Tesco Plc started as a small grocery stall in East London in 1919. This company was founded by Jack Cohen and since its inception has grown significantly over the years, expanding its product lines and services. Due to the uniqueness and strengths of Tesco, the company has established itself as one of the most well-known British multinational grocery and merchandise retailers.
This retail company is headquartered in Welwyn Garden City, Hertfordshire, England, and offers a wide range of products, such as household items, groceries, electronics, and clothing.
As one of the most valuable companies in the UK with a market cap of about £19.01 billion (as of August 2023), Tesco has become a significant player in the global market. It has become so successful that it diversified into other sectors, like insurance, financial services, and mobile phones.
Its motto, “Every little helps,” signifies the company’s commitment to helping customers, colleagues, communities, and the planet. This has positioned Tesco as a household name in the retail industry, known for committing to sustainability and providing quality products and services to customers at affordable prices.
In as much as this retailer is a market leader in the UK, its operations are not only limited to the UK. It has grocery stores in 11 more countries around the world such as China, Poland, Ireland, Thailand, Hungary, Slovakia, Czech Republic, Malaysia, etc., and has achieved the position of being the 17th largest revenue-earning retailer in the world, as of 2022.
Even as one of the leading retail supermarket chains in the UK, this retail brand faces competition from several prominent companies like Amazon, Lidl, Sainsbury’s, Aldi, Ocado, ASDA, and Morrisons. These companies, including Tesco, continuously struggle for consumer loyalty and market share in the retail market.
However, Tesco’s strengths and brand equity continue to give it a competitive edge over some of its rival companies. Its level of success makes it a model for other companies in the industry. Hence, we will be discussing some of Tesco’s strengths that have given it a competitive advantage and the features that make it unique and different from other retailers.
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What are the strengths of Tesco?
One of the prominent strengths of Tesco is its innovation. It is one of the most innovative grocery chains ever, inventing and introducing new ways and technology to make it unique and different. Other Tesco’s strengths include larger market share, broad product range, strong brand image, large store network, efficient supply chain, customer loyalty program, etc.
Tesco’s core purpose is “Serving our customers, communities, and planet a little better every day”. As a result, the company has been committed to continuously improving its offerings, services, and the overall shopping experience for its customers. It has been consistent in providing value to its customers, committing to responsible and sustainable business practices, and adapting to changing market demands.
Strengths of Tesco PLC
- Larger market share
- Broad product range
- Strong brand image
- Large store network
- Efficient supply chain
- Customer loyalty program
- Global presence
- Diversified stores
- Several international awards
- Superior Innovative technology usage
- Strong online presence
- Highly trained staff
- Sustainability initiatives
- Quality private label products
- Experienced leadership team
- Employee Benefits
- Innovative marketing
- Tesco Credit Card System
- Diverse revenue streams
Tesco has been able to maintain its position as a leading global retailer by improving its strengths and working on its weaknesses. The company strives for excellence in every aspect of its operations and focuses on improving its strengths. Let’s discuss Tesco’s strengths in detail.
Larger market share
Tesco is the biggest grocery retailer in the UK. The company has higher sales and revenue than other supermarket chains in Great Britain. According to the company’s annual report, it generated sales of over £52 Billion in 2022/23. Hence, as the largest supermarket chain in the UK, one of Tesco’s strengths happens to be its large market share and brand recognition.
This retail brand dominates the grocery retail market of Great Britain with its market share standing at 27% (as of April 2023). This is a prominent strength of Tesco because it has a larger market share compared to other retail brands in Great Britain like Sainsbury’s which has a market share of 14.9%, Asda’s with 14%, and Aldi with 10.1%.
Having such market leadership enables Tesco to benefit from economies of scale and to exert considerable influence over suppliers.
Broad product range
Another prominent strength of Tesco is its diversified market and product range. This retail chain has a broad range of products and a diversified market that includes clothing, mobile phones business, school uniforms, home-ware items, music downloads and DVD rentals, financial and telecom services, cotton fair-trading, etc.
An extensive product range is one of Tesco’s strengths because it enables the company to cater to a diverse customer base. The company is able to provide everything from electronics and clothing to groceries and household items, all in one place. Its wide range of products meets customers’ needs and offers them the opportunity to discover new products and try new things.
Also, this is one prominent strength of Tesco that attracts customers to the brand because customers tend to position the brand as a one-stop shop for all their needs, be it for daily essentials or luxury products. This has, in turn, helped Tesco gain a competitive advantage over its competitors in the industry.
Strong brand image
Companies are powerful and strong when there is credibility, trust, and relevance. Tesco’s strong brand image is definitely one of its strengths. It is known for quality products and affordability which has earned it a large and loyal customer base.
The company has been established as a reputable and reliable brand and its commitment to sustainability and social responsibility also reinforces its brand image which aligns with the values of many customers.
