tesco global strategy case study

TESCO – British Retailer that redefined Grocery Shopping

The first time I visited a ‘Tesco Extra’ store was at midnight, making an emergency run for next morning’s breakfast. The store seemed to occupy the area of an entire football field in Ashby-De-La-Zouch, UK. Even at an ungodly hour, Tesco was well-lit with visiting customers.

Inside, there were never-ending aisles lined up with groceries, food items, clothing, electronics, and whatnot. It was easy to lose way and lose track of time in the colossal supermarket.

I thought to myself that this would be the only store of its kind in the county, but I was wrong.

Tesco has 4008 stores across the UK and Republic of Ireland , with 7005+ stores and franchises across the world. In Europe, Tesco has established itself in Hungary, Slovakia, Czech Republic, Poland and Turkey. In Asia it has stores in Thailand, South Korea, Malaysia, Japan and China.

TESCO is much more than a chain of supermarkets selling a million products. It’s a giant conglomerate, spanning across so many verticals. It’s the equivalent of one of the FAANG companies but in the Grocery & Retail sector. It becomes imperative for business enthusiasts like you and me to understand the business model of this retail giant called Tesco.

It’s considered a part of the ‘Big Four’ supermarkets alongside ASDA, Sainsbury’s, and Morrison’s in Europe.

The Birth of Supermarkets in Britain

Founded in 1919 by a war veteran – Jack Cohen , Tesco began as a grocery stall in the East End of London, making a profit of £1 on sales of £4 on day one. Tesco’s first store was launched in 1929, selling dry goods & its own brand of Tesco Tea. A hundred more Tesco stores were opened in the next 10 years.

With 100+ mom-and-pop stores in Britain, Jack wanted to expand his product range. He traveled to the US in 1946 and noticed the self-service system, where customers would select different products on the shop floor and finally checkout at a counter. Jack brought this concept back to Britain, giving birth to Tesco Supermarkets and changing the face of British Shopping. His motto was to “stack ‘em high, and sell ‘em low (cheap).”

Tesco has a wide range of supermarkets depending upon their size, range of products, and location. This also helps regulate their Supply Chain to reduce wastage.

Tesco Business Model is based on various verticals

Tesco has deep-rooted its businesses in the European market so well, it’s difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are:

A glimpse into the Complex Supply Chain

A supply chain is one of the critical aspects of the business model of a giant retailer like Tesco. Tesco has its priorities set when it comes to procuring products from different parts of the world:

• Use expertise to offer a better range of products at reasonable prices
• Use economies of scale to buy more for less
• Leverage and maintain relations with global branded suppliers
• Grow the brand

It procures goods from over 44 countries, majorly China. A stock of up to 90,000 different products (30% are food & beverages) is transferred via the global sourcing office located in Hong Kong. Keeping wholesalers out of the loop, Tesco procures directly from suppliers. The conglomerate has developed and maintained long-lasting relations with suppliers’ world over—the main ones being General Mills, Kellogg, Mars, and Princes.

Tesco has set up a separate division to regulate its supply chain, “the machine behind the machine” – Tesco International Sourcing (TIS). It can be compared to the East India Company of the 18 th -19 th Century, catering to only one customer – Tesco.

TIS is connected to over 1000+ suppliers across 1200+ factories . It’s responsible for over 50,000 Tesco product lines in terms of quality control, sourcing, production, designing, timely delivery, and sorting trading/customs documentation.

All activities are coordinated centrally at TIS, with just 533 staff members. These staff members undergo rigorous training to detect & analyze Supplier-violations and conduct Auditing.

Tesco coordinates with TIS on a daily basis to procure products in the following ways:

• The local team uses customer insights to create a Product Brief (new or modified) specified for each region.
• TIS analyzes the product brief and develops a Product Sourcing Plan depending upon – stores that need this product and figuring out minimum transport time and cost, as per the region.
• The Plan is executed, and specific demands are handed out to Suppliers all over the world. Expert TIS Buyers make sure the best deal is made.
• Inbound logistics are consolidated at specific Tesco Depot to receive the product efficiently from Suppliers.
• Local teams then make sure the product is distributed to different Tesco stores from the Depots.

Tesco adding eCommerce to the mainstream business model

Being in the Top 50 retailers globally as of 2021 , Tesco’s annual revenue worldwide in 2020 was £58.09B , a 9.1% decline from 2019 (due to the Pandemic & disposing of its Asia operations , to focus on the core business in Europe).

It shifted from Brick & Mortar to Brick & Click stores. The Click+Collect functionality on its website accounts for 43% of E-grocery sales in the UK. The Click+Collect concept enables customers to place their orders online and collect their orders a few hours later at the nearest Tesco Depot. Tesco created these specialized Depots for online orders only.

Despite shutting down most its mall operations, Tesco survived 2020 through its online retail store Tesco.com , with double the orders. Its E-commerce net sales had shot up by 31% from 2019-2021.

A Global Operations & Technology Center in Bengaluru was also set up in 2004. This center serves as the backbone of distribution operations for Tesco worldwide. Its business functions are- Finance, Property, Distribution Operations, Customers & Product. The employees at this Center are Engineers, Analysts, Designers, and Architects.

Tesco’s Marketing Strategy

Tesco has always believed in acquiring loyal customers and regaining stakeholders’ trust. It aims to reach customers from all financial backgrounds. So it launched 2 of its own sub-brands – Tesco finest for the affluent customers and Tesco Everyday Value for the rest of the crowd.

Tesco also launched the Club Card in 1995 as a Membership card, to maintain customer loyalty and keep them coming back. The Card operates on a point-based system with discounts on products, & other subsidiaries like double data on Tesco Mobile. With 5 Million subscribers in the first year , Tesco finally overtook its competitor – Sainsbury’s to become No.1 in the UK.

The Club-card strategy was used to obtain customer data and observe buying habits. This data was analyzed, allowing Tesco to put the right products on shelves while eliminating unpopular ones. Tesco realized that the Club Card isn’t just a quick fix & temporary promotional tool; it’s a promotion in itself. This made the Tesco Club Card unique and long-lasting.

Tesco also realized that spending Billions on traditional marketing efforts and maintaining a ‘one-size-fits-all’ brand image wouldn’t work. It decided to hyper-target specific customers and to earn their trust. For starters, thousands of head-office staff and senior executives were sent to work in stores – to demonstrate how Tesco values its customer. Customization became key for its new marketing strategy; sending out discounts on birthdays via Emails and campaigning from door-to-door.

Tesco also made a partial shift to Digital Marketing which costs much lesser and has a wider outreach. It created well-tailored profiles on all social media platforms. On Twitter, it has more than 15 accounts, separate for each of its business units. The online customer care account on Twitter is active 24-7.

All supermarkets commonly advertised themselves to have quality products at a reasonable cost; Tesco wanted to differentiate itself as a unique brand. It introduced step-by-step Recipes prepared from ingredients available at any Tesco store, with Chef Jamie Oliver as its Health Ambassador . Tesco Food and its variety of recipes were a massive hit. Later on, the monthly Tesco Magazine as a food & lifestyle magazine was also launched, with 4.65Million readers worldwide.

The beginning of the pandemic in March 2020 left people apprehensive about visiting a physical store to buy groceries. To deal with customers’ concerns, Tesco came up with an instructional advertisement in April ‘20. With crisp instructions similar to that of an in-flight safety video, this ad showed customers how to physically shop and behave at Tesco stores. It was considered to be the most effective advertising and communications campaign of 2020 as per YouGov BrandIndex .

Competition

Tesco’s earliest competitor has been Sainsbury’s since the 70s. The Tesco Club Card strategy in 1995 helped it overtake Sainsbury’s to become the No.1 Retailer in the UK, but not for long. The ‘Big Four’ supermarkets in Europe have been in close competition throughout the years. Tesco has acquired a 28% majority stake in the UK market.

The horse meat and accounting scandals were a real setback for Tesco, letting competitors take over the European market. The newest German entrants – Aldi and Lidl had caught customers’ attention and market share in a short span of time.

With a combined market share of 12%, these German retailers posed a threat to Tesco. So much so that Tesco began the ‘ Aldi Price Match ’ campaign to curb the growth of the German discounter and win back customers. Tesco started price-matching thousands of its products with that of Aldi, offering better quality and branded products at Aldi’s prices.

Tesco has a majority market share in Britain, with Sainsbury’s and ASDA in tow:

Tesco Adding Sustainability to its business model – The Little Helps Plan

It’s a well-known fact that giant conglomerate retailers are one of the major causes of rapid climate change and increasing carbon footprints. Tesco realized its impact on the planet and launched the Little Helps Plan as a core part of business in 2017. This plan serves as a framework to attain long-term sustainability. Its four Pillars – People, Products, Planet, and Places are aligned with the UN’s Sustainable Development Goals.

Until now, the Plan has enabled Tesco to:

• Permanently remove 1 Billion pieces of plastic from its packaging
• Redistribute 82% of unsold food, safe for human consumption
• Remove 52Billion unnecessary calories from foods sold

Apart from this, it also aims to increase sales of Plant-Based Meat alternatives by 300% by 2025. At present, it has 350 plant-based meat alternatives on the shelf.

Apart from partnering with various other organizations, Tesco entered a 4-year partnership with World Wide Fund for Nature (WWF) to address one of the biggest causes of wildlife loss – the global food system. It aims to eliminate deforestation from products, promote recyclable/compostable packaging and minimize food waste.

Tesco is one of the few successful retailers in the world, with a compelling history. Tesco has overcome numerous issues across its supply chain, faced global criticism, and still stands undeterred in the European market with its rock-solid business model. It has always adapted to its unpredictable consumers and continues to do so while caring for the planet.

The business is healthy. We said we would rebuild the relationship with the brand and consumers; you will see that in every measure of customer satisfaction we do that. The business is healthy, vibrant and there is a lot of optimism of what we can do going forward. CEO Dave Lewis, who took over Tesco in 2014 (during the struggle years) & stepped down in September 2020

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An Engineering grad, currently working in the fields of Big Data & Business Intelligence. Apart from being immersed in Tech, I love writing and exploring the business world with a focus on Strategy Consulting. An ardent reader of Sci-Fi, Mystery, and thriller novels. On my days off, I would spend time swimming, sketching, or planning my next trip to an unexplored location!

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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.

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] .

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.

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’.

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.

Tesco Corporation’s Internationalization Strategy Case Study

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment

Introduction

Analysis of the existing strategy, costs and benefits of the strategy, environmental challenges, resources/capabilities, new strategic directions.

Tesco is one of the leading UK retailers that started its international expansion in the 1990s. The company’s focus on internationalization was a successful strategy that led to remarkable growth in many regions and considerable profits that reached $3.8 billion in 2011 (Wrigley, Lowe, & Cudworth, 2013). However, success in some regions was accompanied by major failures in other areas, which led to significant losses, both financial and reputational. This paper includes a brief analysis of the company’s strategy, as well as challenges the company faces and new strategic directions to adapt to address these challenges.

The focus on international expansion was determined by the growing regulatory and competitive pressures Tesco had to handle in the domestic market. The first areas of expansion were countries of Central Europe that were undergoing major transformations in the 1990s after the collapse of the Soviet Union. Regulations in those countries were minimal, and competitors were also quite a few, which enabled the company to earn a significant share of the market (up to 27%) in 2011 (Wrigley et al., 2013). At that, Tesco experienced the most unprecedented growth in Asia, specifically in South Korea. The company is now the second-largest retailer in the country, with revenues of over £5 billion (Butler & Neville, 2013). The company is successfully penetrating the markets of India and China.

Nevertheless, the expansion into the US market that started in 2007 proved to be a failure as the company announced that all the stores would be closed and sold in the near future (Ruddick, 2013). It is noteworthy that Philip Clarke, the company’s CEO, understood the complexity of operating in the USA as the market was saturated, and the competition was rather fierce. However, the decision was to enter the American market with a focus on fresh food (which was quite expensive).

The internationalization of Tesco has a number of peculiarities. First, the company made some partnerships. One of the most successful partnerships was implemented in South Korea (Wrigley et al., 2013). Tesco and Samsung collaboration was successful as Tesco managed to address various issues associated with operating in new markets. First, the retailer managed to learn the peculiarities of the country’s legislation and regulatory policies.

Customers’ needs and characteristic features were also acknowledged. Tesco also managed to establish a retail chain that seemed fully domestic. Another peculiarity of Tesco’s expansion was the focus on its private labels rather than manufacturers’ products. The company also tried to be customer-oriented. However, in many regions, Tesco failed to achieve this goal, which led to failures and losses (Yoder, Visich, & Rustambekov, 2016). The company did not meet the needs of customers in the USA, Japan, and other regions.

