’t have this clear separation, it would be difficult to understand the data they were receiving, and they would have less chance of successfully diagnosing the nature of changes in customer behavior.

Taking this one step further, it’s clear that their online shopping vertical is a new type of store and will have unique aspects that set it apart from the rest. As Tesco follows the growth of online shopping they’ll be able to shift their efforts to these new channels because they have the data that they need to be able to do this with confidence.

  • Context is everything in business. By separating your operations into subsets that cater to different contexts, you’ll have the data you need to adjust and adapt to changing trends as they arrive.

Sustainability

A key component of Tesco’s forward-looking strategy is to become as sustainable and environmentally friendly as possible. This is not too out of the ordinary in the modern context as companies around the world work towards mitigating climate change, but Tesco has really gone above and beyond to make this a part of their company DNA.

The biggest offenders in their value chain are the delivery vans which are constantly transporting goods from suppliers to warehouses and then eventually to the stores themselves. These vans number in the thousands and they are running almost 24/7 ensuring that stock levels are where they need to be at all times.

Tesco announced recently that they have begun to transition all those vans to electric vehicles in an attempt to minimize the carbon footprint and work towards a more sustainable goal. Their plan is to have their entire delivery fleet transitioned to electric by 2028 which is a very ambitious plan indeed [3] .

tesco-electric-delivery-truck-charging

This is but one of their sustainability initiatives that are at the forefront of the company they want to become in the future. They are working tirelessly to integrate this into their corporate ethos for a few reasons:

  • Sustainability matters. We all have to be more thoughtful about what we’re building because the impact we’re having on our planet is significant. So, from pure self-interest, a company needs to embrace this value if they are to be robust and to last over the next hundred years. Without this focus, we might find ourselves in a very dangerous position in a generation or two’s time.
  • Customers demand it. Building on the point above, there is tremendous social pressure for corporations to become more sustainable because of the heightened awareness we now have of the problems that face as a species. Customers are placing sustainability and environmental concerns as key factors in their purchasing decisions and Tesco knows that. So, they are leaning into this as a key value for the future so that they can continue to build the strong brand trust that they have with their existing consumer base.
  • Prices are trending downward. As we shift away from fossil fuels and towards renewable energy, the relative prices will come down and that can have a significant impact on Tesco’s profitability. It might require a lot of investment in the short term, but that will pay off by orders of magnitude as the world shifts and economic incentives work their magic.
  • Competitive Advantage. Getting in on this early and working to build this into the future of the company could prove to be a significant competitive advantage for competing against their competitors. This is a clear trend that everyone can see, so those companies that get ahead of the curve will be able to leverage the early momentum to capture more and more of the market going forward.
  • Opens up opportunities for innovation. Whenever there is a radical shift in thinking, it creates an opportunity to go back to the first principles. For large companies, these moments are few and far between so it’s important to use these natural breakpoints to re-examine your strategy and plot the best path forward. Tesco is definitely trying to do that so that they can remain relevant as we move beyond pure retail and into a hybrid model where you need to serve customers in-person as well as online.

Those are just some of the reasons why Tesco is giving so much credence to how sustainable their operations are. It’s also important to note that they are thinking beyond their direct circle of influence. Another significant contributor to carbon emissions is their customers who drive to the stores themselves. To mitigate this, they’ve begun to roll out thousands of charging points to their larger retail stores to support customers with electric vehicles and encourage more people to move in this direction.

This is something we’ll see a lot more of going forward, and Tesco remains one of those leading the charge, at least in the European context.

  • Sustainability is a key value and operational principle that must be at the forefront of any company looking to remain relevant going forward.

The Clubcard Loyalty Program

It seems that every company these days has some form of loyalty program where they try to reward repeat purchasers in exchange for valuable sales data – but Tesco was one of the first to go this route. Their Clubcard program allows regular shoppers to benefit from automatic discounts that are applied at check-out and it makes the already-low prices even more beneficial. This obviously creates loyalty for their key customers who will use the card to get better prices for their groceries, but the more interesting aspect is what it allows Tesco to do with the data.

tesco-club-card

Before loyalty programs, large retailers like Tesco were unable to tie specific purchases to specific customers. They would be able to access aggregated sales figures about the sorts of items that were being purchased, and they could use that information to adjust their offering accordingly, but you were limited in terms of how useful it could be. Any granular demographic data had to be assumed based on the store itself and this didn’t allow for much nuance.

The modern loyalty programs, like the one that Tesco runs, offer a much more sophisticated set of data that is incredibly valuable for product development, planning, and demand forecasting. By tying each purchase to a specific customer’s card, Tesco gains a range of new insights into purchasing behavior and they can arrive at a much more granular understanding of what is actually happening in their stores.

Here are some of the ways that they can use this data:

  • Demographic Analysis. Tesco can identify specific segments of their customer base and analyze purchasing habits in these unique categories. For example, they can compare their male base to their female base. They can look at how age affects the sorts of items that are purchased. They can look at ethnicity and how that impacts the brands that are most in-demand. All of these slices help to break a massive consumer base into smaller segments that can be more effectively sold into. This affects the marketing messaging, the placement of goods in the store, the outbound sales efforts, and much more.
  • Lifetime Value Analysis. When you’re able to track specific customers over time, you gain a lot of insight as to how they engage with your brand and how that plays out over time. Through a more nuanced calculation of a customer’s lifetime value, it informs how they invest time and resources going forward – to maximize this value and build a strong core of loyal shoppers. This is also vital in the other direction when looking for red flags that might point to something that is going wrong along the way. When you can track this effectively, you’re in a much better position to make long-term strategic decisions that are data-driven and attached to the real-time data on the ground.
  • Shopping Cart Make-Up . If we move up one level of abstraction, we can analyze the make-up of a customer’s shopping cart to understand the relative associations of different items in the store. When Tesco tracks this over time and matches it to key demographic information, they can start to understand the different use cases and common groups of items that are purchased – allowing them to adjust their offering and store placement accordingly.
  • Track the performance of marketing campaigns . When Tesco undertakes various marketing initiatives, it can be difficult to track how well they perform in terms of driving sales in various target markets. The Clubcard loyalty program gives them the data that they need to do this effectively, allowing the company to track whether the marketing message is working with their target audience or if things need to be changed. Once they’ve found a winning formula, they can quickly scale that out across the rest of their stores with a lot more confidence that their investment is going to pay dividends.

