TESCO Marketing Strategy

TESCO Marketing Strategy

  • Executive Summary

TESCO supermarket was founded by Jack Cohen in 1919. The name is a combination of the founder and a partner, TE Stockwell, hence the name TESCO. This name was born in 1924. TESCO has been recognized as UK’s most successful online grocery, with a customer base of almost one million, and more than 250,000 orders per week. TESCO has interests in various products such as food and drinks, clothes, consumer electronics, fuel and gas stations, internet services, consumer telecoms and consumer financial services. The major competitors for the supermarket are ASDA, Sainsbury’s PLC, WM Morrison supermarkets, Wal-Matt, Carrefour, Aldi & Lidl from Germany and others. TESCO PLC is the leading supermarket in the UK with a current market share of 27%. This is a drop from a previous year when it had approximately above 28%. The company prides itself in brand value, a convenient range of products, and a convenient online store. One of its shortfalls is that it principally depends on UK market. The company’s CEO is Dave Lewis and John Allan is the chairman. Tesco operates almost 7,000 stores in the world and employs over 500,000 people.

  • Company Summary

Tesco Supermarket Limited was established by Jack Cohen in East End of London in 1919. It began as a groceries store. The believe of the founder was to put affordable food on everyone’s table. (Wood, Wrigley, & Coe, 2016)

Tesco Supermarket Limited has grown over the years to become the largest supermarket in the UK. The first adopted its brand name in 1924, when Jack Cohen partnered with TE Stockwell, who was a partner in the firm of tea suppliers. The company got its name from a combination of the partner’s name and the founder’s name, hence the name TESCO. The initial years saw the company brand tea with a promise of unequalled value. The first store for TESCO was opened in 1929 at Burned Oak, Edgware, and north London. (Wood et al, 2016). The first ever branded product for the company was Tesco Tea. In 1934, Jack Bought a plot of land in Angel Road and expanded the store, building the store’s first headquarter. It was the first food warehouse in the country. In 1937, TESCO continued its expansion to other locations in suburbs in London and to other neighboring countries. In 1939, at the wake of World War II, Jack introduced rationing in the grocery store such that everyone was treated equally, whether rich or poor. In 1946, Jack Cohen travelled to America and learned the idea of self-service, and introduced it to his stores. The store was incorporated in the stock market in 1947 with a share price of 25 pence. 1950’s saw the company expand rapidly as it bought about 50 stores. (Haddock-Millar, & Rigby, 2015)

The first supermarket under TESCO was established in 1958 in Maldon, Essex. In 1960, the store introduced new products in the market such as clothes, and bought 212 stores of Irwin stores in the north of England. In the year 1960, TESCO opened its first superstore which sat on forty thousand square feet as well as selling food and non-food goods. In 1973, TESCO introduced petrol stations to provide affordable fuel to motorists. On 24th March 1979, the founder, Jack Cohen, passed on. (Haddock-Millar, & Rigby, 2015). TESCO continued expanding in the area of electrical products and it went global. TESCO has seen greater expansions to date with many stores and stocking a variety of goods. The Chef Executive officer for TESCO Group is Dave Lewis while John Allan is the current Non-Executive chairman. TESCO operates on a vision with five principal components which include: to be wanted and needed around the world, to be a growing business, full of opportunities, modern, innovative and full of ideas, winners locally while applying their skills globally and finally inspiring, earning trust and loyalty from customers, colleagues and the community. TESCO is founded on the following values: Treating everyone how they would expect to be treated, a leader in reducing food waste globally, responsible trading, and reducing negative effect on the environment among many more values. Among the aspirations of TESCO is to be produce carbon-free goods by 2050. Currently, TESCO has operations in 12 countries including China, Czech Republic, India, Malaysia, Ireland, Hungary and Poland. In 2013, TESCO employed more than 530,000 people. It has both physical stores and online stores. TESCO is a global leader in various goods as it has a strong strategic leadership. TESCO is a successful company which has achieved great strides of success both financially in in goodwill. (Kirby-Hawkins, Birkin,& Clarke, 2019).