It is necessary to note that internationalization is often an effective strategy used when the competition in the domestic market becomes too fierce, or other environmental challenges come into play (Wrigley et al., 2013). The expansion to other markets allows companies to improve profits through the increase in sales. The company can allocate funds wisely and invest in profitable projects. Operating in new markets helps companies become more flexible and innovative.

On the one hand, businesses learn about different regulatory policies and laws. On the other hand, they learn how to adjust to such environments. This flexibility is essential in the contemporary globalized world as regulations and norms existing in some countries tend to be adopted in other regions as well. There are chances that the norms and regulations existing in a foreign market will be used (with some differences) in the domestic market as well.

Nonetheless, the costs associated with the use of this strategy are also substantial. First, any expansion requires significant financial investments (related to acquisitions, alliances, construction of facilities, and so on). For instance, Tesco invested £1.25 billion to enter the American market (Wrigley et al., 2013). Clarke stated that this kind of investment was affordable for the company, and it could become transformational for Tesco in case of success. The CEO also stated that the major reputational loss in case of failure was associated with his name, not the company. Nevertheless, the reputational loss is apparent, and its negative effect can become visible soon. Unsuccessful expansion can come at a high cost, and Tesco’s failures in some regions can be seen as illustrations of these costs.

Tesco’s failures are associated with a number of wrong decisions as well as environmental challenges. First, the company entered the American market a year before the global financial crisis of 2008 (Butler & Neville, 2013). The environmental factor was accompanied by the inability to adjust and the inability to address customer needs (Yoder et al., 2016). For example, Fresh & Easy stores offered high-quality products, but they became unaffordable for price-sensitive Americans.

Furthermore, the focus on private labels was also ineffective in the US market. Martinez-Ruiz, Gonzalez-Gonzalez, Jimenez-Zarco, and Izquierdo-Yusta (2016) stress that American customers often become loyal to particular brands. People’s needs and preferences were not addressed, which resulted in failures. Customers’ peculiarities were not taken into account in other regions as well. For instance, in Poland, people prefer convenience stores to large hypermarkets while Tesco focuses on this type of retail units in that region (Ruddick, 2013). Apart from the inability to identify people’s needs, Tesco also faced issues related to the introduction of new regulations.

For instance, the changes in the Indian legislature has a negative effect on the development of the company and its further expansion in the region (Butler & Neville, 2013). Finally, many countries are trying to address serious financial issues and introduce new taxes, which also has an adverse impact on the company’s growth.

When discussing the resources and capabilities of the international retailer, it is necessary to note that Tesco has substantial funds to invest in numerous projects. The company’s billion profits show that significant funds can be allocated to innovate and expand. Apart from the obvious financial resources, the company also has other resources and capabilities. For instance, Tesco has a positive experience associated with the collaboration with companies operating in new (for Tesco) regions (Wrigley et al., 2013).

This experience can be helpful when expanding to new markets (in India and China). Tesco’s experience in collaborating with other companies can generate value as the company will be able to employ it in other regions (collaborating with other companies). The use of this strategy can help the company reduce costs, understand new markets better, and develop a proper image in the new market.

The company also tries to innovate and come up with new products and services. The development of private labels is one of the areas where Tesco has succeeded in many regions. For example, its tablets have acquired significant popularity (Warman, 2013). Hence, the development of private labels can help the company meet the existing and potential customers’ needs in a more efficient way.

The company is also expanding its e-commerce operations. Tesco’s management claims that being online is one of the major competitive advantages in the retailing industry (Warman, 2013). The company has quite effective information systems that can be used to implement marketing research, share knowledge within the company, and so on. The data obtained can help the company create value-added products and services that can attract more customers and meet the needs of the existing customers.

It may seem that the most appropriate strategy for Tesco is the focus on the domestic market and the most successful foreign markets (such as South Korea). However, the UK market is saturated, and the competition is very serious. The company needs to expand, but the expansion strategy should be based on the lessons learned from previous years. First, Tesco should launch large-scale market research with a focus on customers’ characteristic features (profile).

It is essential to understand what people need and want. One of the successful methods to learn more about new customers is the development of partnerships and alliances. Tesco can collaborate with local businesses to develop a successful marketing strategy.

Yoder et al. (2016) note that ineffective supply chain management contributed to Tesco’s failures. The company should implement research concerning the most efficient locations of stores and other facilities. This task is closely connected with another area of concern. The company should analyze the existing competition in new markets. Tesco should properly evaluate the existing competition and (based on this analysis) decide whether new Tesco stores can be set or other locations should be chosen. It is also important to identify Tesco’s competitive advantage to be able to win the competition or, at least, remain a successful player in the market.

Finally, Tesco should focus on innovation as this strategy has proved to be effective in South Korea and many other countries. The use of technology is instrumental in achieving this goal. For example, South Korean customers enjoy so-called virtual stores (Wrigley et al., 2013). These advances can be equally successful in western countries as well. The use of mobile technologies is also on the rise. E-commerce is another area to develop.

In conclusion, it is possible to state that Tesco has chosen an effective strategy that implies internationalization. This strategy is associated with numerous opportunities, including larger profits, growth, flexibility, organizational learning, etc. However, it is vital to avoid the mistakes the company has made. For instance, Tesco should reconsider its supply chain management, especially when it comes to the choice of location. The company should implement extensive research concerning customers’ needs and preferences.

It is also critical to evaluate properly the existing competition in different markets as well as environmental issues as macro and micro-economic factors affecting the development of countries and regions. Tesco should maintain its focus on innovation, but the use of advanced technologies and marketing strategies should be based on extensive market research. Although the company is still facing numerous internal and external issues, Tesco can still retain its leading position and improve its operations in different markets.

Butler, S., & Neville, S. (2013). Tesco’s empire: Expansion checked in UK and beyond . The Guardian . Web.

Martinez-Ruiz, M. P., Gonzalez-Gonzalez, I., Jimenez-Zarco, A. I., & Izquierdo-Yusta, A. (2016). Private labels at the service of retailers’ image and competitive positioning: The case of Tesco. In M. Gomez-Suarez & M. Martinez Ruiz (Eds.), Handbook of research on strategic retailing of private label products in a recovering economy (pp. 104-126). Hershey, PA: IGI Global.

Ruddick, G. (2013). Is Tesco’s dream of building an international empire unravelling? The Telegraph . Web.

Warman, M. (2013). Tesco Hudl tablet takes on Kindle and iPad . The Telegraph . Web.

Wrigley, N., Lowe, M., & Cudworth, K. (2013). The internationalization of Tesco: New frontiers and new problems. In G. Johnson, R. Whittington, D. Angwin, K. Scholes, & P. Regner (Eds.), Exploring strategy: Text and cases (pp. 657-661). Harlow, UK: Pearson.

Yoder, S., Visich, J., & Rustambekov, E. (2016). Lessons learned from international expansion failures and successes. Business Horizons , 59 (2), 233-243.

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Bibliography

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In-Depth Marketing Strategy of Tesco – Case Study with SWOT Analysis

By Aditya Shastri

Introduction.

Tesco, a multinational retail company by adopting a customer-focused approach and employing effective marketing strategies has helped them to become a leading player in the supermarket industry industry. The brand focuses on providing its customers with the best possible value for money, by providing a diverse range of products at competitive prices that make it easy for customers to find what they are looking for.

In this case study, we shall discuss how Tesco achieved this feat by looking at its latest news, competitors, marketing strategies, and online retail presence.

About the Company

Tesco is a retail company headquartered in England. The company has 7,000 stores worldwide, employs over 500,000 people and serves tens of millions of customers each and every week. Its core business is grocery retail but the company has also diversified into the retail banking and assurance industries. For the purpose of this blog, we shall only be focusing on Tesco’s retail business. Tesco’s stores stock over 40,000 different products. Their procurement teams work with tens of thousands of different raw materials that are transported internationally every day.

How did a company setting up market stalls transformed into a global retail mammoth? To get a sense of their business and operations and the marketing strategy of Tesco let us first take a look at their marketing mix.

 What’s new with Tesco?

• Tesco Media and Insight Platform have entered into a partnership with Pintrest. This will enable the leading CPG brands to leverage the power of Tesco’s Clubcard data to deliver personalized and relevant ads.
• Tesco has announced that it will be running home deliveries with 500 electric vans for the company’s Sheffield Extra store. This makes it the first in Yorkshire that have a fully electric fleet.
• Tesco Ireland plans to invest €80 million this year in 8 new stores, upgrade projects for 50 years, and maintenance expenses.
• Tesco customers will notice a major change post-announcement made by Tesco to introduce a major shift of milk caps in supermarkets.
• Tesco is introducing a new in-store campaign where they will recycle broken plastic toys into books and reading resources for UK schools.

Tesco’s Buyer Persona

Buyer’s Persona

Profession:

Software Engineer

• Convenience & efficiency in grocery shopping.
• Quality products at affordable prices.
• Interested in saving money
• Wants to maintain a healthy lifestyle

Interest & Hobbies

• Cooking new recipes.
• Home organization & meal planning.
• Finding deals & discounts.
• Exploring Food Trends..

Pain Points

• Limited time due to busy work.
• Difficulty in making choices amidst numerous options.
• Concerns about product freshness & quality.
• Uncertainty about navigating promotions, offers & loyalty programs.

Social Media Presence

• Follows lot of food & lifestyle influencer
• Engages with discount & coupons
• Joins local community group for food recommendations

Marketing Mix of Tesco

A marketing mix is an important tool for determining how a product is marketed or can be marketed in the future. The marketing mix consists of the 4 P’s of marketing: Price, Product, Promotion, and Place. Let us now analyse Tesco’s marketing mix.

Tesco’s Product Strategy

Tesco has majorly expanded since its inception and now provides a wide range of products in categories including food, electronics, health, books, apparel, home and decor, party and gifting, sports and fitness equipment, beauty, jewellery, baby products, etc. It’s quite clear that Tesco caters to various needs of consumers from across segments and is a retail giant. Tesco has its own brands for these categories, namely Tesco Loves Baby, Tesco Lotus, Tesco Kipa, F&F Clothing, Tesco Value, etc. Tesco’s wide range of products and own brands are supported by a strong digital marketing strategy . By using digital marketing effectively, brands can reach a wider audience, build brand awareness, generate leads, drive sales, improve customer service, and understand their target audience.

Tesco’s Pricing Strategy

The Tesco pricing strategy adopts an efficient supply chain network that allows them to take advantage of the economies of scale and offer products at the lowest possible prices. Tesco does not compromise on quality for the sake of price. They regularly entertain feedback from consumers and try to cut down on irrelevant costs to provide low prices. Tesco, thus, follows the cost leadership strategy.

Did you know? 🧐 – Brands can use digital marketing to promote their products and offers through marketing channels such as social media , email marketing , and search engine advertising . This can help them to attract new customers and encourage existing customers to buy more.

Tesco’s Place and Distribution Strategy

Tesco has 6,900+ stores in 15+ countries including the UK, Ireland, Hungary, Slovakia, France, Japan, etc. Tesco has various types of stores offering varying products and services. Namely, Tesco Metro, Tesco Express, Tesco Extra and Tesco Superstore.

Tesco superstores are large supermarkets that sell groceries and a range of non-food items. Tesco Metros are smaller stores situated in towns and city centres. Tesco Express is an even smaller store that essentially deals in high-margin products. Products at Tesco Express are costlier than the other Tesco stores.

Tesco Extra are large stores that carry a wide range of items including groceries and general merchandise, allowing customers to complete all their routine shopping under one roof.

Tesco also has an online store for customers who wish to transact online and get their groceries and other products delivered. To expand its distribution network it has also partnered with many retailers and delivery companies including Amazon which offers delivery of groceries through Amazon Fresh.

Tesco’s Promotional Strategy

Tesco focuses on attracting customers through its signature low prices strategy. Tesco makes extensive use of print and media advertising as a tested channel to send promotional messages to current and potential consumers. As of today, Tesco maintains a balance between its traditional marketing and digital marketing campaigns. The company hugely relies on promotional offers to attract and retain customers. They regularly provide ‘buy one get one’ offers and discounts, online as well as in their stores.

Must Read: 10 Major Digital Marketing vs Traditional Marketing Differences in 2024

For loyal customers, Tesco has an option of availing club cards. The Clubcard loyalty program is a key part of its marketing strategy. The program rewards customers for their loyalty with discounts, points, and other benefits.

