From the 4th March 2008 Tesco Monaghan along with all other stores in Ireland were required by law to charge a €0.15 levy on plastic bags. This levy was to be charged at the point of sale and they were obligated by law to keep a record of each plastic bag they sold. Tesco Monaghan was also required by law to list the levy on the customers’ receipt to reflect the charge of the bag. The levy goes directly to the government into an Environmental Fund, to support waste management and litter.
The introduction of this law required Tesco Monaghan to create new software to allow them to monitor each plastic bag sale. It required them to test the software and ensure it was fully operational. They also had to adapt all tills to this new software and print a barcode on plastic bags for scanning.
All these requirements cost Tesco Monaghan money which they were not compensated for and had a dramatic impact on their profits at the time. To date customers have also adapted a buy-what-you-can-carry attitude as they don’t want to pay the levy which in turn has affected Tesco’s sales.
However when this scheme was imposed Tesco Monaghan developed a strategy to create a little extra profit and provide customers with a means of carrying goods. Tesco Monaghan introduced a bag-for-life scheme which involved the customer paying €2 for a high quality plastic bag which would last them for life, as Tesco promised to replace any that were damaged. This internal scheme allowed Tesco to slightly counter the actions of an external factor as no levy was eligible on the bag due to the fact they were designed for re-use.
Data Protection Act
The Data Protection Act 1988 requires all companies and firms storing personal details of customers including name, address etc to store them on a secure database. They must restrict access to this information and use it accordingly. They are also required by law not to pass any recorded details onto third parties without consent from customer. Breach of this law is a serious offence carrying huge penalties for any firm.
Due to the Data Protection Act 1988, Tesco Monaghan is required by law to keep any customer details on a secure database. This mainly affects Tesco’s Clubcard scheme as it is the largest database of customer information in the Tesco Corporation.
The Clubcard data is stored on a security protected database within each store. Only the management and authorised staff in this store can access the recorded information. They cannot access any information for other stores. However authorised staff in head office can access the details stored for all stores.
This law means that if Tesco Monaghan is collecting any information from customers possibly in the form of questionnaires they are required by law to spend time and money securing all this information and ensuring it will only be used internally.
Tesco Monaghan spends lots of time and money ensuring that all their databases remain secure and are continually updated. Passwords are changed often to maintain a high level of security. Although this has a direct impact on the profits of Tesco such provisions for the collection of information encourage customers to provide information.
This law also requires Tesco Monaghan to provide all staff handling customer data with training in order to ensure data is handled and stored correctly. This training comes directly from Tesco. Tesco also provide basic training to all staff showing how to operate all machines storing details such as credit card readers.
Intoxicating Liquor Act 2008
The Intoxicating Liquor Act 2008 states that any store or off licence selling alcohol must stop selling alcohol at 10 pm. They must also restrict the sale of alcohol on Sundays and are not permitted to sell alcohol on a Sunday until after 12.30 pm. If any store is found to have sold alcohol after 10 pm they are eligible for a huge fine and bad publicity among other penalties.
Tesco Monaghan has an off-licence section in store and sells some spirits at the express till. This law has caused Tesco to make some provisions to ensure it is adhered to. Although the first part of the law with regard to the restriction of alcohol sales after 10 pm does not affect Tesco due to opening times, the second part does. Tesco Monaghan opens at 10 am on Sundays and this law requires them to restrict alcohol sales until 12.30 pm.
In order to try and enforce this law and inform customers to prevent potential disputes Tesco has printed numerous posters which are all over the stores. They have also printed the restrictions in advertising leaflets containing alcohol offers.
Tesco Monaghan has also had to provide Sunday staff with a brief training session outlining the new rules and procedures with regards to the sale of alcohol on Sundays.
This new law also requires that alcohol must be sold separately from other produce. Now that alcohol must only be sold at designated areas Tesco Monaghan had to convert one of its express tills permanently to an ‘alcohol till’. They also temporally converted another till for times when alcohol sales are greater.
This all required money which was funded directly by Tesco therefore Tesco’s profits were slightly reduced as spending increased.
Interest Rates
Interest rates refer to the rate that must be paid back on borrowed capital. Interest rates have an affect on everybody both directly and indirectly. For instance if interest rates increase the cost of borrowing is more expensive and mortgage and loan repayments increase.
-So what affect can Interest Rates have on Tesco Monaghan?
