M RahmanSWOT analysis of Tesco (Tesco SWOT)
This is a detailed SWOT analysis of Tesco. It aims to examine the strengths and the weaknesses of Tesco. It also aims to explore the opportunities the company should pay attention to and the threats it should build resilient walls against.
Strengths of Tesco
UK Market share
Tesco is a leading retailer in the world. It is No.1 in the UK and has 27.3% market share in the UK grocery market (Kantar, 2023). It has been in operation for over a century. Such a market experience is certainly one of its biggest strengths.
Brand recognition
Tesco’s greatest strength is its brand recognition. It is a household name in the UK that has invested heavily in its brand. Its logo is instantly recognizable, and the advertising campaigns are well known.
Overseas operations
Tesco operates in several countries. It has operations in countries such as the UK, India, China, Hungary, Ireland, and others. There are over 4000 Tesco stores in the UK and the Republic of Ireland (Bedford, 2023).
Number of customers
Tesco serves millions of customers every week in its stores and online (Tesco, 2023). It made sales worth of £54.8 billion in 2021 and won several awards in the last decade.
Loyalty card
Tesco was early in the loyalty card market. It has been using the device as a precious marketing and promotional tool. Many analysts argue that Clubcard has helped the company understand customer behaviour better and grow enormously, particularly in the UK. Clubcard has approximately 20 million users in the UK (Tesco, 2023).
Store format
Tesco has different store formats i.e. Express, Metro, and Extra to serve different types of customers. It does not shy away from bringing about changes when necessary.
For instance, it has decided to convert its Metro stores in the UK into Express and Extra stores as it understands that customers are using them as convenience stores to buy daily food instead of bigger and weekly shopping for which Metro stores were originally introduced (Gruffydd, 2021).
Supply chain management
Another strength of Tesco is its supply chain. It has a highly efficient supply chain that allows it to get products to its stores quickly and at a low cost. This has helped it maintain a competitive advantage over other retailers.
Diverse products
Tesco sells everything from groceries to clothing to electronics. This has allowed it to appeal to a wide range of customers, which has been very useful for its growth and expansion.
Online presence
Tesco’s online presence is also a strength. It has invested heavily in its online platform, which has helped it reach the customers who prefer to shop online. Its website is easy to use, and it offers a range of delivery options, including home delivery and click and collect.
Weaknesses of Tesco
Weakness is an important area of discussion in the SWOT analysis of Tesco. Tesco’s key weaknesses are as follows:
Failures in some markets
Although the company has global success stories to share, it also has witnessed some failures over the years. It failed in the USA, Japan, and Poland.
Failures in those countries clearly demonstrate that Tesco has certain weaknesses in understanding overseas markets. It witnessed failures in the UK as well. It closed many stores across the country in the last several years.
Quality control issues
Lack in quality control in some stores has also affected the image of Tesco. It was fined £7.5 million for selling several food items past their use-by date at three stores in Birmingham, UK (Clark, 2021).
Treatment of suppliers
Tesco has also faced criticism for its treatment of suppliers. It has been accused of using its buying power to negotiate lower prices from suppliers, which has put pressure on them to cut costs.
According to a recent report by BBC (2023), Tesco asked its suppliers to pay a new charge when it sells their products online. This news has not been received well by some suppliers.
Opportunities for Tesco
Exploring emerging economies
There are several emerging economies Tesco can explore. Countries such as Indonesia, Turkey, Mexico, South Africa, Brazil, and many others are worth exploring.
Growth at the home market
Further growth within the UK is also possible even though Tesco is making cautious steps due to changes in consumer behaviour and a challenging post Brexit climate.
Strategic alliance
Strategic alliance with other companies is another opportunity worth exploring. This should help Tesco attract more customers and enjoy other benefits. It is worth mentioning that Tesco is already considering several strategic options for further growth.
Threats to Tesco
The last element to address in the SWOT analysis of Tesco is the issue of threats facing the company. The key threats are as follows:
Competition
The grocery market is very competitive in the UK. While Tesco is the market leader in the UK with 27.3% market share, the nearest rivals such as ASDA and Sainsbury’s are trying vigorously to close the gaps.
Tesco faces other threats e.g. price war from Aldi and Lidl. These two competitors are well-known as discounters, and therefore, it is very difficult for Tesco to compete with them on price. Pricing policies of these two companies have a significant impact on Tesco’s profits.
High inflation and cost of living
Eley (2022) reports that a number of factors such as high inflation, changing shopping habits, and high cost of living are affecting Tesco as evidenced from its downgraded profit forecasts.
Lawsuits
Tesco was fined millions of pounds in the past. If it incurs more fines because of lawsuits, the impact on its finance may be significant.
Summary of SWOT analysis of Tesco
Despite the challenges it faces, Tesco has potentials for future growth. It has a strong brand, a well-established supply chain, and a diverse product range. It can use its strengths to expand its online platform, enter new markets, and focus on sustainability and innovation. By doing so, it can maintain its position as one of the largest retailers in the world and continue to grow its business.
We hope the article SWOT analysis of Tesco (Tesco SWOT) has been helpful. Please share the article link on social networking sites to support our work. You may also like reading Marketing mix of Tesco. Other relevant articles for you are:
Advantages and disadvantages of franchising
Brand identity and brand image
Last update: 24 March 2023
References:
BBC (2023) Tesco to charge suppliers extra to sell online, available at: https://www.bbc.co.uk/news/business-64915952 (accessed 23 March 2023)
Bedford, E. (2023) Tesco store numbers in the United Kingdom (UK) and Ireland, available at: https://www.statista.com/statistics/490947/tesco-group-stores-united-kingdom-uk/ (accessed 23 March 2023)
Clark, M. (2021) Tesco fined £7.5 million for out-of-date food sales, available at: https://www.foodsafetynews.com/2021/04/tesco-fined-7-5-million-for-out-of-date-food-sales/ (accessed 01 August 2021)
Eley, J. (2022) Tesco shares sink as inflation bites on sales, costs and staff pay, available at: https://www.ft.com/content/a2f5900f-ca9b-45ad-8690-9ad90596a551 (accessed 22 March 2023)
Gruffydd, M. (2021) Tesco to change and rebrand all 147 Metro stores in major supermarket overhaul, available at: https://www.express.co.uk/life-style/life/1438159/tesco-metro-stores-removal-supermarket-overhaul-change (accessed 25 August 2021)
Kantar (2023) Great Britain: Grocery market share, available at: https://www.kantarworldpanel.com/en/grocery-market-share/great-britain (accessed 24 March 2023)
Tesco (2023) About us, available at https://www.tescoplc.com/about-us/ (accessed 23 March 2023)
Photo credit: www.tescoplc.com
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.
