Tesco Case Analysis

Tests had an In store policy that a new checkout line would be undefendable If there was m re than 1 person waiting In line and they were pioneers In egotism service checkout terminal. Tests was also innovative with its store formats. Tests stores ranges in size and service fro m Express, Metro, Superstore, Extra, and Homeless. Tests utilize consumer purchase data to tailor assortments to local customer needs. Tests also increased the amount of non food items they stocked with to include a clothing line.The Club card, which offered cash back rewards and redeemable vouchers, was successful In creating allegiance among Its consumer. Tests proved successful In International operations by poke outing Into emerging entries with minimal competition such(prenominal) as those in Eastern Europe and Asia. It AC aired smaller, established retailers and kept local way in mark. They were flexible in their strategy and acted locally using multiple formats.Tests also leveraged its brand all egiance to expand in some other service atomic number 18as such as flan telecommunications, and grocery delivery. This by partnering or ultimately 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 have been the inadequacy of strong competition in the new areas to expand.Clearly not this case, because there were around 35,000 super markets In t and in addition, almost every retailer from drugstores to home improvement centers sold some grocery items. There existed utmost(prenominal) price competition as the U. S. Was oer stored, according to some industry analysts, and the average U. S. Supermarket realized an run 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 identified an increasing consum er interest in wellness, in health conscious food choices and a chronic trend towards on the go consumption, especially evident in California as a gist of greater automobile commuting times compared to the national average. Tests hoped to avoid the headed head competition for the weekly family obtain trim with the established grocery chains, a niche it dominated in the U. K. , and rather focus s on targeting an undeserved niche 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 Southwest was a good market to enter actual performance leads one to think otherwise. Tests c inducted a great deal of cod diligence prior to entering the US market. They analyzed trends I indicated by market research, sent elderly managers to live with Californian families, and conducted d a mock 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 part with established grocery chains.Several other factors demonstrated potential to include o Grocery retailing in the US embraced multiple formats (in keeping 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 between convenience stores and supermarkets that might be filled by nearness markets o Increasing customer interest in wellness, in health conscious food choices, and a Tests specifically looked to the following benefits of California, Arizona and NevadaS Grocery retailing not dominated by each one chain S Lower penetration by Wall Mart than in other US regions S CA rapidly growth, ethnically diverse population of over 35 million, medial(a) house hold income well above national average S AZ, NV. Similarly diverse and growing rapidly D espite 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 stinting downturn 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 snappy & light-colored value proposition? Is it desirely to be likeable in California, Arizona and Nevada? C customers wanted great service, choice, and value (p. 4) offer good, 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 dishonor operating costs to deliver honest low prices on fresh wholesome food that should be available to everyone in a neighborhood market ( Employees from local community, carefully selected to fit Decos culture (p. 7) Nonfood items would broadsheet for only 5% of sales (p. 7) ready to sell approach, whereby many products sent from dispersal center to store packaged, extending product freshness, protecting produce from damage, cutting down on spoilage, requiring less refrigeration, and reducing labor undeniable to stock shelves (p. ) Leveraging relationships with collaborators for distribution (p. 8) this centralized MO del was similar to Walters Smaller stores = easier permitting process Taking over existing, vacant drugstores = cheaper than building from scratch New stores built from prepare materials = quicker construction, lower overhead, streamlined sum chain Energy efficient stores (30% less energy than comparable, traditional stores some stores LED certified) Fresh & Easy emphasized everyday low pricing rather than weekly specials and hope d to on fresh wholesome food that should be available to everyone in a neighborhood market. Fresh & Easy leveraged relationship s with collaborators for distribution to create value e by minimizing costs and emphasize fresh. Their ready to sell approach, whereby prepare caged products went instantaneously from distributors to local stores, promotes that it extended pro duct freshness. The prepackaging protected produce from damage, cut down on spoilage, infallible less refrigeration, and reduced 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 Arizona and Nevada were similarly diverse and growing rapidly. Ethnically diverse pop populations are likely to appreciate Fresh & Eases va lue 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 lead 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.