Tesco launched a campaign called Better Baskets, which aims to address the challenges that customers face when trying to make healthier choices while shopping. According to research conducted among Tesco customers, 86% of them expressed a desire to eat more healthily, and 77% of them want Tesco’s assistance in achieving this goal.

This is how Tesco manages to maintain its position as a market leader with affordable products while ensuring accessibility and quality. This is also visible in their marketing strategy, let’s take a deeper look at that.

Marketing Strategy of Tesco

Tesco’s marketing strategy accurately targets its ideal consumers with the help of its well-positioned brand image. Marketing strategy of Tesco is formulated based on the following:

Customer Segmentation: Based on the diverse needs and preferences of their customers, Tesco can put customers into different segments. Different marketing messages can be crafted to meet the needs of those segments.

Loyalty Program: Tesco’s Clubcard loyalty program is the most popular in the UK by offering personalized discounts, rewards, and special offers to encourage repeat purchases from customers. This program has 19 million members, which generates a revenue of billion pounds for Tesco each year.

Marketing through Multiple Channels: Tesco uses a combination of traditional and digital marketing channels such as TV, radio, emails, social media, etc., as well as in-store promotions to reach a wider customer base.

Value for Money: Tesco has always positioned an image in the minds of its customers for offering good value for money. This is reflected in the form of providing high-quality products at affordable prices.

Private Label Brands: Tesco has a range of private-label brands that sell a variety of products at a price that is lower than other national brands. These private-label brands are preferred by customers who want a good deal for the products purchased.

CSR activities: Tesco is involved in various corporate social responsibility (CSR) activities that focus on sustainability, community engagement, and charitable work. Highlighting these initiatives taken by the company will help to establish a positive brand image in the minds of the customers. Customers will appreciate the efforts taken and the company will receive a positive word of mouth.

Digital Marketing Strategy of Tesco

Campaign Name: Prices that take your back

What was the campaign about?

This campaign is one of the best examples of a successful marketing campaign that was launched in 2019 to celebrate Tesco’s hundredth anniversary as well as compete with retailers that offer discounts like Lidl and Aldi.

Which medium was used in the campaign?

Tesco used social media to engage with its audience and made alterations to its offers based on the response received. For instance, the price of Freddo chocolate was reduced to 10p, and a competition to find out the best snacks from Skips and Frazzles. Customers were able to resonate with it which led to an increase in engagement.

What was the outcome of the campaign?

The campaign was a huge success and Tesco made a sale of around half a million in one week and had 4,55,000 people participating in the snack competition. Tesco witnessed its highest-ever ROI along with a positive customer perception of Tesco’s value of money across all metrics.

Campaign Name  – Alia’s ‘worth the wait’ Samosas campaign 

What was the campaign About?

Tesco used a variety of media to launch Alia’s “worth and wait” campaign with the motive to reach a wider audience and connect with the audience at an emotional level. The release of the capaign was perfectly timed with the Muslim holiday of Eid al-Fitr, that received a strong support by a strong public relations campaign. Which medium was used in the campaign?

A 30-second Ad was aired on television that featured a young Muslim woman named Alia who is making somasas for her family.

The commercial was able to successfully portray the information of joy, warmth, and nostalgia by showing Alia’s family sitting around a table to relish samosas.

The campaign was launched and run on digital platforms, such as social media and Youtube that made use of videos, images and recipes related to samosas.

Source: Tesco

The video and images shared on social media, helped to generate a lot of buzz around by making use of interactive elements, such as a quiz that included questions recipe related to samosas. This helped to improve engagement with the viewers, making them feel a part of the campaign.

Top Competitors

Sainsbury’s: It is one of the main competitors of Tesco in UK known for its extensive network of supermarkets and general merchandise stores.

Asda: The company offering a diverse range of products and services, including groceries and clothing is one of the major competitors of Tesco.

Waitrose: The company known for providing high-quality products and an amazing shopping experience, competes with Tesco in the premium grocery market.

Ocado: This is an online grocery retail store. It competes with Tesco on online shopping and delivery services.

Iceland: This company is well known for offering frozen food that competes with Tesco in the frozen food segment.

Failed Campaigns

Tesco tv 2004.

This in-store TV network launched Tesco in 2004. This network showed a combination of editorial and advertising content but did not recieve a good response from the audience.

Many people complained about the editorial content being irrelevant and annoying, which did not cater to the shopping needs of the customer. Hence, as a result of this response Tesco TV was discontinued in 2009

Tesco’s Clubcard Plus

This was a program launched in 2017 offering a number of benefits to its members in the form of discounts on fuel and groceries. But this campaign was not well received by the customers.

Many people noticed that the campaign fees were high and the benefits didn’t seem to provide value for money. This resulted in the discontinuation of Tesco Clubcard Plus in 2019.

Tesco’s Christmas 2015 AD

This ad featured a group of children singing a song on how they would rather eat instead of going to school. This ad received a lot of criticism for being insensitive to parents and teachers, and so was eventually removed.

Tesco’s Online Services and eCommerce Strategy

Tesco has a sophisticated online strategy that enables seamless digital shopping. Tesco’s eCommerce strategy reflects the brand’s commitment to value and convenience. Website visits are just as efficient as in-person purchases. Tesco’s website, just like its stores, is easy to navigate.

Tesco’s online business has performed extremely well over the years. As a result, the company’s online sales increased by 15% in Ireland and South Korea. Tesco has also achieved double-digit growth in the UK grocery market. Since 2010, Tesco has consistently improved its online business to provide customers with a worthwhile online shopping experience.

Tesco has also launched Click and Collect services which enable its customers to procure their groceries online and collect them from any store operated by Tesco. Tesco Direct also has an online platform that allows customers to procure electrical goods, clothing and general merchandise.

The Tesco app is also a major hit and a go-to for customers for direct purchases and payments. The app launched a stand-out feature in 2020 that created a lot of buzz. They introduced the option for customers to shop in-store by simply scanning the products as they shop, through the app. Once done, the customers can simply checkout via self-service or cashier counters. And make the payment through the mode of their choice. This proved to be extremely convenient and quick since people did not have to wait in queues to await their turn.

Along with the many strengths and advantages that we looked at, Tesco also has several weaknesses and threats. This is why we also conducted a SWOT analysis of the company.

Tesco’s corporate philosophy is essentially cost leadership with an emphasis on availability, variety, and customer service. Tesco is well-known in the United Kingdom and internationally for its focus on value, comfort, and affordability. The Clubcard is critical to the supermarket chain’s continued success because it keeps consumers coming back for more sales. Tesco has built a very loyal customer base and a global brand as a result of its customer-centric approach. Its popularity, on the other hand, is based on its image as a convenient and affordable chain. The retailer promotes customer-oriented activities on its website and in its stores in order to make every shopping experience as smooth and rewarding as possible.

This straightforward yet successful strategy will ensure that the retailer continues to remain at the forefront of the industry.

If you liked our analysis of Tesco’s marketing strategy, be sure to check out the series of case studies on various other companies’ strategies written by our students. 

If you want to learn how to create such campaigns and studies, be sure to explore various institutes that offer online digital marketing courses in India . So start your journey in upskilling yourself today!

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Case study of Tesco plc: Future international expansion strategy into New Markets

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Retail multinational learning: a case study of Tesco

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Research output : Contribution to journal › Special issue › peer-review

Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

• international business
• multinational companies

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• 10.1108/09590550510577110

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• http://www.emeraldinsight.com/journals.htm?articleid=1464111&show=abstract

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• Retail Business & Economics 100%
• Multinationals Business & Economics 75%
• learning Earth & Environmental Sciences 72%
• globalization Earth & Environmental Sciences 43%
• Internationalization Process Business & Economics 28%
• international distribution Earth & Environmental Sciences 23%
• emerald Earth & Environmental Sciences 17%
• Internationalization Business & Economics 15%

T1 - Retail multinational learning

T2 - a case study of Tesco

AU - Palmer, Mark J.

N2 - Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

AB - Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

KW - international business

KW - learning

KW - multinational companies

KW - retailers

UR - http://www.scopus.com/inward/record.url?scp=18844441797&partnerID=8YFLogxK

UR - http://www.emeraldinsight.com/journals.htm?articleid=1464111&show=abstract

U2 - 10.1108/09590550510577110

DO - 10.1108/09590550510577110

M3 - Special issue

SN - 0959-0552

JO - International Journal of Retail and Distribution Management

JF - International Journal of Retail and Distribution Management

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Please note you do not have access to teaching notes, retail multinational learning: a case study of tesco.

International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 1 January 2005

This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process.

Design/methodology/approach

This research draws on a dataset of 62 in‐depth interviews with key executives, sell‐ and buy‐side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion.

The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or “shocks” in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step‐by‐step incremental approaches to expansion.

Research limitations/implications

The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations.

Practical implications

This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self‐reflection seriously.

Originality/value

The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process.

• International business
• Multinational companies

Palmer, M. (2005), "Retail multinational learning: a case study of Tesco", International Journal of Retail & Distribution Management , Vol. 33 No. 1, pp. 23-48. https://doi.org/10.1108/09590550510577110

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Tesco’s Stumble into the US Market

• Entering the US, Tesco deserves credit for creating a neighborhood market approach—emphasizing fresh produce and meats, and good quality but value-priced prepared meals.
• By not partnering or hiring local executives, Tesco missed the opportunity to learn more about the habits and needs of target customers.
• Tesco rightly aimed to scale the concept as soon as possible so that fixed overhead investments in its own distribution centers could be spread across a larger number of stores.
• Perhaps Tesco's original rollout plan was too ambitious, with executives assuming that the company would get everything right on the first try.
• Tesco has listened to its customers, learned from its mistakes, and made appropriate midcourse corrections.

Tesco PLC is the third-largest retailer in the world, just behind Wal-Mart and Carrefour. But that didn't make the UK-based chain immune from many costly mistakes as it entered the US market in 2006.

For example, it opened some of its Fresh & Easy stores on the wrong side of the road, eliminated discount coupons, and decorated in a spare style more suited to a hospital than a food retailer. Five years later, Fresh & Easy has not made a dime, and analysts are wondering whether the company should pack up and go home, as so many other British retailers have done before it.

Tesco's story makes ideal Harvard Business School case material for teaching everything from multinational strategy to on-the-ground logistics. Marketing professor John A. Quelch recently introduced Tesco PLC: Fresh & Easy in the United States , developed from public sources.

Sean Silverthorne: Each country poses its own obstacles for multinationals entering new geographies. Your recent case on Tesco highlights challenges faced by companies coming to do business in the United States. Tell us about the initial strategy to conquer the United States with Fresh & Easy stores.

John Quelch: The United States is an unusually competitive and cluttered market. It is tough to succeed without a clear and sustainable point of differentiation. While successful grocery retailers are expanding internationally, the odds are long. Both Sainsbury's and Marks & Spencer of the United Kingdom have withdrawn from the United States. Wal-Mart tripped up badly in Germany.

Tesco's international forays have hitherto been successful—with the possible exception of Japan. Tesco intelligently elected to concentrate on fast-growing, emerging economies in Eastern and Central Europe and in southeast Asia. Its modus operandi has been to joint venture with a local retailer, acquiring good store locations and local management talent in the process.

Tesco deserves credit for not taking a "me-too" approach in its US strategy. Tesco entered the California, Arizona, and Nevada markets with a new retail concept: a neighborhood market emphasizing fresh produce and meats, and good quality but value-priced prepared meals. Averaging 4,000 items in assortment, its Fresh & Easy stores aimed to be distinctive on those two attributes: fresh and easy, conveniently located stores with a conveniently preselected assortment.

Q: The company did a serious amount of homework before entering the United States, including sending 50 British executives to live with California families. But it seems the advance team didn't learn all that it should, such as the notion that designing stark stores with concrete floors wouldn't necessarily appeal to American tastes. What can other companies that are thinking of moving into the United States learn about Tesco's early fact gathering and strategy development?

A: I suspect that Tesco had a view on what would work before sending its executives to live with those California families. The result was perhaps a bias toward gaining evidence in support of a predetermined strategy.

California is a car culture. Most households undertake a weekly shopping expedition, supplemented with stock-up purchases at convenience stores. A small neighborhood market's success depends on enough consumers changing behavior to buy a higher proportion of their groceries on a more frequent basis. This could work in inner-city locations where younger shoppers might buy their evening meal on the way home each day, but it is less likely to work in the suburbs.

In addition, the Fresh & Easy assortment carried around 50 percent private- label products, rather than more familiar national brands. And finally, fresh produce was prepacked rather than loose on the shelves. While this can actually improve freshness, consumers perceive the opposite.