Those are just some of the ways that Tesco uses this data to inform their business decisions but hopefully, it gives you a sense of why it’s such an important part of their strategy. The data alone is much more valuable than the discounts that they offer in exchange, making it one of the most impactful revenue generation mechanisms that the company has at its disposal.

  • Granular customer data is worth its weight in gold and anything you can do to gather and process it effectively, should be a priority for your organization.

The Price Match Guarantee

The world of grocery stores is incredibly competitive and unless you have a specific niche focus, there is going to be a lot of competition around price. In 2014, Tesco was going through a difficult period and found itself losing ground to some up-and-coming chains that were doing anything they could to undercut Tesco’s prices and win customers away from the incumbent. Tesco realized that they couldn’t afford this to happen for very long and so they came up with what they call the ‘Brand Guarantee Scheme’ to try and mitigate against this trend.

The idea was that if a customer got to the check-out and their basket of ten or more branded items was more expensive than what could be found at a rival store, customers would receive the difference as a discount when they paid. These prices were independently verified on a daily basis and gave customers the confidence that there were no better deals out there.

This simple psychology was enough to retain the vast majority of their regular customers and removed the one major objection that might convince someone to switch to another brand. It didn’t matter whether the amount was large or small, it provided peace of mind that when you bought at Tesco, you were getting the best deal that there was.

What makes this more interesting though is that this wasn’t the first time they had tried to implement a price match system to enable this sort of deal. Previously, they would go through the same process of matching prices but instead of giving the discount right away, they would offer a gift voucher to the value of the difference between the Tesco price and what it cost at another store.

It wasn’t until they listened to customer feedback and heard that many shoppers never got to use those benefits because they forgot about the vouchers, did they realize that they needed to remove the friction entirely [4] . Creating vouchers just added another step into the process that actually was a point of potential error. And even though it was completely within the customers’ control, the impression was that they were losing out.

When the company took that away and chose to implement the discount immediately as they paid, this completely disappeared and customers found the process quite magical. They didn’t have to do anything, yet they knew that if there were savings to be had, Tesco would make sure that they got them.

Achieving this took a lot of technological investment and considerable expense to do the requisite daily market research, but it made the purchasing experience a delight and that’s what keeps customers coming back time and time again. It sends a signal to customers that you’re looking out for them and will do whatever it takes to make their grocery shopping a breeze. To this day, the Tesco Brand Guarantee is one of those components that is severely underrated in terms of the company’s success up to this point.

  • The more friction you can remove from the customer journey, the more magical the experience becomes, and the more likely customers are to return.

Aggressive Acquisitions

Another key strategy that typifies who Tesco has been as a company has been its track record of large international acquisitions which looked somewhat impulsive in retrospect. They bought a wide range of different brands in countries like Poland, Japan, India, Malaysia, the Czech Republic, Hungary, Slovakia, and more [5] . In each case, they were hoping to grab a piece of the local market and then apply their technology, data, and operational know-how to rapidly scale the operations.

In most cases, they left the brand as is rather than applying the Tesco name to it, giving them diversification but also underplaying the role that they would play in those specific regions. If you look at their growth over the past few decades, a lot of it can be attributed to these deals – though it’s difficult to know exactly how much value was added in the process. Once each acquisition was absorbed under the umbrella, there are just too many variables to make an educated statement on the overall success rate.

What cannot be denied is that this was a very intentional strategy on their part. By taking the financial power that they had built up in the UK, they were able to go into new markets and take risks on brands, knowing that any losses would be subsidized by the market-leading position back home. This might not be the most efficient way to grow, but it does give you scale and speed when certain acquisitions do provide the value you were expecting.

There is lots of debate about the pros and cons of a strategy like this, but Tesco have stuck with it for their entire history and this land-grab mentality rings true today. It’s only possible when you have a significant war chest and an existing set of operations that can sustain the shocks that come with potential market failures, especially when you are moving as fast as they do.

In the next section, we’ll look at an example of where things went wrong and see what we can learn from it.

Aggressive acquisitions should only be considered when you have a large war chest and you can manage the downside risks as they present themselves.

The Failed US Expansion

Tesco hasn’t always got it right and we can often learn as much from the failures as we can from the success stories. Back in 2006, the company decided that they wanted to enter the United States and try to replicate some of the success they had found in the UK. The strategy was to open a chain of small-format grocery stores in a few states in the West of the USA, specifically Arizona, California, and Nevada. These stores wouldn’t carry the Tesco name but instead were branded as ‘Fresh and Easy’.

fresh-&-easy-storefront

In the first five months they opened 60 stores, they had 150 by the end of the first year, and over the next 6 years, they expanded to have over 200 at their peak. However, they found it much more difficult to get a foothold in the market than they had originally anticipated.