This Tesco’s strength facilitates the growth of the brand’s core grocery retailing business in the UK and also aids the brand’s success in other business areas that it ventures into, such as non-food retailing, e-tailing, and financial services.
Extensive store network
One of Tesco’s strengths is its extensive network of stores worldwide. From about 3,751 stores in 2008, the company has grown to about 4,752 stores at the end of FY2022. Its large store network is a major competitive advantage because it allows the company to reach a broad customer base across different countries and regions.
Having many stores in various locations expands the brand’s customer base and increases the brand’s visibility and recognition. A growing number of stores makes it easier for customers to have access to and patronize the brand. It also enables the company to reach new markets.
The extensive network of stores is definitely one of Tesco’s strengths because as new stores are added to the company’s operational chain, its revenue increases every year. This strength also enables the company to negotiate better deals with suppliers, which in turn improves the company’s profitability.
Efficient supply chain
In order to create a reliable and efficient supply chain network, Tesco manages its supply chain through vertical integration, lean thinking, and complexity management. Its supply chain is structured to minimize costs, maximize efficiency, reduce waste, improve inventory management, and quickly respond to changes in demand.
The company bears profitable relationships with suppliers, and these relationships help to minimize supply chain risks and ensure quality. This sort of supply chain reduces incurring costs and implements efficient waste management. It ensures that products are delivered to customers promptly which reduces waiting times and increases customer satisfaction.
Having such an efficient supply chain management system is definitely one of Tesco’s strengths because an efficient supply chain ensures the availability of products in stores, making sure customers receive their orders promptly without hassle. This, in turn, creates high levels of customer satisfaction and maintains competitive pricing which increases the profit that the company makes.
Customer loyalty program
One of the strengths of Tesco is its Customer Loyalty Program. Through this program, customers receive plenty of perks and benefits. A common customer loyalty program of this retailer is the Clubcard program. The company was the first European grocery store chain to release its Clubcard system.
Being early in the loyalty card market gives Tesco a competitive advantage. The company has been using this program as a marketing and promotional tool which has helped it understand customer behavior better and grow enormously in the retail industry, particularly in the UK.
Through this loyalty program, shoppers get points after each transaction which can be used later to buy further goods. The program offers exclusive customer benefits that encourage repeat patronage and create a sense of loyalty among customers. Tesco Clubcard members have an advantage over those who do not own a Clubcard because they can buy cheaper products and also get other special offers.
As of February 2023, there are more than 20 million active household users of Clubcard in the UK. This is an indication of how this loyalty program increases Tesco’s customer base.
Implementing the Clubcard program is, therefore, one of Tesco’s strengths because it encourages shoppers to revisit the company’s retail stores, to buy more products. By offering customers rewards for their purchases via the program, the company is able to retain customers and boost loyalty among its customers.
Also, while the Clubcard program enables customers to buy discounted-priced goods, Tesco learns and discovers shoppers purchasing behavior. The company takes advantage of the program to collect valuable information for its database. The valuable consumer data collected is used by the management team to improve the company’s marketing strategy and tailor its offerings according to customer’s preferences.
Having an international presence is one of the strengths of Tesco. The company is geographically diversified with about 4,752 stores in different countries. It has a huge market in Europe, North America, and Asia.
Carrying out operations in multiple countries is beneficial because it results in reduced reliance on any single market and creates diversified revenue streams. This international presence gives Tesco a competitive advantage over its competitors that do not have a global presence because it is able to learn from different markets and apply best practices.
The diverse store formats that Tesco uses, cater to different customer needs. This is one of the strengths of Tesco because the flexibility of its stores, be it a small convenience store or a large hypermarket allows the company to reach a larger customer base and adapt to changing market conditions.
Tesco has different forms of stores such as:
- Tesco Extra – These stores are larger and stock nearly all of Tesco’s product ranges; there are mainly out-of-town hypermarkets.
- Tesco Superstores– These are standard large supermarkets; they stock groceries and a much smaller range of non-food goods than Tesco Extra hypermarkets
- Tesco Express– These are neighborhood convenience stores averaging 200 square meters that stock mainly food
- Tesco Metro – These are stores averaging 1,000 square meters (sized between Tesco superstores and Tesco Express stores) located mainly in town centers and similar urban locations.
- One-stop– The One Stop stores are the smallest stores with frequently cheaper price ranges to match Costcutter, its nearest competitor.
Superior Innovative technology usage
One of Tesco’s strengths is its usage of technology in the best optimal way in order to enhance its customer’s shopping experience. In its operations, Tesco introduced a new RFID-enabled barcode system to count its products automatically. It also uses data analytics and artificial intelligence to help make better decisions on inventory management and customer preferences.
The company also advanced its M-commerce facility and mobile payment app. It integrated technology into its operations through its online platform and mobile apps in order to make shopping more convenient and better for customers. This has helped to enhance customer engagement and loyalty.
Strong online presence
A strong online presence is one of Tesco’s strengths. The company’s e-commerce capabilities and online presence enable it to reach and serve customers who prefer to shop online.
