What Is the Basis of Tesco's Success?

Kirsta Dixon  

Case Analysis  

Out Supply- Chaining the King of Supply Chainers      1. What is the basis of Tesco's success? 

Tesco has developed a considerable skill in applying data management to the analysis of consumer preferences in different markets (pg 498).  Tesco has a firm called Dunnhumby which is a data-mining firm that allows them to manage everything within the company such as designing formats and targeting sales promotion. Another advantage that Tesco has that was another factor in the company's marketing success was private-labeling. Tesco's ability to provide a better and broader range of private brands – products manufactured for retailers who sell them under their own names (pg 498). Retailers in the US struggled with profiting off of private-label products because they couldn’t convince consumers that is was good as their brand name counterparts. For example, Walmart struggles to get 35 percent of its sales from private-label goods while Tesco gets as much as 60 percent of its revenue from private- label products.  

2. How easy (or hard) would it be for rivals like Walmart or Carrefour to adopt Tesco's data management techniques? 

It would be easy for rivals like Walmart or Carrefour to adopt Tesco's data management techniques because they all share the same concept in their supply-chain management.  For example, Walmart uses point of sale scanners to track product sales and re-order quickly. Tesco's data management techniques will allow Walmart to operate and apply data management to supply chain management. They will be able to manage everything and even up their revenue in private-label products. Adopting Tesco's data management technique will be a easy transition because all three retail marketers have already been using dynamic pricing solution, but however with Tesco's technique it will make a big difference and have a better and broader range. 

3. The global recession slowed down Tesco's plans for expansion. Why might Tesco have been more harmed by the recession than Walmart? 

Tesco decided to launch in the American marketplace by introducing their new retail markets called " Fresh and Easy" back in 2007, a year before the financial crisis in California, Arizona, and Nevada. Due to bad timing, consumers were more worried about budgeting and spending and only brought what was actually needed. Fresh and Easy failed to implement low- cost products and failed to embrace coupons. Where Tesco is originally operated out of eastern countries such as the United Kingdom, where coupons are not really valued and people really do not care for them. However, in the U.S retail/grocery industry, there are some incentives such as memberships to receive coupons on future purchases. Walmart, who is already established and well-known for low cost products, was not so much affected by the recession because they implemented everything Fresh and Easy failed to do. Tesco implemented a plan that worked well in eastern countries and not so much in America. Another reason why Tesco was more harmed is because they was new to the three areas and chose to launch their markets in places where recession happens more frequently, due to climate weather. Walmart is more convenient for consumers to buy, save and have more options to chose from.