It’s not entirely clear as to why the stores failed but it’s likely due to a combination of these factors [6] :

  • Unfamiliar Shopping Experience. The Fresh and Easy concept was to mimic the small convenience stores from the UK – offering people a shop where you should shop daily for the food and drinks that you needed. This was a stark contrast to the typical American shopping experience which was to purchase groceries in bulk and shop much more infrequently as a result. This difference in culture meant that they could never really get the traction they wanted, and it didn’t seem to fit the buying patterns of American consumers.
  • Economic Recession. The timing of this expansion was really unfortunate because it happened in the middle of the worst economic crisis that the USA (and the world) had seen for a long time. As the sub-prime mortgage crisis took hold, unemployment soared, and the purchasing power of the middle class was significantly harmed. This effect was further concentrated in these Western states and so there was a disproportionate impact on the overall demand. This was not something Tesco could have predicted or planned for, but it’s a good reminder that you don’t operate in a silo. You’re reliant on economic conditions around you to sustain whatever operations you’re involved in.
  • Misaligned Product Offerings. The one common criticism that the roll-out faced was that the store focused too much on ready-to-go, microwaveable meals – something that was very popular in the UK but had less buy-in across the USA. When it came to convenience food, the US market was much more comfortable with fast-food outlets and that meant that the demand for the Fresh and Easy offering wasn’t as strong as it could have been.

As always, these reasons are purely anecdotal and it’s not entirely clear what role they played, but the key learnings were that you need to deeply understand the psychology and the buying behavior of a new target market before you enter it. If you don’t, you place the entire project at risk and this can have drastic consequences financially as well as from a reputational perspective.

Tesco had reportedly lost around $2bn when they decided to pull out of the country in 2013 and they’ve never gone back. They continue to focus on the UK market which they know very well and select other European and Asian customer bases which provide some diversification.

  • When you’re entering a new market, it’s critical that you understand the nuances and psychology of the customers in that new segment. Without this, you might miss the mark and suffer significant financial damages.

Tesco remains one of the most well-known grocery store brands worldwide and their ability to combine retail dominance, strong logistics capabilities, and sophisticated use of customer data is what will be the foundation that they build their future on.

They face many challenges in the year to come as more and more customers shop directly from brands, but the company is well aware of that and is doing all that they can to pivot the company effectively for this modern paradigm shift. In this strategy study, we’ve aimed to highlight some of the key areas that they’re focusing on with the hope that you can learn from them and apply them to your own context.

As a quick refresh, here are those main takeaways from the Tesco story:

  • Aggressive acquisitions should only be considered when you have a large war chest, and you can manage the downside risks as they present themselves.

Remember to take the necessary time to understand the customer context, leverage the power of data, and invest in sustainability so that you can remain relevant for decades to come.

The Strategy Story

Tesco SWOT Analysis

tesco strategic plan 2022

Before we dive deep into the SWOT analysis, let’s get the business overview of Tesco. Tesco plc is a British multinational retail company specializing in the grocery and general merchandise sector.

It was founded by Jack Cohen in 1919 and has grown to become one of the world’s largest retailers. Tesco operates across multiple countries, with its primary market being the United Kingdom. Here’s an overview of Tesco’s business:

  • Market Position: Tesco is the UK’s leading supermarket, holding a significant market share in the country’s grocery sector. It also has a strong presence in other countries, including Ireland, Central Europe, and Asia.
  • Store Formats: Tesco operates various store formats to cater to different customer needs, including Extra, Superstore, Metro, Express, and One Stop. These formats range from large hypermarkets to smaller convenience stores.
  • Product Range: The retailer offers a broad range of products, including groceries, clothing, household items, and electronics. It also has a robust private label offering through its exclusive brands, such as Tesco Finest, Tesco Everyday Value, and F&F.
  • Online Presence: Tesco’s robust online platform allows customers to order groceries and other products through its website and mobile app. The company offers home delivery and click-and-collect services to provide convenience to its customers.
  • Loyalty Program: Clubcard, Tesco’s loyalty program, rewards customers with points for their purchases, which can be redeemed for discounts, vouchers, or other benefits. This program helps Tesco maintain customer loyalty and gather valuable consumer data.
  • Corporate Social Responsibility: Tesco has implemented various sustainability initiatives, including reducing food waste, minimizing plastic usage, and sourcing products ethically. It aims to become a zero-carbon business by 2050.
  • Financial Performance: Tesco has demonstrated strong financial performance, consistent revenue, and profit growth. The company focuses on cost-saving measures and operational efficiency to maintain its profitability.
  • Acquisitions and Partnerships: Tesco has pursued strategic acquisitions and partnerships to expand its market reach and diversify its business. Notable acquisitions include the UK food wholesaler Booker Group and the convenience store chain One Stop.

In its 2021/2022 financial year, Tesco’s annual revenue amounted to more than 56 billion British pounds in the United Kingdom and the Republic of Ireland. This was an increase of over three billion pounds compared to the prior fiscal year.  The company’s profit  in the UK and the ROI increased to 2,191 million in 2021/2022.

Here is the SWOT analysis for Tesco

A SWOT analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business, project, or individual. It involves identifying the internal and external factors that can affect a venture’s success or failure and analyzing them to develop a strategic plan. In this article, we do a SWOT Analysis of Tesco.