The group sales for 2018 were £56.9B with a profit of £2.206m. It has several charity initiatives and therefore it is impacting its society positively.

  • Products and services

TESCO stocks and sells a very wide variety of products. These are in various categories. The first category of products offered by TESCO is Fresh Food. The fresh food stocked and sold by TESCO is meat, poultry, fish, fresh fruit, fresh vegetables, fresh salad and dips, chilled fruit juice, eggs, butter, cheese, yoghurts, dairy alternatives, Chilled Desserts, Fresh meat alternatives, fresh pizza, pasta and garlic bread, fresh soup, sandwiches and salad pots as well as world foods. The other category of products stocked and sold at TESCO are bakery products. These products include bread and rolls, cakes, cake bars, slices and pies, teacakes, fruit loaves and scones, crumpets, muffins and pancakes among others. (Kirby-Hawkins, Birkin, & Clarke, 2019)

TESCO also stocks and sells frozen foods as enumerated above. Another category of products stocked and sold at TESCO is drinks. TESCO stocks a very wide variety of drinks including low and no alcohol drinks, wines, spirits, beer and cider, hot chocolate and malted drinks, coffee, tea, milkshake, sports and energy drinks, kids and lunchbox drinks, premium drinks and mixers, squash and cordial, bottled water, juices and smoothies, fizzy drinks and cola. TESCO has also invested in baby products. Some of the baby products and services available at TESCO are nappies and pants, baby and toddler wipes, baby and toddler toiletries, baby and toddler healthcare, baby and toddler milk, baby and toddler food, toilet training, mum to be, breastfeeding accessories, baby bottles and accessories, baby weaning and accessories, dummies and teething, sterilizing and bacterial, baby laundry, toys and nursery accessories. Another category of products at TESCO is health and beauty products. These products include make up and nails, body skincare, facial skincare, haircare, shower, bath and soap, oral care, women’s toiletries, men’s toiletries, medicines and treatments, vitamins, lifestyle and wellbeing, sun care and travel as well as gift sets and fragrances. (Ahmad, Noor, & Wel,2014). In TESCO is where we have another category of products called pets. Under this category, the customers of TESCO can have access to the purchase of cat and kitten, dog and puppy, small animals, fish and bird. TESCO also stocks household goods. These include laundry, toilet roll, kitchen roll and tissues, cleaning, dishwashing, air fresheners and fragrance, household essentials and food storage, lightbulbs, brushes, mops and buckets, and eco-friendly households. In addition to the above products, TESCO also stocks and sells a home and entertainment products. These include batteries (AA batteries, AAA batteries, 9 volt batteries, specialist batteries, C batteries, D batteries and rechargeable batteries. In addition, the giant chain is a stockiest in magazines, newsletters, Tobacconist, as well as national lottery scratch cards. Greeting cards such as Christmas cards are also available at TESCO. The company also stocks cooking and dining products (kitchen essentials and food preparation, food storage and lunchboxes, tableware, cooking appliances, bakeware, glassware, oven ware and roasting dishes, pots and pans, mugs and cups). The giant retailer also stocks DIY and car care. Entertainment, DVD and music is also available in this retailer’s premises. These include books, gaming, CDs, gaming and DVDs. Home and office are also products offered at this supermarket. These include bedroom products, bathroom products, and home accessories. (Ahmad et al ,2014) There are also a variety of stationery at this chain. These include pens & pencils, paper, pads & notebooks, filing and office supplies, stationery and geometry sets, stamps and envelops, arts and crafts. Party decorations and supplies are also available here. These include balloons, banners, bunting and badges, birthday candles, gifts, party accessories, party tableware among others. Sports and leisure accessories are also available which include camping accessories, bikes accessories, sports and fitness accessories. Electrical appliances are also available in TESCO supermarket. These include cooking appliances, phones and accessories, data storage and the like. TESCO supermarket stocks and sells almost all the goods needed for human use.