If interest rates rise then people have to pay a lot more money on their loan and mortgage repayments. Therefore the disposable income a person has is dramatically affected. Even a small rise in interest rates could see a person’s mortgage rising by €50-€100 every month. Therefore people who usually do their weekly shop in Tesco Monaghan are more conscious on their spending and spend less. They may also only purchase products that they require and not luxuries and may buy cheaper alternatives. Therefore as a result of this Tesco’s sales are going to be affected.
The effects of interest rates depend on the economic activity within a country and currently in Ireland economic activity is low. Therefore interest rates will have a huge impact on people living throughout Ireland.
As a result of people purchasing cheaper alternatives due to them having less disposable income Tesco Monaghan has to try and compete with budget stores such as LIDL in Monaghan. This means they have to offer cheaper versions of products and reduce prices in order to compete efficiently and maintain sales. As a result of this Tesco Monaghan may have to abandon some of its Finest, Organic or Fair trade products in order to reduce product costs.
The interest rate is now 8.2% which is high in comparison with last years rate. This also affects those customers who use credit cards if they don’t pay their balance on time. Overall, a rise in interest rates may mean lower sales and profits for Tesco Monaghan.
Loom of a recession
A recession refers to a period of low economic activity within a country. Recessions last for more than just a few months and affect everyone. Indicators of recession include: high unemployment, staffing cut backs, company closures, retails sales fall, housing and car markets slowing.
In a recession people have less money to spend and more people become unemployed due to company closures. People find it much harder to pay their bills and purchase only basic requirements. People look for much cheaper alternatives and cannot afford to purchase products that would normally be classed as a luxury.
-So what affect can Loom of a recession have on Tesco Monaghan?
Currently Ireland is actually in a state of economic recession and the effects are already apparent. Companies all across Ireland have closed and more and more people are becoming unemployed everyday. More people in Ireland are now more dependent on the Government than ever before as it has become so difficult to find a job. In fact Century Homes which is also located in Monaghan has paid off a large number of employees and now operates on a 3 day week.
As a result of the current recession in Ireland the unemployment level is at around 7% and is the highest level seen in Ireland in over 10 years. The recession in Ireland is also worsening with unemployment levels steadily increasing and no signs of an upturn in the economy apparent.
As a result of this recession in Monaghan alone customer spending has been severely cut with the majority of people only purchasing their basic requirements. Car and house sales are basically at a standstill and banks are not lending money as easily.
In order to compete with the recession and accommodate the needs of the customer Tesco Monaghan has also had to/will have to make changes. Firstly in order to reduce their own costs to try and sustain their profits Tesco Monaghan has made staffing cuts. I have a friend who has been working part-time in Tesco for the last two years and he has recently been paid off. This will mean that people working at Tesco Monaghan will lose their jobs and become unemployed. Tesco Monaghan will also have to take an in-depth look into customer trends and their product range offered.
As people will have less money to spend they will be purchasing cheaper alternatives so it is vital that Tesco are offering such products at an affordable price for customers with little money to spend. Tesco will need to ensure that they are selling at an affordable price or customers may be forced to shop in budget retail chains such as LIDL.
Bad external publicity
As well as there being internal publicity published and paid for by the firm themselves to boost sales there is also external publicity. External publicity is normally a result of surveys carried out by an external firm such as watchdog. It can either be good publicity or bad publicity but the firm themselves have no control over this.
-So what affect can bad external publicity have on Tesco Monaghan?
Bad external publicity can have a dramatic impact on any business and is normally a result of a customer’s complaint being published. For instance let’s say a customer purchases an expensive electrical product from Tesco Monaghan and a problem arises shortly after the customer purchases the product. Let’s say the customer brings the product back to Tesco Monaghan but they make a fuss and send the product away to be tested instead of refunding or exchanging. Well in this case the customer isn’t going to be happy because it is not their fault after all. As a result of their dissatisfaction that customer may decide to go on local radio, write to the paper or contact an investigating board.
This customer will be expressing their opinion on Tesco Monaghan and their service and they will be more than likely encouraging other people to avoid Tesco. Lots of people will read or hear this customer’s opinion and may as a result adapt this opinion of Tesco Monaghan themselves. Therefore they may never purchase such a product from Tesco Monaghan as they are aware of what happened another customer when things went wrong due to bad publicity they heard.
I actually recently heard of such a case been talked about on local radio, Northern Sound. The customer claimed they had purchased an electrical toaster from Tesco Monaghan at €55, had it 7 days and it stopped working. He brought the toaster back to Tesco Monaghan Customer Service to exchange it but they claimed they needed to test it first. He claims that that was over 2 weeks ago and he has heard nothing.