Q: Tesco decided initially to fill its US management ranks mostly with British expats instead of hiring locally. How did that strategy work for them? What can we all learn?

A: Tesco established Fresh & Easy as a greenfield investment rather than acquiring or joint venturing with a US retailer as its starting point. Therefore, Tesco did not have immediate access to local retail savvy, not just in store design and assortment but also in the critical area of store locations.

Many Fresh & Easy stores are refits of preexisting retail stores that were up for sale; at least some of these stores were on the wrong side of the road, more easily accessible to inbound rather than outbound commuters who would more likely be thinking about what to buy for dinner. Foreign managers, transplanted from the UK, might not readily have these kinds of insights. And as a greenfield newcomer, Tesco would not necessarily attract California retailing's best and brightest talent as it would assuredly do in the UK.

Q: As sales remained under plan, Tesco execs halted development of new stores temporarily and made adjustments to those stores already open, such as shifting product mix, allowing some coupon discounting, and expanding hours. Do you have advice for companies about revisiting original assumptions? Do companies new to the American market have to do this reassessment more frequently or look for different things?

A: Tesco has not been afraid to listen to its customers, learn from its mistakes, and make appropriate midcourse corrections.

The assortment was expanded by 600 items; stores that were originally stark and unwelcoming—to project a value price feel—were painted in pastel colors; and more signage was added. Weekly price specials were increased to build store traffic.

Perhaps Tesco's original rollout plan was too ambitious. It assumed that Tesco would get everything right on the first try. On the other hand, Tesco rightly aimed to scale the concept as soon as possible so that fixed overhead investments in its own distribution centers could be spread across a larger number of stores.

Q: What issues do students have to answer as they make their way through the Tesco case?

A: There are two questions that students must wrestle with.

First, are Tesco's problems in the United States a result of poor strategy or poor execution? The latter problem is obviously more correctable. On the other hand, Tesco has lost time; competitors have responded to its initiatives by incorporating some of Tesco's approaches in their own merchandising and assortment selections.

The second question is how long the Tesco board will permit management to hemorrhage losses in the United States. Originally, Tesco announced a five-year plan to profitability that would come due in 2011.

Q: The case ends with Tesco in the fourth year of its five-year plan, with largely disappointing results. We heard the news recently that Philip Clarke has authorized a new expansion program through at least 2013, when it finally expects Fresh & Easy to become profitable. Correct decision?

A: Sir Terry Leahy, Tesco's highly successful CEO for more than a decade, recently announced that he would step down in favor of Philip Clarke, a long-standing Tesco insider. Speculation that this might result in the the company abandoning the Fresh & Easy experiment no doubt prompted the recent announcement that Fresh & Easy would be given a two-year reprieve until 2013.

Tesco has the resources to continue, and the US market's size remains a juicy target if Tesco can get it right.

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Tesco Case Study: How an Online Grocery Goliath Was Born

Tesco boasts an impressive history in the UK and abroad. Over the years, the grocery goliath has achieved continued success by remaining at the forefront of retail trends, including everything from self-service shopping to international expansion. More recently, Tesco has made its mark with a sophisticated online grocery strategy that enables seamless digital shopping. There’s a lot that can be gleaned from Tesco’s eCommerce efforts. In this Tesco case study, we highlight the retailer’s long-term emphasis on customer service, which can be seen not only in its physical locations but also in its eCommerce strategy.

Table of Contents – Summary

A Brief History of Tesco

Tesco’s and world’s first virtual store, tesco and scandals, how tesco became a retail case study favorite, tesco’s ecommerce website, interesting technologies that tesco’s uk site uses, impressive tesco stats you may not know, faq on tesco.

• The Tesco Success

To understand current growth and successes and why they warrant a Tesco case study, it helps to understand the retailer’s history. Founded in 1919, the company initially consisted of a group of high-performing market stalls. Founder Jack Cohen conceived the idea shortly after leaving the Royal Flying Corps as World War I drew to a close. He used demobilization funds known as “demob money” to purchase surpluses of fish paste and golden syrup.

Tesco’s initial success could largely be attributed to Cohen’s understanding of mass-market sales. In a time of strict austerity, he employed a rigid business model of “stack ’em high, sell ’em low.” The brand also set itself apart by embracing a self-service approach, which, at the time, was rare in the UK. Following the introduction of its first supermarket in 1956, the retailer entered an era of rapid growth.

After emerging as the UK’s preeminent grocery chain, Tesco released the revolutionary Clubcard. During the 1990s, the chain expanded to include thousands of international locations. This was quickly followed by investments in internet retailing, which led to the chain’s current status as a top eCommerce grocer, netting  £1.3 billion in pre-tax profits  for the year ending in February 2018.

In 2011 Tesco was the first-ever retailer building the world’s 1st virtual grocery store in South Korea. The experiment took place in a subway station and the results were tremendous: the number of new registered members rose by +76%, online sales increased by +130% and Tesco became South Korea’s no1 online grocery retailer, outranking its rivals e-mart, so this experiment was one of the first key steps towards Tesco’s digital transformation.. After this phenomenal success, Tesco opened its first European virtual grocery shop in Gatwick Airport, UK. See how they did it in this brilliant video:

Tesco has occasionally suffered controversy in the last several decades, with 2 shocking moments that everyone remembers:

• The Horse Meat Scandal: Back in February 2013, several products believed to consist entirely of beef were found to contain horse meat. The Food Safety Authority of Ireland tested a range of cheap frozen beefburgers and it found that Tesco’s sample contained 29% horse instead of beef .  The retailer made every effort to appease concerned customers. One of which included a notable promise to tighten up its supply chain and purchase a more significant share of its meat from the UK. Such efforts have likely played into the grocery chain’s recent logistics successes.
• The Accounting scandal: It was 2014 when the news dropped like a bomb: an FTSE 100 firm could get away with “cooking the books”. The company admitted submitting overstated profits by £250 million . The results? £2 billion off the supermarket’s share price in one day.

How Tesco thrived in the COVID-19 area

During Q1 2021, Tesco reported that the sales from its online store were “remarkably higher” than before the Covid-19 crisis. As Internet Retailing mentions , Tesco’s sales increased by +22% in 2020, even though the physical stores and hospitality re-opened at some point. It is believed that this success was a result of Tesco’s recent delivery enhancements and doers mentality, implemented during the first lockdown. 

It’s revenue analysis shows that 1.3m online orders were conducted only in spring 2021. This means that the total number of transactions was 81.6% higher than the same period in 2019 (a before Covid-19 year), proving that Tesco actually turned COVID-19 into an opportunity for its business, achieving memorable results by quickly adjusting its business model to the pandemic’s needs.

Despite the horsemeat scandal, Tesco remains a customer favorite throughout the United Kingdom. The Tesco case study has become a common phenomenon, as the chain boasts several unique strengths worth emulating on a broad scale.

Over the years, the retailer has shifted its original “stack ’em high, sell ’em low” approach. While affordability remains a priority, Tesco did not pursue it to the detriment of quality. Instead, it combines reasonable prices with exceptional convenience and customer service. This can be seen in physical stores and eCommerce alike.

Excellent Customer Service

Strong customer service lies at the heart of Tesco’s sustained success. The retailer employs a variety of initiatives to keep consumers happy. Customer-oriented product development, for example, ensures that all stores are stocked with the items visitors actually want. This development process includes rigorous consumer testing to ensure that new products and services are well-received. Customized stores lend further appeal; each is designed based on carefully analyzed demographics.

Quality customer service means making accommodations for all consumers—including those with special needs. Tesco accomplishes this through the use of sunflower lanyards, which allow customers with hidden disabilities to secure additional assistance discreetly. The chain also provides induction loops for hard-of-hearing customers, as well as helpful visual guides for consumers with autism.

Ultimately, Tesco’s impressive customer service derives from its top-down approach, in which a commitment to customer satisfaction permeates every element of the company’s culture. Insight Traction’s Jeremy Garlick tells The Grocer that the key to large-scale retail success lies in “ understanding your customers, anticipating their needs, and giving them what they will value.” Tesco checks off all these boxes. This is true both in stores and with its website, which uses an intuitive layout to ensure that customers can quickly access the products and services they desire.

Product Diversification

Tesco may be best known as a grocery chain, but the retailer provides a surprising array of products and services. It aims to serve as the ultimate one-stop-shop for those who prioritize convenience and quality above all else. Customers can expect to find a collection of produce, dry goods, frozen products, and more. Toiletries, household products, pet food, and even apparel can also be located within Tesco stores and on the retailer’s eCommerce website.

Beyond its many product offerings, Tesco also provides a few key services to enhance customer convenience. Tesco Bank, for example, offers everything from credit cards to pet insurance. These digital offerings play largely into Tesco’s eCommerce strategy, with banking customers capable of accessing their account information online.

Fine-Tuned Logistics

Quality customer service is not possible without an effective logistics and supply chain strategy. Strong relationships with suppliers are essential, especially as Tesco seeks to diversify its already vast product collection further. Efficient routes ensure that produce and other time-sensitive products arrive promptly in stores—and are quickly distributed to customers taking advantage of the chain’s affordable home delivery program.

Ongoing investments in telematics promise to further improve Tesco’s already fine-tuned supply chain. New monitoring tools offer greater insight into the trip status and real-time decision-making—and how these elements play into both profit margins and long-term customer satisfaction.

Digital customers, in particular, appreciate Tesco’s tight supply chain. When they order items online, they can rest assured, knowing that their favorite products will consistently be in stock. What’s more, online customers feel confident that delivered items will be fresh and of exceptional quality.

Insane International Expansion

Tesco may currently dominate the UK grocery market, but it’s also an international force. While the retailer pulled out of the United States in 2014, it has enjoyed sustained growth in Eastern Europe and Thailand.

Just as Tesco targets its international in-store efforts to reflect local populations, it designs its global eCommerce strategy around a diverse consumer base. Different websites are offered in each target country, with text provided in both English and the respective region’s primary language.

Customer Loyalty

Brands such as Costco and Amazon prove that customer loyalty can pay dividends for a company’s bottom line. Tesco demonstrated this long ago with the Clubcard, which encourages customers to prioritize the chain over competitors.

Today, the Clubcard continues to play a crucial role in Tesco’s success. Further transformation is in store, as Tesco recently unveiled a £7.99 per month subscription service called Clubcard Plus . Subscribers will receive significant discounts above and beyond those offered through the traditional Clubcard, including a permanent 10 percent off many of the store’s most beloved brands. Given the current popularity of subscription services, this could prove an excellent opportunity to get existing customers even more enmeshed in the Tesco ecosystem and more responsive to eCommerce marketing automation efforts.

Tesco’s eCommerce strategy reflects the brand’s commitment to value and convenience. These priorities are evident in everything from the logo to the images and even the general layout. Website visits are just as efficient and orderly as in-person purchases at Tesco’s physical locations. Tesco’s website, like its stores, may not be fancy—but it gets the job done. In this Tesco case study, we’ve analyzed several of the key eCommerce strategies that help Tesco’s page stand out in a competitive digital marketplace, as well as a few areas that warrant improvement.

Analyzing Tesco’s Homepage

What We Liked

• Easy to navigate . Today’s impatient customers demand easy-to-navigate websites that almost instantly get them from point A to point B. Tesco’s homepage appeals greatly to convenience-oriented online shoppers, who can quickly find desired products via a simple search tool. Headings highlight main categories, including groceries, clothing, banking, and even recipes.
• Visually-appealing fullscreen displays . Rather than distract website visitors with several separate visuals, Tesco’s website maintains a single, but decidedly bold display. This impactful background stretches across the entire screen and is layered behind text and customer prompts. The homepage, featuring fresh produce, has eye-catching graphics that reflect the commitment to quality that emerges in every Tesco case study
• Minimalist, but not dull . Minimalist displays dominate modern web design. Sometimes, however, white space feels excessive. Tesco strikes an ideal balance by keeping clutter to a minimum without relying on a bare-bones approach.
• Easy logo identification . Customers can always spot the Tesco logo in the upper left-hand corner, surrounded by just enough white space to ensure that it stands out.

What We Didn’t Like

• Customer testimonials . Reviews from happy customers may prove desirable in some contexts, but there is a time and a place. These particular testimonials take up the page’s most prominent space, which could be better served by showcasing exciting deals or products.
• Tabs that open into new pages . Ideally, when clicking on a link that appears to be a tab (such as the Delivery Saver tab), the new content should open in the same page, instead of loading an entirely new page.