  • Market Analysis Summary

TESCO is a UK originated company and its influence in the UK is far reaching. Before looking at the market analysis for the company itself, it will be prudent to look at the general market for the products offered in the UK. (Haddock-Millar, & Rigby, 2015)

Groceries market in the UK

 Figure 1: Grocery market share in the UK

Figure 1 above shows the market share by company in the UK for the last 12 weeks. From this analysis, TESCO has the highest market share with 27.0% of the market and the margin between TESCO the second largest in market share, Sainsbury’s is wide. Therefore, TESCO is a huge company and has a good share of UK’s market. (Haddock-Millar, & Rigby, 2015)

The United Kingdom is well known for its supermarket business, with most of the world’s leading supermarkets having been founded there. Figure 2 below shows the market share of UK grocery stores, and it reveals that TESCO is the market leader. However, the figure clearly illustrates that there is a decline in the market share for the period 6th October 2019, as compared to a similar period in 2018. (Kirby-Hawkins et al, 2019) . A market research carried out on popularity places Aldi in position 1, with TESCO getting to the 5th position in popularity. From figure 2, we can clearly see the competitors of TESCO supermarket which with Sainsbury’s being the closest competitor. Aldi and Lidl are new entrants to the UK market from Germany and they seem to cause much pressure to these two long serving giants in the market. ASDA is also a close competitor for market share getting almost the same amount of market share as the second largest, Sainsbury’s. Morrisons, Co-op, Waitrose, Iceland & Acado are also among those competing for the UK’s grocery market. Since TESCO is well established and with goodwill amongst its large customer base, it wishes to continue expanding both locally and globally, keeping an eye not to lose the local market and relevance. As we have already seen, there is a stiff competition with new organizations getting to the market and this should make the long-serving supermarket chain to be focused not to lose its hard found market share. The larger the market the more sales can be made. Therefore, since the company wishes to increase its profitability, it is prudent to keep this market share growing.

Figure 2: Comparative market share for grocery stores in the UK

Though TESCO has been accused of operating as a monopoly, there is a need to continue increasing its value and having the same principles with consistency being at the core of its business. This will ensure that it remains competitive in the long run regardless of the entrants to the market.

  • References

Wood, S., Wrigley, N., & Coe, N. M. (2016). Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc. Journal of Economic Geography, 17(1), 31-57.

Haddock-Millar, J., & Rigby, C. (2015). Business Strategy and the Environment: Tesco PLC’s Declining Financial Performance and Underlying Issues. Review of Business & Finance Studies, 6(3), 91-103.

Kirby-Hawkins, E., Birkin, M., & Clarke, G. (2019). An investigation into the geography of corporate e-commerce sales in the UK grocery market. Environment and Planning B: Urban Analytics and City Science, 46(6), 1148-1164.

Ahmad, A., Noor, S. M., & Wel, C. A. C. (2014). Factors influencing consumers’ purchase decision of private label brand products. International Journal of Economic Practices and Theories, 4(2), 101-110.
Sleight, P. (2001). Tesco. com. Interactive Marketing, 2(4), 373-383.