Tesco’s online platform is accessible to customers worldwide and user-friendly. It has expanded the company’s customer base and increased its revenue streams. Due to the growth of e-commerce and changing consumer behaviors, the company has experienced over 60% growth in its online sales compared to pre-COVID.
Using online platforms enables the company to collect data on customer behavior and preferences, which it uses to improve its product marketing strategies and offerings.
Another significant strength of Tesco is its presence on social media platforms like Facebook, Instagram, Twitter, etc. which increases the brand’s reach and awareness. Digital marketing is done on the company’s social media platforms to compel its audience to make a purchase.
Highly trained staff
One of Tesco’s strengths is its highly trained staff. It focuses on training its employees to ensure a high standard of service is maintained across all its stores.
The company employs over 300,000 people worldwide and provides comprehensive training for its employees to equip them with the skills and knowledge needed to provide excellent customer service to customers in order to increase customer satisfaction.
A better customer experience helps to increase sales and customer loyalty. Thus, giving Tesco a competitive advantage over its competitors.
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Social responsibility and sustainability initiatives
One of Tesco’s strengths is its sustainability initiatives and focus on corporate social responsibility. The company’s commitment to sustainability attracts environmentally-conscious customers and creates a positive image for the company.
Tesco integrates sustainability initiatives like the use of renewable energy, reducing food waste, and the Green Clubcard Points program. The Green Clubcard Points program, for instance, offers green points to shoppers who reuse carrier bags. Such initiatives show the company’s commitment to sustainability and reducing its carbon footprint.
In as much as such initiatives protect the environment, they also reduce costs and align with the values of many of its stakeholders and investors. It also helps Tesco comply with regulatory requirements and manage the risks associated with environmental and social issues.
Quality private label products
Tesco’s private label products contribute to its success in the retail industry. Through its private label brands, the company offers high-quality products at affordable prices. This attracts customers who seek value for their money and also increases the company’s profitability.
This retail brand has its own factories and makes some of its groceries. This means it doesn’t have to depend on external suppliers for these products which saves costs and makes its products cheaper. This form of backward vertical integration is the reason why some of Tesco’s products are cheaper at its stores.
The company launched its own quality private label brands such as Tesco Finest, F&F, Tesco Everyday Value, Tesco Standard, and Tesco Healthy Living which offer high-quality goods to customers at competitive prices. These brands count as strengths of Tesco because they help to differentiate the company from competitors and boost its profit margins.
Experienced leadership team
Tesco has an experienced leadership team that has a proven track record of success. This makes Tesco so successful because it helps instill confidence in investors, customers, and employees. Aside from this, the team is skilled at navigating complex regulatory and legal environments. Hence, this experienced leadership team is one of Tesco’s strengths because the team helps the company avoid potential pitfalls or legal issues.
The employee package that Tesco staff benefits contributes to the success of the company. In order to reduce its level of employee turnover, the company offers a benefits package to support the well-being and development of its employees.
Employees at Tesco have career progression opportunities, which include training and development programs. This enables them to develop new skills and advance in their careers, which in turn, motivates them to stay with the company for a long time.
Tesco PLC also offers a range of healthcare benefits, such as mental health support and medical insurance in order to ensure that its staff have access to the care they need. The ability of Tesco to be able to offer these benefits is one of its strengths because a low level of employee turnover helps to streamline the company’s operations.
One of the strengths of Tesco is its innovative marketing strategies. The company makes use of various innovative marketing campaigns to engage with customers via several channels, like in-store promotions, social media, and email marketing.
Tesco also uses data analytics and artificial intelligence to personalize promotions and recommendations, in order to provide a tailored shopping experience to customers. Such innovative marketing approaches enable the company to stay ahead of the competition in the industry.
Tesco Credit Card System
In as much as Tesco’s Credit Card System is largely only used in the UK, it still gives the company a competitive advantage.
The company introduced a good credit system for shoppers which is paired up with a credit card wherein partial payments are deducted monthly for those who cannot afford to pay for a purchased electronic device in one payment. This is one of Tesco’s strengths because it attracts shoppers and increases customer loyalty.
Diverse revenue streams
Another strength of Tesco is its diversified business model which provides the company with multiple sources of revenue. This diversification of revenue streams enables the company to reduce its dependence on the retail sector and increase its profitability.
A diversified source of income is one of the strengths of Tesco because it helps to mitigate risk and protect the company when navigating through economic downturns. Also, additional revenue streams help the company to cross-sell its products and services to its existing customer base, which boosts sales.
Apart from retail business, Tesco has other streams of revenue such as Tesco Bank, which include banking and insurance. This offers its customers additional convenience.
Other streams of revenue and subsidiaries of Tesco include Booker Group, Tesco Mobile, and Tesco Tech Support.Last Updated on September 29, 2023 by Nansel Nanzip Bongdap