Asda, owned by US corporation Wal-Mart since 1999, is the only supermarket with the potential to become a thorn in the side for Tesco. Wal-Mart, with global sales of $256bn in 2003, is the biggest company in the world with annual sales eight times bigger than Tesco's.
The external factors that have impacted and will continue to impact on the business in the future
For example, in UK, Tesco's stores are divided into five formats, differentiated by size and the range of products sold
One of the external factors that it have impacted and will continue to impact on the business is the rapidly grow of the new stores, such as Tesco Metro, they are mostly located in city centres and on the high streets of small towns.
As they are mostly located in the town centres, this might lead to traffic congestion from cars and lorries. It will be a problem to small towns that cannot handle large volume of traffic. At peak period, this can lead to disruption for local road users.
Tesco’s image
Tesco has a long term strategy for growth, based on four key parts: growth in the Core UK business, to expand by growing internationally, to be as strong in non-food as in food and to follow customers into new retailing services.
Also, Tesco ensures it has broad appeal by continually innovating and investing in new lines to increase choice for their customers. From Value to Finest and lifestyle ranges like Organic, Free From and Healthy Living, their various own brands enable customers to buy products to compliment their lifestyle.
Understanding customers is another significant factor for growth, Tesco Clubcard is the UK's most popular loyalty card scheme, with over 13 million active cardholders. Information provided by Clubcard enables them to better understand their customers and say thank you for shopping with them by giving them vouchers based on the amount they spend.
As Tesco is the biggest private sector employer in the UK with over 260,000 employees. They look after their people. They offer a market-leading package of pay and benefits such as childcare vouchers and two share schemes, Save as You Earn a savings scheme with an option to buy shares at a discounted rate and Buy as You Earn.
Key trends affect the business in the coming years.
The company has a four-pronged strategy:
- Core UK business - It has been innovative and energetic in finding ways to expand, such as making a large-scale move into the convenience-store sector, which the major supermarket chains have traditionally shunned.
- Non-food business - Many United Kingdom supermarket chains have attempted to diversify into other areas, but Tesco has created the largest non-food business of any of them, and became the largest non-food retailer in the UK in 2006.
- Retailing services - Tesco has taken the lead in its sector in expanding into areas like personal finance, telecoms, and utilities. It usually enters into joint ventures with major players in these sectors, contributing its customer base and brand strength to the partnership.
- International - Tesco began to expand internationally in 1994, and in the year ending February 2006 its international operations accounted for nearly a quarter of sales.
This strategy might affect the business in the coming years, one of the main problems is the diversifications of the company, it may lead to the business out of control.
Will the business still be in existence in ten years time?
I believe Tesco will still be existence in ten years time. But the growth of the business will slow down. As Tesco's huge growth in this country is a hard act to follow. With the domestic market increasingly saturated, some UK supermarket chains, namely Tesco, Sainsbury and M&S have looked to overseas markets to maintain their positions. This is a whole new ball game, bringing into play competition with large firms from other countries, such as US retailing giant Wal-Mart and French multinational Carrefour. Therefore, Tesco may not be able to competitive to the large and multinational company.