How Tesco Can Reposition Themselves For The Discount Chains

As Aldi has already established itself as a large discount supermarket chain with over 10,000 stores in 18 different countries including Australia (2001), and holds a large market share in the grocery world due to its business culture and market leading initiatives. This report aims to provide the ALDI board of directors with:

Product offerings by these contenders are similar as Tesco’s to a huge degree. This procedure helps Tesco to ensure its commercial center by expanding competition. A large portion of the contenders of the Tesco have an equivalent or a bigger market share in the store business. By industry investigators, Tesco PLC has a twenty nine per cent of shares the grocery store industry.

From the time it opened, Aldi has expanded the number of product assortments that allow consumers to find nearly anything they need to supply and feed their families. Aldi developed a strong marketing program and decentralized their pricing and assortments that also include some well-known products. Aldi’s begins its value propositions to shoppers with its amazingly low prices. Their “hard” discount pricing, averages about 30% below standard supermarkets like Winn-Dixie or Kroger’s (Brick, 2016). They attribute their success and growth to the “hard discount” model as it has demonstrated to be highly effective. Aldi is different than “large” discounters like Walmart where Walmart’s varieties are limited in size and led by private label products, and investments are made in stores atmosphere, unfortunately, resulting in lackluster customer service. This allows “hard” discounters like Aldi to win the grocery price war by greater margins than Walmart, making Aldi a major competitor of Walmart (Bartone,

The threat of substitutes in the food retail industry can be high among the ‘Big Four’ as switching costs are relatively low and products can be similar. However, most have their own private labels and also target slightly different markets, such as Sainsbury’s having more upmarket positioning and Tesco’s cost leadership. Waitrose offers unique and differentiated products, which are, in the eyes of the consumer, significantly superior. No other supermarket offers such premium quality products with great service and such a large range of organic products as Waitrose, so this makes them extremely difficult to substitute. (Euromonitor, 2008).

The macro environment of the food retail industry in Australia, within which Aldi is part, supports the fierce competition in the industry as well as the need to develop effective long-term strategies to

The objective of this report is to analyse the UK supermarkets industry for John Lewis in order to seek their competitive advantage in the market. This report is to be presented to the Board of Directors of John Lewis Partnership.

This screenshot is about how Aldi is opening more shops combined with Tesco, Sainsbury’s and Morrison. Aldi’s expansion plan is equal to roughly 60 to 80 new shops. It wants to double the size in the UK to 1,000 shops by 2022. Moreover, this will affect supermarkets such as Sainsbury’s, Morrison 's and Tesco because they will make less profit, which is a downfall. This means that Tesco, Sainsbury 's and Morrison 's will decrease the prices of the products to enable they appeal to the customers.

Tesco is a British owned multinational grocery and general merchandise retailer that was found in 1919 by Jack Cohen in London. (Tesco PLC, 2013). Over the years Tesco has grown rapidly and now it operates in 14 countries around the world. (Tesco PLC, 2013). Tesco is now the third largest retailer in the world. (Tesco PLC, 2013). In 2007 Tesco entered the US market under the name of Fresh & Easy, opening

Tesco has expanded into many other countries over the years, but as the “BRICS” economies are becoming increasingly attractive, an opportunity to venture into these economies seemed to be a ‘rising star’ for Tesco. Tesco’s ‘eye on the prize’ meant that they took their eyes off what made them successful in the first place- their UK stores. Ultimately, expansion into China, India and Thailand has left what was their ‘cash cow’ UK stores to currently become their ‘problem child’. Losing focus on their original investments meant that they “slipped behind in terms of stores, service and innovation.” http://www.bbc.co.uk/news/magazine-17767565 In addition to their struggles to maintain the success of their UK stores, focus on China, Thailand and India had a massive impact on their competitors such as Asda, Sainsbury’s, Lidl and Aldi. During the time that Tesco focused on the new move, it was an opportunity for its competitors to steal Tesco’s 30% market share – Sainsbury’s brought in “By Sainsbury’s” and Asda brought in “Chosen By You”. When Tesco realised their mistake and focused their attention on their UK stores, they invested in the “Big Price Drop Flop” but the £500m campaign only damaged their branding image, as customers thought the quality of their products had dropped. It was a clear step by step process for Tesco losing its place

However Sainsbury’s has experienced a slight increase pattern (0.8%) in its sales growth percentage. This means that Sainsbury’s has shown a sign of life since the beginning of 2014 because of its constant decrease in the sales growth from 2014 (City index, 2016). On the other hand, even though Aldi and Lidl have two of the lowest market shares with 5.5% for Aldi and 4.2 for Lidl, they managed to achieve a surprising significant sales growth of 13.3% for Aldi and 18.5% for Lidl. Therefore, the competitive rivalry environment in the UK supermarket industry is very strong between the major companies that have the advantage of reducing the prices by using the large economic of scale strategies and the huge invested capital, without forgetting the strong competition from the new discounted supermarkets brands Aldi and Lidl, which have the advantage of being the initiative and the leaders in the discounted products

1 - Introduction In recent years, there have been vast growth in the wider business world regarding the overall influence of retailing and because of which, retailing and the issues that surround it, have become a vital sector in today’s global economy. (Fisher & Raman, 2001) It has been said that retailers no longer compete on retail activity alone, rather on the overall efficiency of the whole supply chain and overcoming ever expanding management issues of which arise throughout business activities. (Fernie & Sparks. 2004)

supermarkets like Tesco offering the biggest discounts in the UK and Sainsbury 's offering of substitute products too (Mintel, 2010). This shows the responsiveness and flexibility towards consumer needs in the supermarket industry.

* External Context of Sainsbury’s belongs to the biggest supermarket leaders in UK. In other words, Sainsbury’s is part of big four ‘Asda, Tesco, Sainsbury’s, Morrison’s. The biggest rival today in UK market is Morrison’s, they booth fighting for a market but Sainsbury’s ram in a higher place. In Appendix 3, we can find concept of retail and types of functioning.

Tesco was founded in 1919 by Jack Cohen, when he purchased the shipment of tea from T.E Stockwell and later in 1924 combined the initial of the names (TES) with the first two letters of his surname (CO). The first TESCO store was opened in Burnt Oak, Middlesex in 1929. Tesco is now operating in 14 different countries around the globe with almost 5000 stores worldwide and it is one of the largest retailers around the world. According to Kantar worldpanel, 2012 Tesco covers almost 30% of the market share in the UK.

Since acquiring number one ranking in 1996, Tesco has developed a successful multiformat strategy that has accelerated its advantage. Its UK sales are now 71% larger than Sainsbury’s. Also the Competition Commission’s report makes it very difficult for a competitor to challenge its scale and has effectively scuppered Wal-Mart’s chances of stealing UK leadership. Therefore, Tesco is in an enormously strong position in its domestic market.