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Tesco: An Example of a Company That is Facing Many Challenges

Tesco

The main UK supermarkets are struggling because the limited-range discounters Aldi and Lidl have invaded their turf and undercut them on price. The big grocers have also contributed to the UK supermarkets’ misfortunes, as the supermarkets lost touch with what customers were seeking through the downturn and protected their margins to push through price increases. Now they must also deal with food deflation (which cuts the value of their sales), rising costs of wages and the explosion of online sales.

But the weakness of supermarkets’ current state means that even when changes such as the drop in oil prices may make consumers more inclined to spend, the grocers are in no position to make the most of a more positive mood. Instead, they all still have too much debt and must repair their balance sheets before they can invest again for future growth. Meanwhile, they must convince shareholders that they still have appeal.

Big out-of-town supermarkets were once the big hit where you could buy everything you wanted under one roof. But now, they are dinosaurs in the Internet and e-commerce world, where home delivery is smooth and where companies like Amazon give you the world’s largest bookstore with one click. Consumers are purchasing mass media sources over the internet, regardless of Tesco’s massive shelf space as travel costs are eliminated, and customers are overall looking for the easiest way out.

However, supermarkets such as Tesco have anything one could need in one place, and this makes it convenient. The issue is ascertaining where each commodity is assigned: the entertainment sector, the pharmacy, etc. In addition, Tesco, with their large focus on groceries, has to find new ways to maintain their customer base, especially with the advent of restaurant dining and ready-made food.

British shoppers have fallen out of love with Tesco. It cannot just be about advertising and PR anymore, although both tools are essential. It is vital that Tesco makes the most of its massive shelf spaces and customer bases to its advantage.

 

July 12th, 2017

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