Exchange Rates
Exchange rates refer to the monetary value of one currency against another. The calculation is done using figures published by the Exchange Market. There are two types of exchange rates: fixed and floating. Fixed exchange rates are an official rate set by the monetary authorities; it is not controlled by market forces but can fluctuate over long time scales. Floating exchange rates are rates which are determined by market forces, mainly supply and demand. Floating exchange rates have no direct intervention from central bank. Floating exchange rates change every second and are published on the Exchange Market.
Exchange rates can have a vital affect on any business if the majority of their customers come from a different currency jurisdiction. Exchange rates can make a product cheaper or more expensive depending on the exchange rate. If exchange rates are favourable to customers spending a different currency it may boost a business sales.
-So what affect can exchange rates have on Tesco Monaghan?
Due to Tesco Monaghan’s location and target customer audience exchange rates are one of the biggest affecting external factors. Tesco Monaghan said that in 2006/07 43% of their customers were from Northern Ireland and were either spending GBP in store or had changed GBP to Euro before shopping. This is because Tesco Monaghan is located in the Republic of Ireland and is in the Euro zone whereas Britain still uses Sterling.
IN 2006/07 £1 sterling pound was worth about €1.44 Euro which made shopping in areas operating with Euro less expensive as they were getting more for their money. Therefore this exchange rate made Tesco Monaghan a very favourable destination for a family from Northern Ireland to do their weekly shop as they could easily see the savings. During 2006/07 Tesco Monaghan said that the strong value of the sterling pound against the Euro had a dramatic impact on their sales levels and they exceeded all targets.
Now however in 2008 £1 sterling is only worth about €1.22 which makes shopping in Monaghan for people spending sterling more expensive then spending it in the North. Therefore as a result of this customers from Northern Ireland may find that they are getting better value on their own side of the border and do not carry put their weekly shop in Monaghan. Therefore Tesco Monaghan as a result of this has lost a large percentage of their customers from Northern Ireland. Also the price of Petrol and Diesel are greatly affected by exchange rates, as a person from Northern Ireland does not save as much now as last year when purchase fuel in the Republic.
As well as losing a large percentage of their Northern Ireland customers Tesco Monaghan has also lost a lot of their Republic customers as a result of the exchange rate, reversed affects than seen during 2006-07. This is because now a customer from the Republic of Ireland shopping in Northern Ireland gets better value for their money with €1 currently worth about 80p. Therefore customers from the Republic of Ireland, even though they may have to travel further to shop are getting better value for their money and making a saving. As Ireland is now currently in a recession and there is less disposable income available, shopping where cheapest is a must.
For instance last year my mother could purchase a trolley of goods totalling €200 last year in Tesco and this now costs her about £135 sterling. Whereas now it would cost her about £160 and she can purchase the same trolley in Lisnaskea (Northern Ireland) for about £150. So it is now favourable to shop in Lisnaskea as she spends Sterling.
Location
Location in this context refers to the location of business and how this location has an external affect on the business.
-So what affect can location have on Tesco Monaghan?
Tesco Monaghan is located in the Republic of Ireland and fuel prices in the Republic of Ireland are much cheaper despite the low exchange rate for customer’s spending sterling. As a result of these reduced fuel costs, residents in Northern Ireland often cross the border to purchase their fuel. Residents from Northern Ireland may also visit Monaghan to use other facilities such as the cinema, swimming pool or gym as it may be the nearest location.
These actions may bring people to Monaghan to purchase their fuel as lots of neighbouring towns are located in Northern Ireland. As a result of this when people from the North are in Monaghan purchasing their fuel they may be encouraged to visit Tesco Monaghan and buy what they require as they are so near to it, even through it may be slightly more expensive.
Ethical views
Ethical views refer to the views held by one person relating to another culture, and what the think is ethically right. In this context in refers to the views held by customers purchasing products made in foreign countries and how the employees and the environment are treated.
Recently there have been a number of cases uncovered where multinational firms are exploiting the rights of workers in other countries. We hear of such cases everyday in the media and this has encouraged the general public to give more consideration into the product they are purchasing. As a result of these foreign exploitations people in the more developed world such as the UK and Ireland have become more ethical.
-So what affect can ethical views have on Tesco Monaghan?
Ethical views held by a customer could be the barrier preventing them from purchasing a product. Therefore Tesco have tried to abolish this barrier and provide proof that customers’ ethnic views are being supported.