SWOT Analysis: Meaning, Importance, and Examples

  • Market Leadership : As the largest supermarket chain in the UK, Tesco enjoys significant market share and brand recognition. This allows the company to exert considerable influence over suppliers and to benefit from economies of scale.
  • Diverse Store Formats : Tesco’s various store formats cater to different customer needs, from large hypermarkets to small convenience stores. This flexibility enables Tesco to reach a broader customer base and adapt to changing market conditions.
  • Strong Private Label Brands : Tesco’s private label products, such as Tesco Finest, Tesco Everyday Value, and F&F, offer customers high-quality goods at competitive prices. These brands help the company differentiate itself from competitors and boost profit margins.
  • Robust Online Platform : Tesco’s online presence and e-commerce capabilities allow it to reach customers who prefer online shopping. This has become particularly important amid the growth of e-commerce and changing consumer behaviors.
  • Effective Loyalty Program : Tesco’s Clubcard program helps the company retain customers by offering them rewards for their purchases. The program also provides Tesco with valuable consumer data, which can be used to improve marketing and tailor offerings to customer preferences.
  • Efficient Supply Chain Management : Tesco’s effective supply chain management enables the company to minimize waste, reduce costs, and ensure the availability of products in stores. This helps the company maintain competitive pricing and high levels of customer satisfaction.
  • International Presence : With operations in multiple countries, Tesco benefits from diversified revenue streams and reduced reliance on any single market. This international presence also allows the company to learn from different markets and apply best practices.
  • Focus on Corporate Social Responsibility : Tesco’s commitment to sustainability and ethical practices enhances its corporate reputation and appeals to environmentally and socially conscious consumers. This focus also helps the company comply with regulatory requirements and manage risks associated with environmental and social issues.
  • Overreliance on the UK Market : While Tesco has an international presence, most of its revenue comes from the UK market. This makes the company vulnerable to economic fluctuations, changing consumer preferences, and increased competition in the domestic market.
  • Price Competition : Tesco faces intense price competition from discount retailers such as Aldi and Lidl, which may pressure its profit margins. To maintain its market share, Tesco may need to lower prices or increase promotional activities, which could impact profitability.
  • Store Size and Format Challenges : Tesco’s larger store formats, such as Extra and Superstores, have faced challenges due to changing consumer preferences towards online shopping and smaller, local stores. Adapting these store formats and managing underperforming stores can take time and effort.
  • Reputation Damage from Past Issues : Tesco has faced several scandals in the past, such as the 2014 accounting scandal and issues related to supplier mistreatment. These incidents can damage the company’s reputation and erode customer trust.
  • Complex Organizational Structure : As a large multinational corporation, Tesco has a complex organizational structure that can lead to inefficiencies, slower decision-making, and challenges in implementing changes across different business units.
  • Difficulty in Sustaining Growth : Tesco’s size and market share make it difficult for the company to grow substantially in its core markets. Expanding into new markets or product categories can be challenging and risky, requiring significant investment and adaptation to local market conditions.
  • Regulatory Compliance : Tesco operates in a highly regulated industry with strict rules regarding food safety, environmental impact, and employee rights. The company must constantly monitor and adapt to regulation changes, which can be costly and time-consuming.
  • Challenges in International Markets : Tesco has faced difficulties in some international markets, such as withdrawing from the US market and selling its South Korean business. These experiences highlight the challenges of expanding and maintaining a presence in diverse markets with different consumer preferences and competitive landscapes.

Opportunities

  • Expansion of Online and Digital Services : As e-commerce grows, Tesco can further invest in its online platform and delivery services to meet increasing consumer demand for convenience and seamless shopping experiences.
  • Strengthening Private Label Offerings : Tesco can expand and improve its private label product range to offer customers more options at competitive prices, enhancing customer loyalty and boosting profit margins.
  • Focus on Healthier and Sustainable Products : As consumers become more health-conscious and environmentally aware, Tesco can capitalize on this trend by offering a more comprehensive range of healthier, organic, and eco-friendly products.
  • Expansion into Emerging Markets : Tesco can explore opportunities to enter high-growth emerging markets, which could provide significant growth potential and diversify its revenue streams.
  • Partnerships and Strategic Alliances : By forming strategic partnerships with suppliers, technology providers, or other retailers, Tesco can expand its product offerings, improve its supply chain efficiency, and strengthen its market position.
  • Growth through Acquisitions : Tesco can pursue acquisitions of smaller retailers or niche brands to expand its market presence, diversify its product portfolio, and enhance its expertise in specific sectors.
  • Enhanced Customer Experience : Tesco can continue investing in technology and data analytics to personalize in-store and online customer experiences. This can lead to increased customer satisfaction, loyalty, and repeat business.
  • Development of New Store Formats : Tesco can experiment with new store formats, such as smaller urban stores or specialized stores focusing on specific product categories, to cater to evolving consumer preferences and changing shopping habits.

  • Intense Competition : The retail industry is highly competitive, with Tesco facing competition from traditional supermarkets and discount retailers like Aldi and Lidl. These competitors may impact Tesco’s market share and profitability.
  • Changing Consumer Preferences : As consumer preferences evolve, Tesco must adapt its product offerings and store formats to stay relevant. Failure to meet changing customer demands may result in reduced footfall and sales.
  • Economic Uncertainty : Economic fluctuations and uncertainty can impact consumer spending patterns, affecting Tesco’s sales and profitability. This may be particularly relevant given Tesco’s reliance on the UK market.
  • Regulatory Changes : Changes in regulations related to food safety, labor practices, and environmental standards can impose additional costs and operational challenges for Tesco, affecting its business performance.
  • Technological Disruption : The rise of new technologies, such as online marketplaces and on-demand delivery services, can disrupt traditional retail models and threaten Tesco’s market share. The company must continuously invest in and adapt to new technologies to stay competitive.
  • Currency Fluctuations : As a multinational corporation, Tesco is exposed to currency risks due to fluctuations in exchange rates. These fluctuations can impact the company’s financial performance and make international operations more challenging.
  • Supply Chain Disruptions : Tesco’s complex supply chain can be vulnerable to disruptions caused by factors such as natural disasters, geopolitical tensions, or global pandemics. These disruptions can lead to increased costs, stockouts, and potential damage to the company’s reputation.
  • Cybersecurity Threats : As Tesco relies heavily on digital platforms and data management, the company is at risk of cybersecurity threats, such as data breaches or hacking incidents. These threats can lead to financial losses, reputational damage, and legal penalties if not effectively managed.