Analyzing Tesco’s Category Page

• Sticky cart functionality . As shoppers browse the website and add items to their carts, they can keep track of these intended purchases on the right side of the screen. This intuitive design allows for a seamless Tesco checkout process , thereby increasing the likelihood of conversion.
• Variety of filters . A wide array of filters are provided to allow customers to browse through products based on brands and categories. Furthermore, customers can customize their browsing according to specific dietary filters such as vegan or Halal. This plays into Tesco’s overarching emphasis on personalized shopping.
• Usually bought next . Situated at the bottom of each category page, this helpful section makes it easy to pair similar grocery items. This increases customer convenience while also helping to improve sales and final revenue on Tesco’s end.

What We Didn’t

• Difficult filter navigation . There’s a lot to be said for the variety of filters at customers’ disposal, but the actual process of navigating them can prove complicated, particularly compared to competitor websites.
• Navigating to different items within categories . Navigation can prove surprisingly difficult for those browsing various items within categories. The constant need to return to the homepage could quickly grate on otherwise amenable customers.
• Lack of search functionality within categories . Items cannot be sought via keywords within specific category pages. All searches must be completed using the main search bar on the top of each page. For many users, this may represent the website’s greatest weakness, as keyword category searches are an expected feature among competitors.

Analyzing Tesco’s Product Page

• Time-limited delivery notice . Produce delivery is inherently time-sensitive, as are several other services that Tesco provides via its website. The retailer harnesses the power of time-limited delivery notices to ensure that consumers use products when they’re freshest and most appealing.
• A wealth of product information . Product pages contain a wealth of relevant information, including everything consumers could possibly want to know about each item’s nutritional content, country of origin, and even preparation instructions.
• Customer reviews . Shoppers on the fence about a particular product can read customer reviews to get a better idea of whether they actually want to invest in said item. With a wealth of alternatives available, they can take solace in knowing that other options are always on hand.
• Nondescript Add to Cart button . Tesco’s approach for adding options to its carts may get the job done, but this could be an excellent opportunity for adding a bit of visual flair without detracting from the website’s minimalist approach.
• Too much text combined with too small product images . Many shoppers regularly purchase items without actually knowing their names. Rather, they focus on packaging. Tesco’s small pictures make it difficult for these shoppers to identify the elusive products they want. Some may end up with unexpected and unwelcome surprises upon delivery.
• Too much information . While it’s useful to know the origin of each item, including the exact address may seem like overkill to some users. This detailed information detracts from Tesco’s otherwise streamlined product pages.

Analyzing Tesco’s Checkout Process

• Numerous delivery slots are available . A variety of helpful slots for receiving grocery deliveries are provided on an hourly basis throughout the day. This dramatically improves customer convenience, particularly for those who work long hours and might not be available for the limited delivery times provided by some of Tesco’s key competitors.
• Automatic Click+Collect locations . Those who opt to collect deliveries at Tesco stores can look to this feature to automatically display a variety of nearby locations. This makes in-person delivery collection nearly as convenient as Tesco’s impressive delivery setup.
• Several Delivery plans are available . Shoppers who aren’t in a big hurry can elect to have their orders delivered mid-week for a reduced charge. Meanwhile, demanding customers are asked to pay extra for same-day delivery. Customers love options, particularly when they believe those options prompt significant savings.
• Oddly unavailable Click+Collect hours . Shoppers who plan their grocery pickup several days out will be surprised to find that some collection times up to a week out are unavailable. Hence, while Click+Collect provides exceptional functionality for last-minute pickups, it’s not always ideal for those who prefer to schedule in advance.

Eager to learn more about Tesco’s strategy and the technologic functionalities that make Tesco’s website so easy to use, we harnessed the power of BuiltWith to scan the website. A few of the notable technologies we spotted include:

• Omniture SiteCatalyst . Tesco’s web analytics are provided by Adobe’s Omniture SiteCatalyst — an expensive, complex system when compared to its main competition (Google Analytics). If set up correctly, however, Omniture SiteCatalyst provides excellent customer support.
• Hotjar . One of the world’s most famous screen recording and heatmaps tools, Hotjar offers a range of behavior analytic services ideal for businesses such as Tesco, which aim for a targeted approach based on actual customer behavior.
• Optimizely . This top experimentation platform plays significantly into modern web innovation. Despite its name, however, Optimizely may increase page load times throughout the Tesco site.
• OpinionLab . OpinionLab does an admirable job of collecting customer feedback on every aspect of Tesco’s webpage. This allows Tesco to customize better its web offerings based on actual customer opinions
• SendinBlue . User experience is a huge point of contention for SaaS provider Sendinblue. Clients regularly struggle with forms, automation, and APIs. ContactPigeon may prove a more customer-oriented alternative.

Some of these eCommerce tools are also used by John Lewis, UK’s homeware giant , so we do realize that these technologies play also an important part in a retailer’s business model and online success.

• As of 2019, Tesco boasted over 6,800 shops worldwide.
• Tesco currently employs over 450,000 employees around the world.
• Tesco had a 26.9 percent market share in the UK in 2019.
• Of the UK shoppers who primarily visit Aldi, 45 percent highlight Tesco as their main secondary store.

Breaking Tesco News:

• Tesco changes bonus rules after Ocado success hits pay – Read more here
• Coronavirus: The weekly shop is back in fashion, says Tesco boss – Read more here
• Tesco launches half price clothing sale – but some slam the company as ‘irresponsible’ – Read more here
• Tesco, Sainsbury’s, Asda and Aldi put restrictions on items amid stockpiling –  Read more here
• Tesco sells its Thai and Malaysian operations to CP Group.   Learn more here
• In September 2021 Tesco launched a zero-waste shopping service, providing customers with containers. – Learn more here.

When did Tesco begin?

Tesco technically began in 1919 but did not receive its current name until 1924. The company originally consisted of market stalls, with the first shop that might be recognizable to modern consumers not opening until 1931.

What made Tesco successful?

Tesco is popular in the UK and abroad due to its combined emphasis on quality, convenience, and affordability. The Clubcard plays a huge role in the retail chain’s continued popularity, as it keeps customers coming back for deals.  So why is Tesco so successful? It is because of its customer-centric approach, that it gradually helped Tesco to develop a very loyal customer base and equity and a very powerful multinational brand.

Who is Tesco’s owner?

Tesco is currently experiencing a shakeup in leadership. After serving as CEO for several years, Dave Lewis announced his resignation in 2019. He will be replaced by Ken Murphy in 2020. John Allan currently serves as the chain’s non-executive chairman.

What is Tesco industry sector?

Tesco PLC is a retail company. Its core business is grocery retail but they also are in retail banking and assurance industries as well, as part of their product diversification strategy.

How many stores Tesco has?

Tesco has 6993 stores in 12 countries

How profitable is Tesco?

Tesco’s revenue grew by +12% YoY in 2019 hitting  £63.91 billion.

Is Tesco in the public or private sector?

While Tesco was initially a privately-held company, it became a public limited company (PLC) in 1947 and has continued to operate under this approach. However, despite Tesco’s status as a PLC, it remains firmly part of the private sector.

Discover more resources about FMCG retailers

• Sainsbury’s Marketing Strategy: Becoming the Second-Largest Supermarket Chain in the UK
• ASDA’s marketing strategy: How the British supermarket chain reached the top
• The Marks and Spencer eCommerce Case Study: 3 Growth Lessons for Retailers
• The Ocado marketing strategy: How it reached the UK TOP50 retailers list
• ALDI’s marketing strategy: The key growth ingredients of the FMCG titan
• Walmart Marketing Strategy: Decoding the Success of the US Multinational Retailer
• Analyzing Lidl’s Marketing Strategy: How the Discount Supermarket Leader Scaled
• FMCG Marketing Strategies to Increase YOY Revenue

The Tesco Case Study: An overnight Success?

As our analysis showed, a variety of factors play into Tesco’s success. The retailer has a long history of using cutting-edge practices (like the virtual store mentioned above) to set itself apart from the competition. Much of its current success, however, relies on its perception as a convenient and affordable chain.

Tesco’s success is not a matter of luck. On its website and in its stores, the retailer emphasizes customer-oriented practices designed to make every shopping experience as seamless and as enjoyable as possible. This simple yet effective approach promises to keep the retailer at the forefront of the grocery industry in years to come.

If you’re looking to emulate the qualities evident in this Tesco case study, don’t hesitate to get in touch. Contact us today to book a free marketing automation consultation.

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Tesco Marketing Strategy 2024: A Case Study

Tesco, a global retail company specializing in groceries, serves millions of customers worldwide. In line with their commitment to providing exceptional shopping experiences, Tesco has developed a comprehensive marketing strategy for 2024 that encompasses various key elements, including customer segmentation, brand positioning, promotional campaigns, and an omnichannel strategy. By incorporating these strategies, Tesco aims to remain at the forefront of the retail industry and continue to meet the evolving needs of its diverse customer base.

Customer segmentation plays a crucial role in Tesco’s marketing strategy . By understanding the unique preferences and behaviors of different customer groups, Tesco can tailor its offerings to cater to their specific needs. This approach allows Tesco to create personalized shopping experiences that resonate with customers and foster long-term loyalty.

Brand positioning is another essential aspect of Tesco’s marketing strategy. By positioning itself as a reliable and customer-centric brand, Tesco aims to differentiate itself from competitors and establish a strong presence in the market. Tesco strives to be synonymous with quality, affordability, and convenience, ensuring that customers choose Tesco as their preferred shopping destination.

Promotional campaigns play a vital role in Tesco’s marketing efforts . By offering special discounts, promotions, and incentives, Tesco can attract new customers and retain existing ones. These campaigns are carefully designed to align with Tesco’s brand image and provide customers with added value, enhancing their overall shopping experience .

An omnichannel strategy is a crucial component of Tesco’s marketing approach. Tesco recognizes the importance of reaching customers through multiple channels, both traditional and digital. This comprehensive approach allows Tesco to engage with customers on various platforms, including TV and radio ads, social media, email marketing , and online advertising. By utilizing these channels effectively, Tesco ensures that its marketing messages are delivered to a broader audience, driving customer engagement and sales.

Key Takeaways:

• Tesco has developed a marketing strategy for 2024, focusing on customer segmentation, brand positioning, promotional campaigns, and an omnichannel approach.
• Customer segmentation allows Tesco to tailor its offerings to different customer groups, enhancing personalization and loyalty.
• Brand positioning ensures Tesco’s differentiation in the market through a strong focus on quality, affordability, and convenience.
• Promotional campaigns attract new customers and retain existing ones, providing added value and enhancing the overall shopping experience.
• An omnichannel strategy allows Tesco to reach customers through various channels, encompassing traditional methods and digital platforms.

About Tesco: A Brief Overview

Tesco, a retail giant in the grocery sector, has established itself as a leading supermarket in the United Kingdom. With a market share that speaks volumes about its dominance, Tesco operates a vast network of over 7,000 stores globally, catering to the diverse needs of its customers.

What sets Tesco apart is its extensive product range, which goes beyond groceries to include clothing, household items, and electronics. The company’s commitment to quality and choice is evident in its private labels, such as Tesco Finest, Tesco Everyday Value, and F&F, which have garnered the trust and loyalty of consumers.

Tesco’s success is not solely attributed to its product offerings. The retail giant has developed an effective loyalty program called Clubcard, which rewards customers with points for their purchases. These points can be redeemed for discounts on future shopping, offering customers tangible benefits and incentives for remaining loyal to Tesco.

As a responsible corporate citizen, Tesco strives to become a zero-carbon business by 2050 through its sustainability initiatives. Alongside its commitment to the environment, the company has consistently demonstrated strong financial performance, focusing on cost-saving measures and delivering consistent revenue and profit growth.

To expand its operations and maximize its potential, Tesco has made strategic acquisitions, including the renowned UK food wholesaler Booker Group and the convenience store chain One Stop. These acquisitions have strengthened Tesco’s market position and enhanced its ability to serve customers effectively.

Tesco’s marketing mix, consisting of the 4Ps – Product, Price, Place, and Promotion, has proven to be instrumental in developing and implementing effective marketing strategies. By offering own-brand products at various price points and frequently employing price promotions and discounts, Tesco ensures that it caters to the needs and budgets of its diverse customer base.

In an increasingly competitive retail landscape, Tesco recognizes the importance of utilizing digital channels to engage with customers effectively. The company employs social media platforms, email marketing, and online advertising to connect with its audience and provide a seamless shopping experience in both physical and digital spaces.