For example the ‘Fair Trade’ brand offered by all Tesco stores was created as a result of ethical views held by people. Customers wanted to know that people had not been exploited in the manufacturing of the product and firms recognised that customers would pay a little extra to have this reassurance. As a result the Fair Trade brand was created.
The Fair Trade brand of products are manufactured in foreign countries where there is little legislation regarding wages etc. The Fair Trade brands of products are basically a reassurance to customers that people have not been exploited during the manufacturing process. This means farmers have been paid a fair price which they are happy with for the raw materials they may have provided. It also means that workers are paid a wage which they are happy to work for and are not exploited as a result of minimum legislation.
People nowadays also have ethical views about the environment and want to try and reduce their own carbon footprint. Therefore the effect that Tesco has on the environment could mean another customer shopping with that firm. Customers may like the reassurance that the firm are doing everything they can to manufacture and deliver the products with as little environmental impact as possible.
For instance Tesco Monaghan uses an electric powered van to carry out all of their deliveries. As a result of this some customers may feel encouraged to use this service as it reduces the harmful gasses which would be emitted if they drove themselves or had goods delivered by another firm.
Nearby Parking Facilities
Parking facilities are a major factor affecting customer attitudes towards using a certain shop, firm or service. Parking facilities provided could be the difference between a customer using a certain firm. For instance if a customer leaves to do their shopping and arrives in the town and cannot find a parking space outside their usual store they may use another.
So what affect can nearby parking facilities have on Tesco Monaghan?
Tesco Monaghan currently only has a small number of internally owned parking spaces as a result of them being located inside a shopping centre. Therefore when a customer wants to shop in Tesco Monaghan they usually use the externally owned parking facilities in the shopping centre. However these parking facilities still do not meet the volume of people using the shopping centre and operate under a pay and display scheme.
As a result of these limited parking facilities customers if they can find a parking space usually have to pay for it. On top of having to pay for it they also have to walk much further to use Tesco and cross a very busy road. As a result of these limited parking facilities customers may find using Tesco Monaghan for their weekly shop extremely awkward and as a result may shop at a competitor offering better parking, such as LIDL.
Tesco Monaghan has noticed this factor having a major impact on their sales, so as a result are currently building a multi-story car park nearby. This will accommodate a much larger volume of customers and should in the long run boost everyday sales and earn lifetime loyalty from customers.
Competition
Competition exists when similar firms are selling similar products at similar prices and competing for the customer. The food industry is a very competitive market in general with lots of intense competition. As a result of the intensity of competition between larger chain stores many local stores have shut as they could not possibly compete.
-So what affect can competition have on Tesco Monaghan?
Tesco Monaghan is based in Monaghan Shopping centre and has 3 major competitors in the locality. These competitors include; Dunnes Stores, LIDL and Flemings. Dunnes and Flemings operates on a similar scale to Tesco Monaghan and offer similar products, but LIDL operates on a much smaller scale.
The actions of each of these stores have a direct impact on the actions of Tesco Monaghan in order to compete. For instance if Dunnes Stores reduces the price of a certain product to attract customer attention then Tesco Monaghan will try and match or better the price. Even though Tesco Monaghan may not be making a profit on that product they must still try and gain the customer’s purse and compete for it.
Therefore in order to try and maximise profits, deliver unbeatable value to customers and earn their lifetime loyalty Tesco Monaghan must spend time and money keeping a close eye on the actions of their competitors.
Tesco Monaghan regularly sends a member of staff around their competitor’s stores in order to gain pricing information. It is this collected information which has a direct impact on the actions of Tesco Monaghan.
If Tesco Monaghan did not keep an eye on the competition then their aims and objectives would be greatly affected. For instance if they did not try and match or improve on product prices they would not be ‘delivering unbeatable value’. If they did not try and match prices then they may lose customers to the cheaper prices.
As well as keeping a close eye on competitors price changes and promotions Tesco Monaghan also keeps an eye on other factors, such as services provided. These factors if not matched or bettered by Tesco Monaghan may result in Tesco losing ‘Lifetime loyalty of customers’. For instance if LIDL opens later than competitors then customers may take advantage of this and favour LIDL more. Also for instance if staff are friendlier in another store the customers may shop there as they feel they are getting a better service. Therefore it is vital that Tesco Monaghan keep a close eye on all the actions of their competitors and ensure they are combating them.
Online shopping has enabled Tesco Monaghan to compete very well with other stores in Monaghan. Home delivery also gives them a competitive advantage over their rivals. Competitive advantage is necessary when similar goods are sold in a number of retail outlets.