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5C analysis of Tesco (5C’s of Tesco)

This is a detailed ‘5C analysis of Tesco’. It provides readers with important insights into the key drivers behind Tesco’s success. The key drivers analysed in line with the 5C framework are company, competitors, customers, collaborators, and climate.

Tesco Company (Tesco Plc)

Tesco is a British multinational grocery and general merchandise company. It has market experience of over 100 years. It has operations in a number of countries and serves millions of customers every week. It has different types of stores e.g. Tesco Express, Tesco, Metro, and Tesco superstore. It has a strong online presence as well.

Tesco has 27.3% market share in the UK grocery industry (Kantar, 2023). Its online business had grown really well in the last few years. To run the operations efficiently, it has a number of committees under two broad titles i.e. Board Committee and Executive Committee.

However, controversies affected it several times in the past. For instance, it agreed to pay a fine of £120 million to avoid prosecution for its accounting scandal. SWOT analysis of Tesco sheds more lights on the company.

Collaborators of Tesco

Tesco works with thousands of suppliers and strategic partners. It sells both its own label and branded products, and therefore, suppliers are categorised as ‘UK own label suppliers’, ‘ROI (Republic of Ireland) own label suppliers’, ‘Branded suppliers’, ‘CE (Central Europe) own label suppliers’, and ‘Global growers’. Some of its top branded suppliers are Coca-Cola, General Mills, Kellogg, Nestle, PepsiCo, Princes, and Unilever.

Success of Tesco’s business largely depends on its relationship with the suppliers and strategic partners. There is no doubt that the relationship is solid; however, Tesco was found delaying payments to suppliers to boost its own profits in the past.

Likewise, Tesco had demanded suppliers to cut prices to help it battle with budget supermarkets such as Aldi and Lidl which many suppliers did not like and raised concerns about (BBC, 2020). Consequently, it has faced criticism for this type of treatment, with some accusing it of using its market power to force suppliers to accept lower prices.

Customers of Tesco

Tesco places customers at the centre of everything it does.  In fact, customers are one of the three pillars around which the business is organised (Tesco, 2023). The other two pillars are products, and channels. Tesco considers listening to customers extremely important to deliver the best service possible.

Tesco’s customers are diverse and include people from all walks of life. Its product range is extensive, ranging from groceries to clothing and electronics. It has expanded its product offerings to cater to specific customer needs as well, such as gluten-free and vegan products. Its customers are mostly loyal, with many being members of the Clubcard loyalty program.

Tesco communicates with the customers directly and frequently. It sends around 15 million emails to them each week. It also sends Clubcard vouchers regularly to them as a gesture of appreciation (Tesco, 2023). However, compared to some of the competitors, its customer satisfaction rate is low in the UK.

Competitors of Tesco

In the UK, Tesco faces stiff competition from ASDA, Sainsbury’s, Morrisons, Co-op, Lidl, and Aldi. Therefore, it has implemented a number of strategies to beat the competitors e.g. matching Aldi price. Abroad, it is again challenged by Aldi, Lidl, and other giants such as Penny Market, CBA, Carrefour, Walmart, and SPAR. The article Competitors of Tesco sheds more lights on this topic.

Tesco’s Climate

The last topic in the 5C analysis of Tesco is the climate which is also called context. A number of macro factors impact on the operations of the retailer. For instance, it was fined £7.56m for selling out of date food in its stores in Birmingham, the UK (Sky News, 2021).

Tesco is affected by several macro factors, including economic, social, and political factors. Economic factors, such as inflation, unemployment, and interest rates, can affect its sales and profitability. Social factors, such as demographic changes and consumer trends, can also affect it. For example, the trend towards healthier eating has led it to expand its range of organic and plant-based products.

Likewise, the retailer offers a wide variety of products for ethnic markets as it is a very fast-growing category in the UK, and some other developed countries. It sells both own and branded products thereby addresses the needs of customers from different economic backgrounds. PESTEL analysis of Tesco offers more information on the context of the company.

Summary of 5C analysis of Tesco (5C’s of Tesco)

To conclude, Tesco’s journey from a small grocery store to a global retail giant is a remarkable one. Its innovative strategies and initiatives have helped it grow and remain competitive in a challenging retail environment. It is true that it has faced challenges and controversies over the years; however, it has responded by making changes and improving its practices.

Tesco’s success is due in part to its focus on its customers. It has a loyal customer base and has targeted specific customer segments with promotions and product offerings. Its commitment to sustainability and reducing its carbon footprint is also commendable.

We hope the article ‘5C analysis of Tesco (5C’s of Tesco)’ has been helpful. Please share the article link on social media to help us continue with this free academic service.

You may also like reading Marketing mix of Tesco . Other relevant articles for you are:

Ansoff matrix in Tesco

Porter’s five forces analysis of Tesco

Distribution channels and supply chain of Tesco

Last update: 07 March 2023

References:

BBC (2020) Tesco demands supplier price cuts in discount battle, available at: https://www.bbc.co.uk/news/business-53284788 (accessed 07 March 2023)

Kantar (2023) Grocery market share, available at: https://www.kantarworldpanel.com/grocery-market-share/great-britain (accessed 07 March 2023)

Sky News (2021) Tesco fined £7.56m for selling out-of-date food, available at: https://news.sky.com/story/tesco-fined-7-56m-for-selling-out-of-date-food-12280744 (accessed 29 April 2021)

Tesco (2023) About us, available at: https://www.tescoplc.com/about/ (accessed 07 March 2023)

Author: M Rahman

M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.