With its extensive store formats, including Extra, Superstore, Metro, and Express, Tesco is equipped to cater to different customer needs. Whether it’s the convenient one-stop-shop or the quick grab-and-go, Tesco ensures that customers have a variety of options to choose from.

In conclusion, Tesco’s dominance as a retail giant can be attributed to its commitment to quality, extensive product range, effective marketing strategies, and customer-centric approach. With its strategic acquisitions, sustainable initiatives, and a strong foothold in both physical and digital spaces, Tesco continues to set industry standards and thrive in the grocery sector.

Tesco’s Marketing Mix

Tesco, one of the largest retailers in the UK, implements a comprehensive marketing mix strategy to drive its success in the competitive retail market. The company focuses on four core elements: product, price, place, and promotion.

Product Strategy: Tesco offers a diverse range of products, catering to the needs of its customers. In addition to groceries, Tesco provides clothing, household items, electronics, and more. This extensive product range showcases Tesco’s commitment to diversification and meeting the varied preferences of its customer base.

Pricing Strategy: With its wide market reach and massive customer base, Tesco leverages competitive pricing strategies to attract price-conscious customers. The company offers price promotions and implements dynamic pricing for online shopping, ensuring that customers can find value and affordability in their purchases.

Place and Distribution Strategy: Tesco operates various store formats, such as Extra, Superstore, Metro, Express, and One Stop, strategically located to ensure easy accessibility for customers. This diverse store network allows Tesco to cater to different customer needs and preferences, providing convenience and seamless shopping experiences.

Promotional Strategy: Tesco engages in targeted advertising through multiple channels, including television, radio, print, and online media. By reaching its target audience effectively, Tesco promotes its products and offers to drive customer engagement and sales. Moreover, the company runs in-store promotions, such as special offers, discounts, and multi-buy deals, incentivizing customer purchases and enhancing the overall shopping experience.

Tesco’s marketing mix strategy enables the company to effectively position itself in the market, attract customers, and maintain a strong competitive edge. By offering a broad product range, implementing competitive pricing strategies, strategically locating its stores, and engaging in comprehensive promotional campaigns, Tesco continues to thrive and meet the evolving needs of its diverse customer base.

Tesco’s Buyer Persona

Understanding customer needs is a crucial aspect of Tesco’s marketing strategy. To ensure that they deliver a seamless shopping experience, Tesco creates buyer personas, such as John Smith, a representative customer. John Smith values speedy service, quality products at good prices, and savings. Tesco’s buyer persona strategy enables them to personalize their offerings according to the specific needs and preferences of their customers.

By focusing on personalization, Tesco caters to the unique requirements of its diverse customer base. Whether it’s providing convenient store formats, offering a wide range of high-quality products, or ensuring competitive prices, Tesco prioritizes customer satisfaction. Their commitment to savings is evident through their loyalty program, Clubcard, which rewards customers with personalized discounts, exclusive access to discounted products, bonus points on purchases, and redeemable rewards for future purchases.

The buyer persona approach allows Tesco to understand its customers on a deeper level, offering products and services that are tailored to their individual needs. In doing so, Tesco provides a shopping experience that is convenient, personalized, and focused on delivering the highest quality products, all while helping customers save.

Tesco’s Digital Marketing Strategy

Tesco, a leading global retailer, understands the significance of digital marketing in today’s competitive landscape. With a comprehensive digital marketing strategy, Tesco harnesses the power of online platforms to effectively reach and engage with its customers.

One key element of Tesco’s digital marketing strategy is its website. With an authority score of 75, Tesco’s website serves as a central hub for customers, offering a seamless online shopping experience. The website attracts a significant amount of organic search traffic, with 31.5 million monthly visitors. Additionally, Tesco employs targeted search engine advertising, with 14.4K visitors coming from paid search, to further enhance its online presence.

Social Media

Recognizing the power of social media in the digital age, Tesco leverages platforms like Instagram and Facebook to engage with customers, build brand awareness, and promote its products and services. Through strategic social media marketing campaigns, Tesco effectively targets its audience and fosters meaningful connections.

Email Marketing

Email marketing plays a crucial role in Tesco’s digital marketing strategy. Through personalized and targeted email campaigns, Tesco maintains a direct line of communication with its customers, keeping them informed about exclusive offers, promotions, and new product releases. This not only boosts customer engagement but also drives sales and enhances brand loyalty.

Search Engine Advertising

Tesco understands the importance of search engine advertising to increase its visibility and drive traffic to its website. By strategically bidding on keywords relevant to its products and target market, Tesco successfully attracts potential customers and directs them to its online platform. This helps drive conversions and boosts overall sales.

Tesco’s digital marketing strategy encompasses a multifaceted approach that utilizes its website, social media platforms, email marketing, and search engine advertising to create a comprehensive and cohesive online presence. By leveraging these channels effectively, Tesco enhances its brand visibility, engages with customers, and drives business growth in the ever-evolving digital landscape.

Tesco’s Customer Loyalty Program

Tesco’s customer loyalty program, Clubcard, is a key component of the company’s marketing strategy. With over 19 million members, Clubcard offers a range of benefits that foster customer loyalty and enhance the overall shopping experience.

Through Clubcard, customers earn 1 point for every £1 spent at Tesco stores or online. This incentivizes customers to continue shopping with Tesco and rewards them for their loyalty. In addition, Tesco provides up to three loyalty cards to customers, including small plastic keychain cards, making it easy for members to keep their Clubcard handy at all times.

One of the standout features of the Clubcard loyalty program is its personalized deals. Tesco utilizes customer segmentation and data analysis to tailor offers and rewards based on individual shopping habits and preferences. This level of personalization ensures that customers receive discounts and rewards that are relevant to their specific needs, making their shopping experiences even more enjoyable.

Clubcard members have access to a range of rewards which can be redeemed for money towards future purchases, discounts on selected products, and vouchers for various activities and experiences. These rewards not only provide added value for customers but also give them a sense of exclusivity and special treatment.

In the UK, the Clubcard loyalty program operates on a “1% getback” scheme, where participants can earn points equivalent to 1% of their spending. This encourages customers to continue shopping at Tesco and maximize their savings through the accumulation of bonus points.

Tesco’s loyalty program strategy focuses on multiple offers, saving money on grocery bills, and personalization in order to strengthen customer relationships. By leveraging the data collected from the Clubcard scheme, Tesco can better understand individual customer needs and preferences, allowing them to tailor offers and rewards accordingly.

Tesco’s Marketing through Multiple Channels

Tesco understands the importance of utilizing multiple marketing channels to reach a wide range of customers. By combining traditional marketing methods with digital strategies , Tesco effectively connects with its target audience.

Traditional Marketing

Tesco employs various traditional marketing techniques to promote its products and services. Television and radio ads play a significant role in increasing brand awareness and driving customer engagement. These forms of advertising allow Tesco to reach a large audience and convey its message effectively. Additionally, print media, such as newspapers and magazines, are utilized to target specific demographics and geographical regions.

Digital Marketing

Tesco recognizes the power of digital marketing in today’s digital age. The company leverages different digital channels to engage with customers and establish a strong online presence. Social media platforms, including Facebook, Instagram, and Twitter, are used to engage with customers, share product updates, and run promotional campaigns.

Email marketing is another essential component of Tesco’s digital marketing strategy. By sending personalized and targeted emails, Tesco keeps customers informed about special offers, discounts, and new product launches.

Furthermore, online advertising is an integral part of Tesco’s digital marketing efforts. The company utilizes display ads, search engine advertising, and remarketing campaigns to reach potential customers and drive traffic to its website.

Tesco’s multichannel marketing approach allows the company to create a cohesive brand presence across different platforms, both online and offline. By utilizing a combination of traditional and digital marketing strategies, Tesco maximizes its reach and ensures it connects with customers at every touchpoint.

Tesco’s marketing through multiple channels helps the company maintain a strong presence in both traditional and digital spaces. This multifaceted approach enables Tesco to effectively engage with customers, increase brand visibility, and drive sales.

Innovative Digital Grocery Strategy

Tesco, with over 6,800 locations across Europe and Asia, is not only focused on its physical retail presence but also on its innovative digital grocery strategy. As the company aims to become the most successful retailer in the UK and globally, it recognizes the importance of providing a seamless shopping experience for its customers through eCommerce.

Tesco’s digital grocery strategy revolves around offering customers a convenient and efficient way to shop for groceries online. With the increasing popularity of eCommerce, Tesco has invested in its online platform to expand its customer base and enhance customer satisfaction.

Customer service is at the core of Tesco’s digital grocery strategy. The company emphasizes quality, dependability, affordability, and usability to ensure that customers have a positive experience when shopping online.

By leveraging technology and data-driven insights, Tesco strives to provide personalized recommendations and offers to its customers. This not only enhances the shopping experience but also strengthens customer loyalty.

Furthermore, Tesco’s emphasis on customer service extends to its delivery options. The company has expanded its rapid delivery service, “Whoosh,” to reach around 60% of the UK population. This allows customers to receive their groceries quickly and conveniently, reinforcing Tesco’s commitment to seamless and efficient service.

In addition to its robust digital infrastructure, Tesco also focuses on collaborating with suppliers to enhance the overall customer experience. By utilizing online sponsored search functionality and leveraging digital screens in stores, Tesco ensures that customers have access to a wide range of products and promotions.

With an impressive online availability of over 97% and a significant increase in perfect orders year-on-year, Tesco’s digital grocery strategy demonstrates its commitment to meeting customer demands and expectations.

In conclusion, Tesco’s innovative digital grocery strategy combines eCommerce with a focus on providing a seamless shopping experience and excellent customer service. By leveraging technology, data-driven insights, and collaboration with suppliers, Tesco continues to expand its customer base and strengthen its position as a leading retailer in the digital era.

Tesco’s Corporate and Business-Level Strategies for Growth

Tesco, one of the leading global retailers, has implemented a range of effective corporate and business-level strategies to drive growth and achieve success in the highly competitive market. These strategies have contributed to Tesco’s strong market position and impressive financial performance.

Tesco’s Low Price Strategy and Cost Leadership

Tesco has adopted a low price strategy as a core component of its business-level strategy. By offering competitive prices on a wide range of products, Tesco attracts value-conscious customers and maintains an edge over its competitors. Through effective cost leadership, Tesco continuously strives to optimize its operations and supply chain management, allowing the company to minimize costs and deliver savings to its customers.

Customer Focus and Market Development

Customer focus is at the heart of Tesco’s corporate strategy. The company continuously analyzes consumer preferences and behaviors to understand their needs and provide tailored solutions. Tesco’s customer-centric approach enables the development of innovative products and services that meet the evolving demands of its target market. Additionally, Tesco’s market development strategy involves expanding its operations into new geographical regions, tapping into untapped markets, and reaching a broader customer base.

Product Development and Market Penetration

Tesco places a strong emphasis on product development to attract and retain customers. By offering a diverse and high-quality product range, including fresh food and Tesco’s own-branded products, the company stimulates customer interest and strengthens its competitive position. Simultaneously, Tesco utilizes market penetration strategies to drive growth within existing markets. Through targeted marketing campaigns and promotions, Tesco aims to increase its market share and gain a larger portion of customer spending.

Overall, Tesco’s comprehensive corporate and business-level strategies, including its low price strategy, customer focus, cost leadership, market development, product development, and market penetration, have consistently delivered positive results. These strategies have contributed to Tesco’s strong market share, increased revenues, and continuous growth. As Tesco continues to refine and adapt its strategies, the company remains well-positioned for sustained success in the dynamic retail industry.

The Power of Market Research and Competitive Analysis

Market research and competitive analysis play a crucial role in the success of Tesco’s marketing strategy. By understanding the market trends , consumer behavior, and competitive landscape, Tesco can make well-informed data-driven decisions and stay ahead of the competition in the highly competitive retail industry.

Market research provides valuable insights into customer preferences, purchasing habits, and emerging trends. Tesco utilizes market research to identify new opportunities, develop effective marketing campaigns, and customize their product offerings to meet customer demands. By conducting comprehensive market research, Tesco can better understand customer needs and preferences, enabling them to tailor their marketing strategies to target specific market segments .

Competitive analysis allows Tesco to assess the strengths and weaknesses of its competitors. By understanding the competitive landscape, Tesco can identify key areas where they can differentiate themselves and gain a competitive edge. This analysis helps Tesco identify market gaps, improve their product offerings, and develop strategies to position themselves as market leaders.

