Economic Background of Tesco Case Study Example | Topics and Well Written Essays - 1500 words

Economic Background of Tesco - Case Study Example As a group its turnover is 28 billion per year and even as a leader it continues to build market share because of its winning strategy.( Corporate Watch, 2004). In this paper we aim to get an insight into Tesco's economic strategy and analyse the different problems it currently faces and might encounter in the future. We also aim to present plausible solutions to tackle the stated problems. Tesco has an insatiable appetite for space, and relentlessly pursues the best new sites. When it comes to just number of stores and locations, Tesco leaves its rivals standing. In the 1960s, Tesco was buying up literally hundreds of grocery stores and small grocery chains around the country. It introduced 'Home 'n' Wear' departments into larger stores to carry higher-margin non-food merchandise, including clothing and household items, and opened its first 40,000ft 'superstore' in Crawley, Sussex. In 2002, it stunned experts and the competition by buying T&S, a chain of 850 convenience stores across the country. The deal doubled the group's store count in the UK at a stroke. The scale of it allowed them to capture quite an increase in market share, and they really caught the rest of the industry off guard. Learning from its past mistakes, Tesco diversified its level of products and prices to appeal to all income brackets in the same store. Tesco offers three distinct ranges of own-brand products, from Value to Finest, priced to attract all types of shoppers to its stores. Therefore in spite of its humble beginnings as a 'thrifty' store, Tesco now has more upmarket customers than M&S and Waitrose put together attracting 15 million customers per week to its stores comprising of the high and low income customer segments. Investing in Growth, Diversification and Expansion-Thinking Big: Tesco has multiplied its power and standing by reaching far and wide both in terms of diversification and expansion in terms of products and locations. It has expanded its grocery retailing at home in UK by finding innovative and energetic in finding ways to expand, such as making a large-scale move into the convenience-store sector, which the major supermarket chains have traditionally shunned. Tesco has found stunning success in its diversification to non-food business. In 1974, in a deal with Esso, Tesco began to open petrol stations on the grounds of its superstores. The idea was successful and by 1991 Tesco was the country's largest independent petrol retailer: it now accounts for 12.5% of all petrol sold in the UK. (Corporate Watch,2004).By late 2004 it was widely regarded as a major competitive threat to traditional high street chains in many sectors, from clothing to consumer electronics to health and beauty to media products. Tesco sells an expanding range of own-brand non- food products, including non-food Value and Finest ranges. Tesco has pioneered the concept of retail services. Tesco has taken the lead in its sector in