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Barclays reveals revival plan to woo investors as profits fall

Investors give a positive reaction to the chief executive's strategy update that aims to tackle many barriers identified by top shareholders.

tesco strategic plan 2022

Business reporter @SkyNewsBiz

Tuesday 20 February 2024 13:31, UK

FILE PHOTO: A view shows signage on a branch of Barclays Bank in London, Britain, March 17, 2023. REUTERS/Peter Nicholls/File Photo

Barclays has revealed a revival plan to shore up support among investors that includes cutting costs and risk while bolstering returns.

The UK-based lender's shake-up, that Sky News reported last month had already resulted in 5,000 job losses , will also see an overhaul of management, some business disposals and £10bn returned to shareholders over three years.

A total of £3bn was planned for 2023 - up 37% on the previous year.

The plan was announced as Barclays reported a 6% decline in annual pre-tax profits to £6.6bn.

Shares, down by more than 3% in the year to date ahead of the updates, rose by 6% at the open.

Chief executive CS Venkatakrishnan, known as Venkat, told investors: "Our new three-year plan... is designed to further improve Barclays' operational and financial performance, driving higher returns, and predictable, attractive shareholder distributions."

He had previously pledged to listen to a growing number of investors seeking a streamlined business model and improved returns as the bank's share price lagged those of rivals.

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A top complaint has been Barclays' reliance on its high cost and high risk investment banking arm for profitability.

That business has attracted greater regulatory scrutiny industry wide since the financial crash of 2008, becoming even more vulnerable in times of economic uncertainty.

Its corporate and investment bank income fell by 4% to £12bn in 2023 as client activity dipped.

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Barclays said it would simplify its business through the creation of five divisions, boosting accountability in the process, with more investment money being directed at its UK consumer arm.

The company moved to strengthen its domestic retail bank earlier this month when it agreed to buy the bulk of Tesco Bank's operations in a deal worth up to £1bn.

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tesco strategic plan 2022

John Moore, senior investment manager at RBC Brewin Dolphin, said of the bank's update: "Barclays has a habit of delivering mixed news - and today's results are no different.

"While the bank's results for last year are more or less in line with expectations, they are still behind 2022.

"Plans to make cost reductions and revise its corporate structure should help drive improved profitability in the next few years, underpinning shareholder returns of £10bn.

"The acquisition of Tesco Bank also looks like a good, low-risk deal in terms of overlap, cost savings, and gaining some market share.

"Barclays is in a reasonable position and appears to be cautiously optimistic about the future, but execution of the plan set out today will be key to its performance."

We're taking strong action on climate change, with a commitment to be carbon neutral in our own operations by 2035 and net zero across our whole footprint by 2050.

The time to act is now

In its latest review of the science of climate change, the UN Intergovernmental Panel on Climate Change (IPCC) warned of an increased risk of extreme heatwaves, droughts, flooding, and a key temperature limit being broken in just over a decade.

The food industry contributes to climate change and is also vulnerable to it.

It's our responsibility to play our part in helping to avoid the most severe consequences. Urgent, collective action is required to meet global climate goals and move onto a zero-carbon pathway. There's no time to waste.

But we know we need to do more

Most of our total emissions (~90%) are generated in our supply chain and in customers' homes. These are known as Scope 3 emissions. We're working with our suppliers, partners and stakeholders to make the changes needed to reach net zero by 2050.

We aim to advocate, improve and transform our own operations and work with the wider industry to decarbonise our supply chain.

Our commitments

In September 2021 we committed to:

Carbon neutrality

In 2023, we became one of the first companies globally to have our Forests, Land and Agriculture (FLAG) and non-FLAG net zero target validated by the Science Based Targets Initiative (SBTi), a leading, globally renowned body that defines best practise for science-based climate targets.

Our targets include stretching interim commitments to reduce absolute scope 1 and 2 emissions from our own operations by 85% by 2030 from a 2015 baseline year, absolute scope 3 emissions from energy and industrial sources by 55% by 2032 from a 2019 baseline year, and absolute scope 3 emissions from forest, land and agriculture (FLAG) emissions by 39% by 2032 from a 2019 baseline year.

The validated targets will help guide our work towards our commitment to become net zero in our own operations by 2035, and value chain by 2050, in line with the Paris Agreement’s aim of limiting global temperature rise to 1.5C. 

Net zero across value chain by 2050

Note: FLAG = Emissions from Forests, Land and Agriculture. % = % reduction.

Our emissions

We've mapped our total footprint, including both direct and indirect emissions.

We continuously gather emissions data from our suppliers in the UK and abroad, to assess emissions hotspots and climate risks in our supply chain, and identify where we can work together towards net zero.

Most of our emissions come from our supply chain  and customers using what they buy. We can make the biggest impact in three different ways: working with suppliers to improve production practices; offering sustainable choices to our customers; and working with the wider food industry and governments to change the food system.

This graphic shows how our emissions break down:

38.5m tco2e/year.

  • Agricultural products
  • Product manufacturing
  • Fuel production
  • Packaging materials
  • Other raw materials

29.9m tCO2e/year

  • Domestic cooking
  • Washing and drying

5.3m tCO2e/year

  • Supplier transport
  • Customer travel
  • Own fleet emission
  • Employee commuting
  • Business travel

1.5m tCO2e/year

  • Operational waste
  • Packaging waste

1m tCO2e/year

  • Refrigerants
  • Purchased electricity

0.4m tCO2e/year

For our latest Scope 1 and Scope 2 emissions, see our Climate Factsheet

Reaching net zero needs transformational change in how we grow, produce and consume food.