Tesco’s commitment to market research and competitive analysis allows them to make data-driven decisions and stay ahead of the competition. By leveraging the insights gained through these practices, Tesco can anticipate market trends, develop effective marketing campaigns, and deliver tailored experiences to their customers.

Market research and competitive analysis are essential tools for Tesco to stay competitive and achieve their goal of maintaining a 5% extra competitiveness in marketing. These practices enable Tesco to make informed decisions, adapt to changing consumer preferences, and drive growth in the retail industry.

Tesco’s Commitment to Sustainability

Tesco, as a global retail company, is dedicated to sustainability and focuses on implementing various environmental initiatives. Their commitment stems from their understanding of the importance of protecting the environment, engaging with the community, and prioritizing employee welfare as part of their corporate social responsibility efforts.

One of Tesco’s notable achievements is their commitment to sending zero food waste to landfill in the UK since 2009. They have achieved this by implementing effective waste management strategies and partnerships with organizations that help redistribute unsold food safe for human consumption. In fact, in 2022/23, Tesco redistributed 88% of unsold food, surpassing their 85% target set in 2016.

In addition to tackling food waste, Tesco has made significant strides in reducing overall food waste by 45% since 2016. As part of their ambition, they aspire to halve food waste by 2025 and have committed to achieving this goal five years ahead of the global target set by Champions 12.3 and the UN Sustainable Development Goals.

Beyond their food waste reduction efforts, Tesco demonstrates their commitment to sustainability through investments in renewable energy and sustainable sourcing. They have set ambitious goals to reduce their carbon footprint and increase the proportion of sustainable and fairly traded products in their stores.

Tesco’s commitment to sustainability is not without its challenges. The company faces competition from discount retailers, needs to adapt to changing consumer preferences, and comply with regulatory issues. However, they have shown resilience and adaptability by diversifying into financial services and insurance while maintaining their focus on customer service, innovation, sustainability, international expansion, diversification, and cost management.

With a market share of over 27% in the UK’s grocery retail sector, Tesco’s commitment to sustainability shines through their actions. They were the first FTSE100 company to commit to science-based targets aligned with the Paris Agreement’s 1.5°C target. Tesco aims to achieve carbon neutrality in their operations by 2035 and be net-zero across their entire footprint by 2050.

Through their initiatives, Tesco has achieved significant milestones, including a 52% absolute reduction in emissions from their operations in 2022 compared to a 2015 baseline. Over 90% of Tesco’s emissions footprint is captured by scope 3 indirect emissions within their value chain, giving them a clear focus for reduction efforts.

To support their sustainability goals, Tesco launched a revolving credit facility of 2.5 billion GBP tied to key performance indicators (KPIs), including greenhouse gas (GHG) emissions reduction. They also issued sustainability-linked bonds to finance their efforts, demonstrating their commitment and holding themselves accountable for meeting emission-reduction targets.

Tesco acknowledges the importance of collaboration in achieving their sustainability ambitions. In 2021, they initiated a supply chain finance initiative to help suppliers contribute to lower funding costs and align with Tesco’s environmental, social, and governance (ESG) priorities, with a focus on addressing scope 3 emissions.

These sustainability initiatives have garnered recognition, with Tesco receiving awards such as the Association of Corporate Treasurers Deals of the Year Awards and the Finance for the Future Awards. These accolades highlight Tesco’s dedication to sustainable practices and their positive impact on both the environment and society as a whole.

Sustainability Initiatives at Tesco

Table: Tesco’s Sustainability Milestones

Despite the challenges they face, Tesco remains committed to sustainability, continually striving to reduce their impact on the environment and make a positive difference in the communities they serve. Through their comprehensive sustainability efforts, Tesco sets an example for other companies in the retail industry and beyond.

Tesco’s marketing strategy case study exemplifies its commitment to customer loyalty, digital outreach, and innovative retail campaigns. The company’s successful implementation of its marketing mix, understanding of buyer personas, and comprehensive digital marketing strategy have positioned Tesco as a leading retailer in the ever-evolving industry. By prioritizing customer loyalty programs, Tesco ensures a personalized shopping experience for customers, building trust and fostering long-term relationships.

Recognizing the importance of market expansion, Tesco has introduced same-day delivery options, emphasizing its commitment to market development. The company’s product lines, Everyday Value and Finest, have become the largest food brands in the UK, solidifying Tesco’s market presence. Despite facing competition from rivals with a wider product range, Tesco’s brand image centered around low prices reinforces its cost leadership strategy, attracting value-conscious customers.

However, Tesco’s journey towards a fully functioning social media marketing system is yet to be completed. Challenges include improving its digital presence, revamping outdated apps, and addressing functionality gaps, such as scheduling orders. To further enhance operational efficiency, a focus on subscription-based services is recommended, aligning with Tesco’s cost leadership strategy by improving planning and logistics.

With a strong financial performance, an extensive online customer base, and a positive brand image among customers, Tesco continues to thrive. As a retail giant offering more than 40,000 products across various store types, Tesco maintains its competitive advantage through strategic promotional offers, loyalty programs, and price strategies, enabling continuous growth and customer satisfaction.

What is Tesco’s marketing strategy for 2024?

How many stores does tesco have globally, what is tesco’s marketing mix, how does tesco understand its customers, what is tesco’s digital marketing strategy, what is tesco’s customer loyalty program, how does tesco market through multiple channels, how does tesco approach digital grocery shopping, what are tesco’s corporate and business-level strategies for growth, how does tesco utilize market research and competitive analysis, what is tesco’s commitment to sustainability, related posts:.

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Nina Sheridan is a seasoned author at Latterly.org, a blog renowned for its insightful exploration of the increasingly interconnected worlds of business, technology, and lifestyle. With a keen eye for the dynamic interplay between these sectors, Nina brings a wealth of knowledge and experience to her writing. Her expertise lies in dissecting complex topics and presenting them in an accessible, engaging manner that resonates with a diverse audience.

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International Expansion: Why Tesco Missed the Mark in the U.S. Market

Tesco is one of the largest retailers in the world. In 2021, the Tesco Group generated $66 billion USD in revenue. It currently operates 4,673 stores across the globe. Almost 4,000 of those stores are located in the United Kingdom, which is Tesco’s primary market. Based in Hertfordshire in southern England, Tesco “is the leading supermarket brand in the United Kingdom, consistently ranking highest in terms of grocery market share.” Tesco also operates successful stores across many European and Asian markets . In 2007, Tesco expanded in the United States under the brand, Fresh & Easy. At its peak, the company operated 208 stores in the market; however, due to its small store formats, skewed customer research, poor store locations, and food packaging concerns, the company was forced to exit the market in 2013 when it sold its remaining stores. In total, Tesco suffered losses of $1.6 billion USD as a result of its failed entry into the U.S. market.

Small Grocery Store Format

Tesco’s Fresh & Easy stores confused many American shoppers because the stores were much smaller than the traditional American grocery store. The typical Fresh & Easy store was around 3,000 square feet, which is less than one-third the size of an average American grocery, which is usually around 10,000 square feet. The stores were designed to make shopping easier and more convenient for the consumer. In short, they were built for daily shoppers. This daily shopper model, which is common in Europe, did not resonate with the typical American grocery shopper, who typically shops on a weekly basis. Tesco’s smaller stores had less variety which also frustrated the American consumer, who prefers to buy everything at a single store .

Skewed U.S. Market Research

The stores emphasized pre-prepared and ready-made meals, which did not resonate with the average consumer. Because Americans typically shop on a weekly basis, they are often buying items in bulk, which means ready-made items are less appealing . Tesco completed “ detailed market research including visiting shoppers at home to see what they bought and asking people to keep a food diary to observe what they consumed.” In their research, Tesco primarily talked to consumers in California. The company did not build a robust representative sample of the wider American grocery shopper. This oversight likely contributed to Tesco’s misguided decision to purchase small store formats with less variety and ready-made meals.  

Poor Store Locations

In its initial property deals, Tesco acquired store locations that “were essentially on the wrong side of the road .” Many Tesco store locations were located on the in-bound side of the road, which made it extremely difficult for people to stop on the way home from work as they left their jobs in the city. People would see the stores on the way into work when they were not looking to shop. Analysts say Tesco should have prioritized stores on the out-bound side of the road, so customers could quickly grab something for dinner on the way home from work. These poorly located stores severely hurt foot traffic in stores, which contributed to decreased sales in the U.S. market.

Food Packaging Concerns

In some ways, Tesco’s Fresh & Easy grocery stores were ahead of their time. Fresh & Easy stores fully embraced self-checkout . At the time, “self-pay checkouts for groceries were confusing for Americans so used to service .” The self-checkouts required products in the store to have a barcode clearly displayed. This meant that Tesco products were often individually wrapped in plastic for easy checkout. This frustrated American consumers, who are accustomed to touch and feel items like produce and fruit . The plastic wrapping undercut Tesco’s environmental and sustainability stance in the U.S. market. Despite its Fresh & Easy name, “it was hard to get quality fresh food there – especially fruit and vegetables.”

Tesco struggled to properly incorporate and contextualize the lessons learned during their customer research, which ultimately hurt the company’s expansion in the U.S. market. At CASTUS, we work with our clients to execute on their strategic growth plans to drive sustainable, long-term sales. If your company wants to expand into the U.S. market, we would love to talk with you .

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Case Study: Tesco

Tesco is a British multinational groceries and general merchandise retailer with its headquarters in the United Kingdom. Not only is Tesco one of the most valuable brands in the UK, but it is also the sixteenth most valuable retail brand worldwide as of 2021. In the UK, Tesco is the leading grocery retailer with a consistent share of over 27 percent of the market and is classed as one of the ‘big four’ supermarkets.

​The executive team for Tesco is based across Ireland, Asia and Europe with all functional team leads reporting to CEO, Ken Murphy. In 2018, Natasha Adams, then CPO and now CEO Tesco Ireland, attended Wavelength’s immersive learning study tour, Wavelength USA 2018 alongside 20 other exec level leaders from different sectors/continents, and in 2019 attended our bespoke ‘Silicon Valley Immersion’ with fifteen members of the Tesco Executive team.

Between 2014-2021 under the leadership of Sir Dave Lewis, the Tesco leadership team orchestrated a spectacular turnaround, resulting in a 34% surge in profits. However, then, as now, the retail landscape was under intense pressure as consumer behaviours changed, which has had a profound impact on the way in which people shop and eat.

Mindful of the pace of change and increasing customer demand, Tesco needed to pay serious attention to how it was innovating to remain relevant in this fast-paced, disruptive environment. How could they create the necessary conditions to use innovation as their catalyst for growth?

Wavelength were delighted that Tesco thought of us as their ideal partners in their journey towards embedding innovation in their strategy and outlook.

Silicon Valley Immersion Trip

“As a leadership team and as an organisation as a whole, we had to ask ourselves some tough questions. How could we collectively open our minds to innovate in a different way and think about innovation in the longer term? We needed to understand and feed off the big disruptions happening globally and specifically within the retail market,” commented Natasha Adams, former CPO and currently CEO, Tesco Ireland.

“Having attended the Wavelength USA trip the year before, I saw very clear synergies between that experience and the experience we wanted to create in the Tesco Silicon Valley Immersion trip. It was an opportunity to do something bespoke to focus on strategically important key themes.”

Tesco were seeking some very clear outcomes – namely, to change individual leaders’ frames of reference, mindset and expectation of innovation in their individual areas of the business. They wanted to stimulate a collective disruption around what the business was doing – and still needed to do – to fulfil their overarching strategy; all whilst remaining relevant and at the forefront of retail innovation.​

“We wanted to answer the question: ‘how do we become an innovative business where innovation flourishes to the advantage of our customers?’ This trip was about getting the stimulus to start that journey,” added Natasha.​

The bespoke Silicon Valley Immersion trip that Wavelength created for Tesco in 2019 was a world-class, unique three days packed with stimulus and encounters with the innovators, the disruptors and the enablers from across the Valley. The trip was curated around Tesco’s key strategic themes: food, loyalty, data, future of payments and AI.

Hosts included Silicon Valley Bank, Salesforce, Grove Collaborative, Starship Technologies, Andreesen Horowitz, Mayfield and a unique special event with a range of Silicon Valley entrepreneurs, commentators and thought leaders.

Tesco Leaders' Event - Bringing Silicon Valley To London

Following the success of the bespoke Silicon Valley trip, Wavelength supported the next stage of the Tesco Innovation journey by designing a bespoke experience for the group which would recreate and build upon their Silicon Valley Immersion. This formed part of the Tesco October 2019 bi-annual two-day Leaders’ Event, which brought together 50 top global Tesco leaders.

