subject: Competition in the Retail Grocery Industry and Strategies Adopted by Tesco [print this page] Competition in the Retail Grocery Industry and Strategies Adopted by Tesco
The recent global market has been very competitive; whereby every business unit is utilizing every available opportunity to win the consumers. Precisely the concepts of globalization, liberalization of markets as well as advancements in technology have had a significant impact in the global market. In this case, all industries have experienced significant changes in recent days; whereby the modes of operations and marketing have been improved. Specifically, the retail grocery industry has been experiencing stiff competition among the key players in recent years. In regard to this case, the different players in this industry have established efficient and effective strategies that ensure they are adequately positioned in the market. The issues of pricing, promotion, public relations, quality, advertisement and efficiency among other marketing communication strategies have been optimally utilized by the key players in the retail grocery industry. Tesco Plc is a key player in the retail grocery industry; whereby it's the fourth largest in terms of revenues and second largest in terms of profits. The efficient marketing strategies adopted by Tesco Plc are attributed to its excellent performance in the industry. This paper will profoundly discuss and analyze the nature of competition in the retail grocery industry(Kahhn, 1997).
Industry background
Tesco Plc falls under the retail grocery industry which falls under the wider agricultural sector. The retail grocery industry basically involves the sell and distribution of food stuffs and more precisely fruits and vegetables. Fresh products form the firm and industries are the main products traded in the retail grocery industry. The food industry is very diverse ranging from the primary producers to the manufacturers and then to the hotel business. The retail grocery industry is very composite and involves a varied range of players. In this case, small medium and large scale retailers are practicing in the grocery industry. Other players in the retail grocery industry also include the various middle men involved in the distribution of the various products dealt with in the industry. Significantly, it has been observed that, the grocery industry is one of the most sustainable fields due to its nature of sustaining life. All sorts of human life are beneficiaries of the industry thus offering a sustainable and wide market for the services and products being dealt with(Cournoyer, 2010).
Importantly, the grocery industry takes a big chunk of the GDP and the work force. For instance in the United Kingdom, US$ 0.1 trillion is circulated annually in the grocery industry. This is an illustration of how rich the industry stands to be. The fact that food is one of human basics also justifies the potentiality of the food industry in providing a sustainable market. On the other hand, the industry also offers a wide range of job opportunities. In the UK for instance, more than 7 million people are employed in the grocery industry (Kahhn, 1997).
Another key point of observation in the grocery industry is the aspect of a wide range of products offered to the consumers. In this regard, both fresh fruits and vegetables are offered to the consumers. Other products include, fresh fruits, animal products like meat, milk and eggs, processed foods like bread, cooked foods like the pizza, and other cultural dishes. It is evident that the retail grocery food industry is one of the leading industries in terms of the diversity of products and services being offered. Another point of observation is that, the businesses in the industry are of varied sizes, structures and compositions; whereby the different businesses are set to meet the needs of particular target groups (Cournoyer, 2010).
Competition in the retail grocery industry
To begin with, Tesco was founded in 1919 by jack Cohen as a small grocery store at the Well street Market, hackney in London. The business has expanded magnificently over the years whereby different stores have been opened in different countries. Tesco is at present operating in more than 14 countries across Europe, Asia, and North America. The company is the grocery market leader in the UK and the fourth largest in the world in terms of revenues. Additionally, it's important to note that Tesco Plc is the second largest retail grocery in the world in terms of profits. The business is experiencing overwhelming returns and performance thus making it sustainable (Kahhn, 1997).
Research has shown a stiff competition in the retail grocery industry across the globe. In this case, many companies are strongly competing for a market share in the retail grocery industry. Nevertheless, the size and resource endowment as well as the marketing communication strategies adopted by each player determines its competitiveness in the market. The key competitors of Tesco are Asda, Sainsbury's and Morrisons. All these companies deal with retail grocery business. The products and services offered by these businesses are closely related thus creating stiff competition for the success in the market. Statistics by TNS World panel in the year 2008 and 2009 show that, Tesco has a market share of 30.5%, Asda 16.9%, Sainsbury's 16.3% and Morrisons 12.3%. This statistics illustrates the stiff competition in the retail grocery industry in the UK and other parts of the globe (Cournoyer, 2010).
Despite the increase in the market shares of Tesco, Asda, Sainsbury's and Morrisons, it has also been realized that some players in the market have faced significant declines in market shares. According to TNS Worlpanel, Lidl, Aldi and Netto have had drastic decline in their market share in the year 2008-2009. This situation has been influenced by the stiff competition offered by the main players in the market. Research on the retail grocery industry has shown that, the four giants in the retail grocery industry have adopted effective and efficient marketing communication strategies. This is on the aspects of advertisement, promotions, and advertisements as well public relations. The issue of financial and human resources in executing the marketing and promotional strategies has been of great concern in the success of the different business. In this regard, the small and medium sized businesses in this industry have not been able to counter the stiff competition offered by these companies(Mayo, 1993).
A point worth of consideration is that, the issue of quality and efficiency of delivering services and products in the grocery industry has been an outstanding factor in success. In relation with this phenomenon, consumers are in the recent very conscious about the quality of the products. Due to the nature of the products, whereby most of them are perishable it becomes inevitable for the different players to maintain quality. The use of modern equipments and facilities in dealing with the various products has been mandatory for the success in the retail grocery industry in recent days. This is so because of the high quality standards expected from the services and products being dealt with in the industry. In relation with this phenomenon, research has shown that the businesses which have been able to adopt the most efficient facilities and equipments in dealing with the products have been able to succeed in the market. Specifically, refrigeration facilities have been of great importance in ensuring the perishable products are kept in the best conditions (Pondy et al, 1983).
On the other hand, the issue advertisement and promotional strategies has been categorized as a key factor in determining the success of any business in the industry. In this regard, online advertisement has been a dominant practice in the retail grocery industry. Due to the advancement in technology, businesses in this industry have been able to adopt online advertisement and selling. This is one of the most efficient and effective marketing communication strategy since it gives businesses the chance to reach more clients with utilization of only few resources. Most of the giant players in the retail grocery industry have been intensively adopting online selling and marketing of their products. This factor has been made possible due to the increased literacy levels among the world population. In recent days, most of the world populations are able to use the computer as well as having access to the internet. With this in mind, the adoption of internet marketing in the retail grocery industry has been mandatory in the endeavors of attaining success in the grocery industry (Mayo, 1993).
