M Rahman5C analysis of Tesco (5C’s of Tesco)
This is a detailed ‘5C analysis of Tesco’. It provides readers with important insights into the key drivers behind Tesco’s success. The key drivers analysed in line with the 5C framework are company, competitors, customers, collaborators, and climate.
Tesco Company (Tesco Plc)
Tesco is a British multinational grocery and general merchandise company. It has market experience of over 100 years. It has operations in a number of countries and serves millions of customers every week. It has different types of stores e.g. Tesco Express, Tesco, Metro, and Tesco superstore. It has a strong online presence as well.
Tesco has 27.3% market share in the UK grocery industry (Kantar, 2023). Its online business had grown really well in the last few years. To run the operations efficiently, it has a number of committees under two broad titles i.e. Board Committee and Executive Committee.
However, controversies affected it several times in the past. For instance, it agreed to pay a fine of £120 million to avoid prosecution for its accounting scandal. SWOT analysis of Tesco sheds more lights on the company.
Collaborators of Tesco
Tesco works with thousands of suppliers and strategic partners. It sells both its own label and branded products, and therefore, suppliers are categorised as ‘UK own label suppliers’, ‘ROI (Republic of Ireland) own label suppliers’, ‘Branded suppliers’, ‘CE (Central Europe) own label suppliers’, and ‘Global growers’. Some of its top branded suppliers are Coca-Cola, General Mills, Kellogg, Nestle, PepsiCo, Princes, and Unilever.
Success of Tesco’s business largely depends on its relationship with the suppliers and strategic partners. There is no doubt that the relationship is solid; however, Tesco was found delaying payments to suppliers to boost its own profits in the past.
Likewise, Tesco had demanded suppliers to cut prices to help it battle with budget supermarkets such as Aldi and Lidl which many suppliers did not like and raised concerns about (BBC, 2020). Consequently, it has faced criticism for this type of treatment, with some accusing it of using its market power to force suppliers to accept lower prices.
Customers of Tesco
Tesco places customers at the centre of everything it does. In fact, customers are one of the three pillars around which the business is organised (Tesco, 2023). The other two pillars are products, and channels. Tesco considers listening to customers extremely important to deliver the best service possible.
Tesco’s customers are diverse and include people from all walks of life. Its product range is extensive, ranging from groceries to clothing and electronics. It has expanded its product offerings to cater to specific customer needs as well, such as gluten-free and vegan products. Its customers are mostly loyal, with many being members of the Clubcard loyalty program.
Tesco communicates with the customers directly and frequently. It sends around 15 million emails to them each week. It also sends Clubcard vouchers regularly to them as a gesture of appreciation (Tesco, 2023). However, compared to some of the competitors, its customer satisfaction rate is low in the UK.
Competitors of Tesco
In the UK, Tesco faces stiff competition from ASDA, Sainsbury’s, Morrisons, Co-op, Lidl, and Aldi. Therefore, it has implemented a number of strategies to beat the competitors e.g. matching Aldi price. Abroad, it is again challenged by Aldi, Lidl, and other giants such as Penny Market, CBA, Carrefour, Walmart, and SPAR. The article Competitors of Tesco sheds more lights on this topic.
Tesco’s Climate
The last topic in the 5C analysis of Tesco is the climate which is also called context. A number of macro factors impact on the operations of the retailer. For instance, it was fined £7.56m for selling out of date food in its stores in Birmingham, the UK (Sky News, 2021).
Tesco is affected by several macro factors, including economic, social, and political factors. Economic factors, such as inflation, unemployment, and interest rates, can affect its sales and profitability. Social factors, such as demographic changes and consumer trends, can also affect it. For example, the trend towards healthier eating has led it to expand its range of organic and plant-based products.
Likewise, the retailer offers a wide variety of products for ethnic markets as it is a very fast-growing category in the UK, and some other developed countries. It sells both own and branded products thereby addresses the needs of customers from different economic backgrounds. PESTEL analysis of Tesco offers more information on the context of the company.
Summary of 5C analysis of Tesco (5C’s of Tesco)
To conclude, Tesco’s journey from a small grocery store to a global retail giant is a remarkable one. Its innovative strategies and initiatives have helped it grow and remain competitive in a challenging retail environment. It is true that it has faced challenges and controversies over the years; however, it has responded by making changes and improving its practices.
Tesco’s success is due in part to its focus on its customers. It has a loyal customer base and has targeted specific customer segments with promotions and product offerings. Its commitment to sustainability and reducing its carbon footprint is also commendable.
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Last update: 07 March 2023
References:
BBC (2020) Tesco demands supplier price cuts in discount battle, available at: https://www.bbc.co.uk/news/business-53284788 (accessed 07 March 2023)
Kantar (2023) Grocery market share, available at: https://www.kantarworldpanel.com/grocery-market-share/great-britain (accessed 07 March 2023)
Sky News (2021) Tesco fined £7.56m for selling out-of-date food, available at: https://news.sky.com/story/tesco-fined-7-56m-for-selling-out-of-date-food-12280744 (accessed 29 April 2021)
Tesco (2023) About us, available at: https://www.tescoplc.com/about/ (accessed 07 March 2023)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