  • Appendix


Balance Sheet: 23/02/2019 24/02/2018 25/02/2017 27/02/2016 28/02/2015
  £ (Millions) £ (Millions) £ (Millions) £ (Millions) £ (Millions)
Non-Current Assets:   
Property, Plant & Equipment: 19,023.00 18,521.00 18,108.00 17,900.00 20,440.00
Intangible Assets: 6,264.00 2,661.00 2,717.00 2,874.00 3,771.00
Investment Properties: 36.00 100.00 64.00 78.00 164.00
Investments: 704.00 689.00 1,562.00 1,863.00 1,915.00
Other Financial Assets: 2,157.00 1,977.00 1,303.00 6,255.00 3,906.00
Other Non-Current Assets: 8,195.00 7,187.00 6,682.00 250.00 2,060.00
  36,379.00 31,135.00 30,436.00 29,220.00 32,256.00
Current Assets:   
Inventories: 2,617.00 2,264.00 2,301.00 2,430.00 2,957.00
Trade and Other Receivables: 1,640.00 1,504.00 1,475.00 1,406.00 2,121.00
Cash at Bank & In Hand: 2,916.00 4,059.00 3,821.00 3,082.00 2,165.00
Current Asset Investments: 390.00 1,029.00 3,011.00 3,520.00 593.00
Other Current Assets: 5,007.00 4,744.00 4,465.00 4,246.00 3,983.00
  12,570.00 13,600.00 15,073.00 14,684.00 11,819.00
Other Assets: 98.00 149.00 344.00 n/a 139.00
Total Assets: 49,047.00 44,884.00 45,853.00 43,904.00 44,214.00
Current Liabilities:   
Borrowings: 1,599.00 1,479.00 2,560.00 2,826.00 2,008.00
Other Current Liabilities: 19,081.00 17,754.00 16,674.00 15,040.00 17,797.00
  20,680.00 19,233.00 19,234.00 17,866.00 19,805.00
Net Current Assets: c n/a c n/a c n/a c n/a c n/a
Non-Current Liabilities:   
Borrowings: 5,673.00 7,142.00 9,433.00 10,711.00 10,651.00
Provisions: 983.00 817.00 773.00 799.00 894.00
Other Non-Current Liabilities: 6,877.00 7,212.00 9,828.00 5,912.00 5,788.00
  13,533.00 15,171.00 20,034.00 17,422.00 17,333.00
Other Liabilities: n/a n/a 171.00 n/a 5.00
Total Liabilities: 34,213.00 34,404.00 39,439.00 35,288.00 37,143.00
Net Assets: 14,834.00 10,480.00 6,414.00 8,616.00 7,071.00
Capital & reserves:   
Share Capital: 490.00 410.00 409.00 407.00 406.00
Share Premium Account: 5,165.00 5,107.00 5,096.00 5,095.00 5,094.00
Other Reserves: 3,798.00 735.00 601.00 (141.00) (414.00)
Retained Earnings: 5,405.00 4,250.00 332.00 3,265.00 1,985.00
Shareholders Funds: 14,858.00 10,502.00 6,438.00 8,626.00 7,071.00
Minority Interests / Other Equity: (24.00) (22.00) (24.00) (10.00) n/a
Total Equity: 14,834.00 10,480.00 6,414.00 8,616.00 7,071.00


Income statement

Income Statement: 23/02/2019 24/02/2018 25/02/2017 27/02/2016 28/02/2015
  £ (Millions) £ (Millions) £ (Millions) £ (Millions) £ (Millions)
Revenue: 63,911.00 57,493.00 55,917.00 53,933.00 62,284.00
Operating Profit / (Loss): 2,153.00 1,839.00 1,017.00 1,072.00 (5,792.00)
Net Interest: (514.00) (533.00) (765.00) (849.00) (571.00)
Profit Before Tax: 1,674.00 1,300.00 145.00 202.00 (6,376.00)
Profit after tax from continuing operations: 1,320.00 994.00 58.00 256.00 (5,719.00)
Discontinued Operations:   
Profit after tax from discontinuing operations: n/a 216.00 (112.00) (127.00) (47.00)
Profit for the period: 1,320.00 1,210.00 (54.00) 129.00 (5,766.00)
Attributable to:   
Equity holders of parent company: 1,322.00 1,208.00 (40.00) 138.00 (5,741.00)
Minority Interests / Other Equity: (2.00) 2.00 (14.00) (9.00) (25.00)
Total Dividend Paid: c n/a c n/a c n/a c n/a c n/a
Retained Profit / (Loss) for the Financial Year: c n/a c n/a c n/a c n/a c n/a
Earnings per Share:   
Basic: 13.65p 12.15p 0.81p 3.24p -70.24p
Diluted: 13.55p 12.11p 0.81p 3.22p -70.24p
Adjusted: 13.65p 12.15p 6.68p 4.06p 9.42p
Dividend per Share: 5.77p 3.00p 0.00p 0.00p 0.00p


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