To achieve this, we've developed emissions reduction roadmaps for key hotspots and commodities in our supply chain. The scale of the challenge is unprecedented. It will need action across our business and supply chains to support a shift in food production. It means doing everything we can to eliminate waste. And we will need to support customers with changes they can make in their households, for example by encouraging more sustainable diets. We’ve brought this work together under the pillars of our Planet agenda. 

  • We're supporting all suppliers to establish their own net zero ambitions and to set science-based targets. This includes a move to renewable electricity sources for all manufacturing sites.
  • We’re committed to 100% deforestation free primary risk commodities, including soy, palm oil, wood and paper, by 2025.
  • We’re also rolling out sustainable agriculture innovations such as low carbon fertilisers, across a number of our key veg suppliers.
  • We will have a 100% electric home delivery fleet by 2030.
  • We’re rolling out the use of electric HGVs in our transport network.
  • And we’re using rail freight where possible as a low emissions alternative to road miles.

Scope 1 - 3

  • Across the Group, 100% of the electricity we use is renewable, either from our onsite solar panels and wind turbines or through the renewable electricity we source from the national grid. We have signed one of the largest unsubsidised Power Purchase Agreement (PPA) portfolios in the UK, helping to transform the UK National Grid.
  • We’re trialling and rolling out innovative technologies across our stores including heat pumps.
  • We’re also improving refrigeration efficiency and reducing refrigerant emissions in our stores and distribution centres by installing aerofoil technology, and retrofitting existing systems with more environmentally friendly refrigerant gasses.

Scope 1 & 2

  •  Increasing the proportion of sales of healthy food to 65% by 2025.
  • We’ve launched our Better Baskets campaign to encourage customers to make better choices about the food they buy, while still offering great value.
  • We’ve made a voluntary commitment not to sell HFSS products through volume-led promotions.
  • We’re committed to halving food waste in our own operations by 2025 – five years ahead of the United Nations Sustainable Development Goal.
  • We’re also encouraging customers to waste less food at home through our ‘Use-Up Day’ initiative.
  • To reduce the impact of packaging, our \"4Rs\" strategy - Remove, Reduce, Reuse, Recycle - aims to ensure packaging never finds its way into landfill or the environment.
  • All packaging will be fully recyclable by 2025.
  • All paper and board used will be 100% sustainable by 2025.

Scope 1 and 3

  • We’re rolling out LEAF Marque certification for all our global fruit and veg suppliers by 2025.
  • We’re committed to improving biodiversity at a landscape-scale, by supporting soil, water, pollinator and nature-based outcomes in priority locations, including the Wye & Usk, Cam & Ely and Soar in the UK, and South Africa, Kenya, and southern Spain.
  • We’re part of the Science-Based Targets for Nature (SBTN) initial target validation group and the Taskforce on Nature-Related Financial Disclosures (TNFD) soy and palm pilots.
  • We’re working with WWF on a Seascape approach to protect whole marine ecosystems.
  • We’ve launched a pesticide strategy for suppliers and farmers, and working to improve nature across Tesco’s estate by reducing pesticide use, planting wildflower margins and rewilding of landbanks. 

Climate and finance

In 2017, we became signatories of the Taskforce on Climate-related Financial Disclosure (TCFD), which commits us to assessing, mitigating and disclosing climate-related risks.

Since 2020, we’ve launched two sustainability-linked bonds, which are a form of borrowing linked to sustainability performance. We have also put in place a revolving credit facility linked to achieving our environment commitments. We have also implemented an enhanced climate governance framework encompassing our Board, Committees and Executive team.

£2.5 billion

€750 million, £400 million.

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Five Places Russia Is Fighting to Break Through Ukrainian Lines

Outmanned and outgunned, Ukrainian ground forces are in perhaps their most precarious position since the opening months of the war.

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By Marc Santora ,  Scott Reinhard and Josh Holder

tesco strategic plan 2022

Sievierodonetsk

Zaporizhzhia

Line of contact

before invasion

Sea of Azov

tesco strategic plan 2022

Ukraine is engaged in a desperate fight to hold back the Russian onslaught.

Russian forces captured the longtime Ukrainian stronghold of Avdiivka before dawn on Saturday, Moscow’s first major battlefield gain since it took Bakhmut last May.

But across the entire 600-mile-long front, Ukraine is short on ammunition without renewed American military assistance, and it is struggling to replenish its own depleted forces after two years of brutal fighting.

Russia’s assault has split into five major lines of attack, spanning towns and cities across much of the front in eastern and southern Ukraine. Here is the status of Russia’s offensive in five critical battles:

1. Avdiivka

Russia captured a longtime ukrainian stronghold..

The now-destroyed city of Avdiivka covers only some 12 square miles. But for the better part of a decade it carved a bulge in the front line that undermined critical Russian logistical operations. It sits only a few miles from the city of Donetsk, which Russia has occupied since 2014.

In recent weeks, Russian forces have breached a critical supply line and threatened to encircle Ukrainian soldiers. Oleksandr Tarnavskyi, the head of Ukraine’s forces in the south, said that Ukraine had no choice but to withdraw.

“In a situation where the enemy is advancing on the corpses of their own soldiers with a 10-to-1 shell advantage, under constant bombardment, this is the only correct solution,” he said in a statement.

It’s not clear how far the Russians might be able to push this fight beyond Avdiivka, or how well the Ukrainians have constructed their next lines of defense. But the next major population centers, home to tens of thousands of civilians, are only about 35 miles to the west.

Roughly 50,000 Russian soldiers have been dedicated to the fight for Avdiivka in this direction, although the numbers fluctuated. Tens of thousands of Russians have been killed or wounded, according to Western and Ukrainian officials, but Russia has steadily replenished their ranks, including using convicts to join the fighting.

Even if the lines stabilize after the Russians take the city, its fall allows the Russian military to move troops and equipment more efficiently behind the line as it presses in other directions.