Natasha was keen to involve elements from across the Silicon Valley programme in the Leaders event, with the aim of broadening the level of awareness for the need to innovate differently.

Experience and Results

For Natasha, the highlights of the Silicon Valley Immersion programme were in its breadth and diversity of content, and the top-notch quality of conversations.

“The openness and willingness of the host companies to engage with the Tesco Group meant that the brief for the trip was 100% met. And the real highlight was that the trip stimulated the disruption conversation and challenge we wanted and needed to move forward with our strategic plans” she said.

The participation of the Tesco top team in Wavelength programmes ignited serious change across the company.

As a direct result, Tesco completely re-examined and relaunched their approach to innovation – culminating in September 2020 with their launch of ‘Tesco Red Door’, their new approach to disruptive innovation. They invite innovators with new products, ideas, or emerging technologies with the potential to cause disruption in the future to contact this Group Innovation Team.

This team is now a single point of contact, responsible for quickly evaluating ideas, supporting partners to access Tesco, and helping them to develop and implement their ideas.

This team enables start-ups with products and services that could step change Tesco’s business to partner with them whilst the ‘mothership’ focuses on incrementally increasing service delivery to 24 customers every week. Current pilots include partnering with:

• Manna to deliver groceries by Drone,
• Turing to use AI to transform product development,
• WhyBuy offering the opportunity for customers to access products and services without the cost of ownership.

A new role has also been created – Group Innovation Director. This role reports directly to the CEO and has a small working team with 100% backing from the executive team.

Smaller outcomes, but no less important, are that the executive team now have a markedly different perspective, connecting with entrepreneurs with whom they have built – and continue to build – key strategic partnerships.

What SAGA said

You managed to do that difficult thing of getting people to think more broadly about their profession, sharing fresh thinking from other companies and weaving this into a stimulating and entertaining narrative – great result!

Ala’a Eraiqat Group Chief Executive Officer & Board Member Abu Dhabi Commercial Bank

Dave did a thorough job of understanding ADCB journey towards Service Excellence, where we were, and what our ambition is. Dave tailored his speech in line with ADCB’s Service Ambition and illustrated the service road map beautifully to the audience. His speech was a catalyst that has reignited our leaders passion for service excellence, which is clearly evidenced by the increase in the number of change initiatives that have been kicked off and successfully implemented since the event. Would definitely recommend Dave as a speaker to help put to the customers and the employees back at the top of the agenda where it always belongs.

Alain Moffroid, Regional Managing Director Europe, Rentokil

Thank you for the brilliant session you delivered. We have received extremely positive feedback and it was a key contribution to the success of the two days. Both content and delivery were truly excellent, congratulations!

Alan Webber, Former Managing Editor, HBR & Co-Founder, Fast Company Magazine

If you have a chance to work with Steve Cadigan - for any reason at all - grab it! You will learn a lot. You will enjoy the experience. You will benefit from knowing and working with Steve in ways large and small. And it’s not just about the work. It’s about what kind of person Steve is. Trust me: you want to work with Steve.

Alexandra Humphries, Group Learning and Development Manager, Rentokil Initial

Working with Wavelength and their speakers was really easy. Sarah helped us shortlist a number of different speakers that were suitable for our event. Tokunbo was a great speaker, he listened to our needs about the event and what we wanted to achieve. His delivery was fantastic and we received great feedback on the session. Tokunbo spoke about the importance of embedding a long-term strategy that celebrates difference, of developing a culture of mentoring, championing and sponsorship, and that excellence is everywhere - and how employees should find it and then nurture it.

Alexandra Pierce, Group Head of Organisation Development & Culture, Aldermore Bank

I feel grateful, inspired and humbled by the incredible work of Alder Hey Innovation led by Iain Hennessey and his team. Their customer obsession, outside the box thinking and bravery in pushing the boundaries of technology to save the lives of children faster and better is refreshing and inspiring. Aldermore Bank shares a unique connection in the name, which symbolises strength, confidence and determination. I’m really proud to be part of this business and am filled with hope for how we can take and implement learnings from Alder Hey to create more value for our customers.

Alice Webb, CEO & Co-President, Mercury Studios, Universal Music Group

Aravind is an inspirational example of how to do good business and do good at the same time. This trip is built in that image, feeding your brain and your soul in equal measure. I can’t recommend it highly enough. The impact will stay with you for years!

Alison Cheung, Group Financial Director, Tesco

“An awesome and inspirational experience! It was a privilege to have access to some of the world’s leading businesses in innovation. It was an exceptional learning experience.”

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53 Percent of GBS Leaders Prioritize Productivity Zinnov-ProHance Study Unveils Data-Driven Strategies for Organizational Success

Bengaluru, Karnataka, India – Business Wire India In the face of mounting macro-economic challenges, Global Business Services (GBS) organizations are at a pivotal moment. A new study by Zinnov, a global management and strategy consulting firm, in collaboration with ProHance, a productivity management pioneer, underscores the critical need for GBS leaders to implement robust productivity frameworks to not only withstand economic pressures but also drive sustainable growth. Navigating the Crossroads of GBS: The Need for a Data-driven Productivity Framework GBS organizations today are navigating a complex landscape marked by economic uncertainty, talent retention challenges, and rapid technological advancements. The study highlights that 53% of GBS leaders rank productivity improvement as their top priority for 2024. This focus is driven by the dual need to enhance operational efficiency and foster innovation amidst ongoing economic headwinds. As the economic environment remains volatile with inflation, geopolitical risks, and supply chain disruptions, the pressure on GBS organizations to deliver cost efficiencies has intensified. Zinnov and ProHance’s study reveals that a data-driven approach to productivity management is not just desirable but essential. With 52% of leaders citing limited access to reliable data as a key barrier, there is an urgent need for comprehensive visibility and actionable insights to optimize operations and impact the bottom-line effectively. In response, GBS leaders are increasingly focusing on productivity as a critical lever to mitigate these pressures and ensure organizational resilience. This one of a kind study by Zinnov and ProHance guides GBS leaders on how productivity can serve as a key lever to navigate these challenges and offers a roadmap for sustainably enhancing productivity. The key to success lies in transforming data into actionable intelligence and integrating it across people, processes, and technology. This holistic approach not only enhances immediate productivity gains but also builds a culture of continuous improvement, positioning GBS organizations as strategic enablers within their parent organizations. From Quick Wins to Sustained Impact: The Journey of Productivity Transformation The study outlines a three-step strategy for GBS leaders to enhance productivity and achieve sustained impact – 1. Visibility: The first step is gaining comprehensive visibility into workforce data. This involves leveraging advanced analytics tools to capture and visualize performance metrics, enabling GBS leaders to identify bottlenecks and areas for improvement. 2. Interventions: Once visibility is established, targeted interventions can be implemented. These range from optimizing resource allocation and task prioritization to reengineering processes and integrating Automation and AI technologies. The goal is to enhance both short-term productivity and long-term operational resilience. 3. Change Management: Effective change management is crucial to the success of any productivity initiative. The study emphasizes the need for a strategic approach to manage stakeholder expectations, align priorities, and drive cultural change across the organization. The study also captures compelling, real-world case studies that demonstrate how organizations at different stages of their productivity journey can achieve significant gains – with a framework approach. The Zinnov-ProHance Productivity framework is designed to help organizations systematically identify pain points and curate targeted interventions. With early-stage organizations reporting up to a 20% improvement in productivity levels, the framework-led approach clearly has merits. The Strategic Imperative: Embracing Productivity for Sustainable Growth In light of the study’s findings, it is clear that productivity is no longer just a measure of efficiency but a strategic imperative for GBS organizations. As the role of GBS evolves from being a cost center to a value driver, leaders must adopt a more nuanced approach to productivity management—one that balances cost efficiencies with value creation and innovation. Talking about the study, Karthik Padmanabhan, Managing Partner at Zinnov, said, “Today, the pursuit of productivity extends beyond just deploying advanced tools – it requires a cohesive, framework-led approach. With 52% of leaders citing limited access to reliable data as a major barrier, and productivity dropping by 15% after 8 hours of work, it’s clear that sustainable productivity is not just about working harder, but smarter. By setting realistic targets and KPIs, the Zinnov-ProHance approach helps move 19% of employees into high productivity zones within six months, driving impactful change across people, processes, and technology. The Zinnov-ProHance Productivity Quadrants framework provides a strategic blueprint for GBS organizations to baseline and benchmark productivity, allowing them to make data-driven decisions. As GBS leaders navigate the complexities of modern business, adopting this holistic approach will be essential to sustain and scale their impact.” The Path Forward: Leveraging Data for Strategic Advantage For GBS leaders, the path forward is clear: embrace a productivity framework that integrates advanced analytics, targeted interventions, and strategic change management to navigate the complexities of the current business environment and unlock sustainable growth. “Driving the productivity agenda within GBS demands a robust measurement system. The enterprise productivity landscape is increasingly complex and cluttered with various technologies such as Generative AI, RPA, and Process Discovery. However, the impact of these technologies on optimizing investments in human capital often remains unclear. ProHance offers a comprehensive understanding of work patterns and their influence on efficiency and productivity. This study, grounded in first principles, provides accurate measurement and presents an alternative perspective, enabling GBS organizations to cut through the noise and focus on the true drivers of sustainable productivity,” said Ankur Dhingra, CEO, ProHance. About Zinnov Founded in 2002, Zinnov is a global management and strategy consulting firm, with presence in New York, Santa Clara, Houston, Seattle, Bangalore, Gurgaon, Hyderabad, Pune, and Paris. Over the past 22 years, Zinnov has successfully consulted with over 250+ Fortune 500 enterprises to develop actionable insights to help them accelerate their technology journeys to create value – across dimensions of revenue, transformation, and optimization. With core expertise in Digital Engineering Talent, Digital Transformation, Innovation, and Outsourcing Advisory, Zinnov assists clients by: • Enabling global companies to design, build, transform, and scale their global engineering talent footprint through center setups and accelerators – in an as-a-service model, as well as optimizing their global portfolios, to achieve higher R&D efficiencies, innovation, and productivity; • Advising global PE firms in asset shortlisting and target evaluation, commercial due diligence, and value creation including global footprint accretion; • Growing revenue for companies’ products and services in newer markets through account intelligence, market entry, and market expansion advisory; • Helping global companies outline and drive their open innovation programs, design and operate accelerator programs, and enable collaboration with start-ups across specific use cases and predefined outcomes; • Structuring and implementing Digital Transformation levers enabled by technologies like AI/ML, Intelligent Automation, Cloud, IOT, etc. With their team of experienced consultants, subject matter experts, and research professionals, Zinnov serves clients from across multiple industry verticals including Enterprise Software, BFSI, Healthcare, Automotive, Retail, and Telecom in the US, Europe, Japan, and India. For more information, visit http://www.zinnov.com. About ProHance ProHance is an industry leader in the enterprise workforce analytics, productivity intelligence, and operational empowerment with 370,000+ users across 25 countries. The cloud-based platform is tailored for the hybrid work environment and productivity enhancement especially in GBS organizations through years of collaboration with companies like Tesco, JLL, American Express, Tata Power, Lowe’s, and more. In an age when remote and hybrid work has become table stakes for the contemporary enterprise, solutions like ProHance enable businesses to track productivity beyond simple metrics and generate real-time workforce intelligence to the executive leaders that crave actionable insights. For more information, log onto: www.prohance.net. To View the Image, Click on the Link Below: Ankur Dhingra, CEO, ProHance Karthik Padmanabhan, Managing Partner, Zinnov (Disclaimer: The above press release comes to you under an arrangement with Business Wire India and PTI takes no editorial responsibility for the same.). PTI PWR PWR

(This story has not been edited by THE WEEK and is auto-generated from PTI)

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Naini is a writer at Forbes India, who likes to dabble in storytelling across all forms of media. She writes on various topics ranging from innovation and startups to cryptocurrency and agriculture—anything and everything that makes for an interesting story. Before her stint at Forbes India, she worked for close to a year at Outlook Business. With five years of work experience, she co-produces Forbes India’s video series “From The Field” and hosts the podcast “Teenpreneurs”. She also emcees at events and moderates panel discussions from time-to-time. Naini is a part of Forbes India’s digital team, also handles Forbes India’s Instagram account and helps plan events. An avid learner, she has completed her PGDM in Journalism from Xavier Institute of Communication and Bachelor’s of Mass Media from Sophia College for Women in Mumbai. Be it at work or home, you will not find her working without her headphones and work playlist. She loves trekking and travelling, experimenting in the kitchen, watching films and reading.

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