Tesco Case Analysis

Tests had an In remembering form _or_ system of g everyplacenment that a bargon-ass checkout concern would be opened If there was m re than 1 person waiting In line and they were pi unrivalleders In self service checkout terminal. Tests was give carewise innovative with its store formats. Tests stores ranges in size and service fro m Express, Metro, Superstore, Extra, and Homeless. Tests used consumer purchase selective information to tailor assortments to local customer needs. Tests also increased the amount of non f ar items they stocked to let in a clothing line.The Club card, which offered cash jeopardize rewards and redeemable vouchers, was successful In creating loyalty among Its consumer. Tests proved successful In International operations by throw a fiting Into emerging entries with minimal competition much(prenominal) as those in Eastern Europe and Asia. It AC aired smaller, open up retailers and kept local management in place. They were flexible in their outli ne and acted locally using multiple formats.Tests also leveraged its brand loyalty to expand in other service areas such as flan telecommunications, and grocery delivery. This by partnering or eventually acquiring recognized and trusted brands/organizations. 2. Which success factors are or are not transferable to the US? Transitioning to the United States presented a challenge for Tests considering that t Eire major factor of international success form been the lack of strong competition in the new areas to expand.Clearly not this case, because there were around 35,000 super grocery stores In t and in addition, almost every retailer from drugstores to home improvement centers sold some grocery items. There existed yearning price competition as the U. S. Was over stored, according to some effort analysts, and the average U. S. Supermarket realized an operating proof t of 2% to 3% of sales, presenting a much different landscape from what Tests was transitioning g from in the U. K. Nevertheless, Tests identify an increasing consumer interest in hygienicness, in health informed diet choices and a continuing trend towards on the go consumption, especially limpid in California as a result of greater go commuting times compared to the national average. Tests expectd to avoid the headed head competition for the each week family shop trim with the established grocery trains, a time out it dominated in the U. K. , and rather focus s on targeting an undeserved street corner in the marketplace. 3. Was Tests smart to enter the US market? In California, azimuth and Nevada?Although early analysis led decision makers to believe the US, especially the southwestern United States was a favorable market to enter actual performance leads one to think otherwise. Tests c inducted a great deal of due manufacture prior to entering the US market. They analyzed trends I indicated by market research, sent senior managers to live with Californian families, and conducted d a treat store tour with 200 focus groups. By targeting an undeserved niche in the marketplace ace, Tests hoped to avoid headed head competition for the weekly family shopping trip with established grocery chains.Several other factors demonstrated potential to allow in o marketplace retailing in the US embraced multiple formats (in safekeeping with Tests strategy No national grocery retailer in the US None of the principal supermarket chains (Kroger, Safely, Supernal) commanded more than 15% of US grocery sales Market size $600 billion Possible gap surrounded by convenience stores and supermarkets that might be filled by area markets o Increasing customer interest in thoroughlyness, in health conscious solid food choices, and a Tests specifically looked to the following benefits of California, azimuth and NevadaS Grocery retailing not dominated by any one chain S Lower penetration by Wall Mart than in other US regions S CA rapidly suppuration, ethnically several(a) populat ion of over 35 million, median house hold income well above national average S AZ, NV. Similarly diverse and growing rapidly Despite all of the potential benefits, Tests faced several challenges to include Competition (35,000 supermarkets) Almost every retailer from drugstores to home improvement centers also sold grocer y items (overstated) Intense price competition Economic brush upturn Low average operating profits of 23% of salesPrior attempts by British supermarket chains to expand into the US had proven nuns successful 4. What is the angelic & free value proposition? Is it likely to be appealing in California, Arizona and Nevada? C customers wanted great service, choice, and value (p. 4) offer white, wholesome food at affordable prices (p. 7) strong commitment to being a good neighbor and a great place to work (p. ) emphasis on everyday low pricing rather than weekly specials hoped to leverage disdain operating costs to deliver honest low prices on fresh wholesome food that should be lendable to everyone in a neighborhood market ( Employees from local community, carefully selected to fit Decos culture (p. 7) Nonfood items would account for and 5% of sales (p. 7) ready to dish out approach, whereby many products sent from dispersion center to store packaged, extending product freshness, protecting produce from damage, cutting down on spoilage, requiring less refrigeration, and reducing labor needed to stock shelves (p. ) leverage relationships with collaborators for distri plainlyion (p. 8) this centralized MO del was similar to Walters Smaller stores = easier permitting process winning over existing, vacant drugstores = cheaper than building from scratch New stores built from determine materials = quicker construction, lower overhead, streamlined supply chain Energy cost-effective stores (30% less energy than comparable, traditional stores some stores LED certified) Fresh & light(a) emphasized everyday low pricing rather than weekly speci als and hope d to on fresh wholesome food that should be available to everyone in a neighborhood market. Fresh & easy leveraged relationships with collaborators for distribution to fabricate value e by minimizing costs and emphasize fresh. Their ready to sell approach, whereby prepare caged products went directly from distributors to local stores, promotes that it extended pro duct freshness. The prepackaging protected produce from damage, cut down on spoilage, required less refrigeration, and trim back labor needed to stock shelves. Fresh & Eases appeal in new markets relied on various factors.California offered the rapidly growing, ethnically diverse population of over 35 million with a median house hold income well above the national average. The percentage of Caucasians had fallen to below 45 and 40% of people spoke a language other than English at home. Hispanic Americans accounted for 37% of the population, Seminarians for 12% and African Americans 6%. The populations of A rizona and Nevada were in like manner diverse and growing rapidly. Ethnically diverse pop populations are likely to appreciate Fresh & Eases value propositions.The emphasis on honest 10 w prices and a neighborhood marketappeal to various ethnicities. However, Fresh & Easy built many stores in suburban neighborhoods. The population n in these neighborhoods tend to shop less times per week but spend more at each visit. These habits clash with the Fresh & Easy concept of daily visits to grab a quick and inexpensive vive bite. It may have been a better idea to have targeted urban cities like New York or Chicago w here the populations buying habits are more compatible with Fresh & Eases intended target. 5.