Read more: The Death Throes of a Ukrainian City , Feb. 18

A destroyed town is now a base for Russian attacks.

By last month, Russian forces had finally cleared out the last Ukrainian defenders of Marinka , another longtime frontline town.

There is very little left of Marinka after two years of Russian bombardments and battles. But its capture has allowed the Russians to turn their attention to the south and another vital Ukrainian stronghold, Vuhledar .

Last year, the Russians repeatedly tried to attack Vuhledar from the south and suffered catastrophic losses, including a devastating defeat in one of the largest tank battles of the war.

But with Marinka under control, the Russians are attacking Vuhledar from the north. They are currently advancing through the village of Novomykhailivka, which is about 13 miles to the northeast.

It is not clear how many forces the Russians have amassed in this direction, but Ukrainian officials have said Russia has kept around 40,000 in the nearby Mariupol area to be deployed for attacks from the south.

Soldiers fighting in the Vuhledar area said that the fall of Avdiivka, 55 miles to the northeast, would likely free up Russian forces to step up attacks from the north.

Read more: A Trophy in Ruins: Evidence Grows That Russia Controls Marinka , Jan. 4

3. Robotyne

Russia is seeking to reverse ukraine’s largest gains last year..

When Ukraine’s failed summer counteroffensive culminated last year, its forces had managed to advance only about ten miles deep into the southern front, reaching just beyond a tiny village, Robotyne .

Russia now appears determined to win back what it lost.

The Russian military has more troops concentrated on this front than on the Avdiivka front, Dmytro Lykhovii, a spokesman for Ukrainian soldiers fighting in the south, said this week.

“It seems that the Russians have set a goal to gain some success there by storming in, just as they are trying to do in Avdiivka,” he said.

Read more: Russia Retakes Some Land Hard Won by Ukraine During Counteroffensive , Dec. 28

4. Kreminna

Russia is pushing from kreminna to reclaim towns in the northeast it lost to ukraine in late 2022..

Ever since the Russians were driven out of occupied territories in northeastern Ukraine more than a year ago — losing control over more than 500 settlements spread over 11,000 square kilometers — they have been fighting to try and take it back.

Last year, little territory changed hands, despite intense fighting in the forest belts along the front here. Now, Russia is starting to move forward again, albeit slowly in the face of fierce Ukrainian resistance.

Russian forces are pushing in two directions from the city of Kreminna : toward the battered city of Kupiansk to the north, and toward Lyman , 80 miles to the south. Russia has maintained a total force of around 110,000 troops in the area for months, despite losses, Illia Yevlash, a spokesman for the military in the area, told reporters earlier this month.

Read more: Ukraine and Russia Battle for a Gateway City in the East , Dec. 27

Russia has regained the momentum, and a major Ukrainian city could come into artillery range.

Russia destroyed and then seized the city of Bakhmut in May, its last significant territorial gain on the battlefield before advancing on Avdiivka this week. By the time the Russians took Bakhmut, their forces were exhausted, and the Wagner mercenary group that led the fight was in open rebellion against the Russian ministry of defense.

Ukrainian hopes to exploit the disarray to counterattack around the flanks of the city largely stalled. Now, it is the Russians who have the initiative.

General Oleksandr Syrsky, the newly appointed commander of Ukrainian forces, said recently that the Russians are determined to break through their defenses around Chasiv Yar , which would give them control of commanding heights in the area and expose the city of Kramatorsk to increased artillery fire. Some 62,000 Russian soldiers are on the ground in the Bakhmut direction, according to Ukrainian estimates.

“The situation is tense, requiring constant monitoring of the overall situation and prompt decision-making on the ground,” Gen. Syrsky said in a statement earlier this month.

Read more: Why Bakhmut? It’s a Question as Old as War , May 5, 2023

Marc Santora has been reporting from Ukraine since the beginning of the war with Russia. He was previously based in London as an international news editor focused on breaking news events and earlier the bureau chief for East and Central Europe, based in Warsaw. He has also reported extensively from Iraq and Africa. More about Marc Santora

Scott Reinhard is a graphics editor, focusing on cartography and data visualization. He holds a master's degree in Graphic Design from North Carolina State University. More about Scott Reinhard

Our Coverage of the War in Ukraine

News and Analysis

Hungary’s Parliament voted to approve Sweden as a new member of NATO , allowing the Nordic country to clear a final hurdle that had blocked its membership and held up efforts by the military alliance to isolate Russia over its war in Ukraine.

European leaders gathered in Paris in an attempt to showcase unity in their support for Ukraine  as the country confronts a dire situation on the battlefield  against Russia and in Washington, where Republicans in Congress are blocking badly needed aid.

Some 31,000 Ukrainian soldiers have been killed  since Russia’s invasion began two years ago, President Volodymyr Zelensky of Ukraine said, acknowledging for the first time in the war a concrete figure for the country’s toll.

Holding a Sliver of Hope: A Russian mother knows her son, a conscript, died 14 months ago in a battle in eastern Ukraine. But she is still waiting for him.

A Long Fight: On the second anniversary  of Russia’s invasion, many weary but determined Ukrainians  are taking a longer view of the war , pinpointing the Maidan uprising of 2014 as the start of a 10-year conflict with their adversary.

Sending a Message: Two years since the start of the war in Ukraine, President Vladimir Putin of Russia has fully embraced the image of an unpredictable strongman  ready to escalate his conflict with the West.

How We Verify Our Reporting

Our team of visual journalists analyzes satellite images, photographs , videos and radio transmissions  to independently confirm troop movements and other details.

We monitor and authenticate reports on social media, corroborating these with eyewitness accounts and interviews. Read more about our reporting efforts .

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