tesco uk case study

Tesco Case Study: How an Online Grocery Goliath Was Born

Tesco boasts an impressive history in the UK and abroad. Over the years, the grocery goliath has achieved continued success by remaining at the forefront of retail trends, including everything from self-service shopping to international expansion. More recently, Tesco has made its mark with a sophisticated online grocery strategy that enables seamless digital shopping. There’s a lot that can be gleaned from Tesco’s eCommerce efforts. In this Tesco case study, we highlight the retailer’s long-term emphasis on customer service, which can be seen not only in its physical locations but also in its eCommerce strategy.

Table of Contents – Summary

A Brief History of Tesco

Tesco’s and world’s first virtual store, tesco and scandals, how tesco became a retail case study favorite, tesco’s ecommerce website, interesting technologies that tesco’s uk site uses, impressive tesco stats you may not know, faq on tesco.

• The Tesco Success

To understand current growth and successes and why they warrant a Tesco case study, it helps to understand the retailer’s history. Founded in 1919, the company initially consisted of a group of high-performing market stalls. Founder Jack Cohen conceived the idea shortly after leaving the Royal Flying Corps as World War I drew to a close. He used demobilization funds known as “demob money” to purchase surpluses of fish paste and golden syrup.

Tesco’s initial success could largely be attributed to Cohen’s understanding of mass-market sales. In a time of strict austerity, he employed a rigid business model of “stack ’em high, sell ’em low.” The brand also set itself apart by embracing a self-service approach, which, at the time, was rare in the UK. Following the introduction of its first supermarket in 1956, the retailer entered an era of rapid growth.

After emerging as the UK’s preeminent grocery chain, Tesco released the revolutionary Clubcard. During the 1990s, the chain expanded to include thousands of international locations. This was quickly followed by investments in internet retailing, which led to the chain’s current status as a top eCommerce grocer, netting  £1.3 billion in pre-tax profits  for the year ending in February 2018.

In 2011 Tesco was the first-ever retailer building the world’s 1st virtual grocery store in South Korea. The experiment took place in a subway station and the results were tremendous: the number of new registered members rose by +76%, online sales increased by +130% and Tesco became South Korea’s no1 online grocery retailer, outranking its rivals e-mart, so this experiment was one of the first key steps towards Tesco’s digital transformation.. After this phenomenal success, Tesco opened its first European virtual grocery shop in Gatwick Airport, UK. See how they did it in this brilliant video:

Tesco has occasionally suffered controversy in the last several decades, with 2 shocking moments that everyone remembers:

• The Horse Meat Scandal: Back in February 2013, several products believed to consist entirely of beef were found to contain horse meat. The Food Safety Authority of Ireland tested a range of cheap frozen beefburgers and it found that Tesco’s sample contained 29% horse instead of beef .  The retailer made every effort to appease concerned customers. One of which included a notable promise to tighten up its supply chain and purchase a more significant share of its meat from the UK. Such efforts have likely played into the grocery chain’s recent logistics successes.
• The Accounting scandal: It was 2014 when the news dropped like a bomb: an FTSE 100 firm could get away with “cooking the books”. The company admitted submitting overstated profits by £250 million . The results? £2 billion off the supermarket’s share price in one day.

How Tesco thrived in the COVID-19 area

During Q1 2021, Tesco reported that the sales from its online store were “remarkably higher” than before the Covid-19 crisis. As Internet Retailing mentions , Tesco’s sales increased by +22% in 2020, even though the physical stores and hospitality re-opened at some point. It is believed that this success was a result of Tesco’s recent delivery enhancements and doers mentality, implemented during the first lockdown. 

It’s revenue analysis shows that 1.3m online orders were conducted only in spring 2021. This means that the total number of transactions was 81.6% higher than the same period in 2019 (a before Covid-19 year), proving that Tesco actually turned COVID-19 into an opportunity for its business, achieving memorable results by quickly adjusting its business model to the pandemic’s needs.

Despite the horsemeat scandal, Tesco remains a customer favorite throughout the United Kingdom. The Tesco case study has become a common phenomenon, as the chain boasts several unique strengths worth emulating on a broad scale.

Over the years, the retailer has shifted its original “stack ’em high, sell ’em low” approach. While affordability remains a priority, Tesco did not pursue it to the detriment of quality. Instead, it combines reasonable prices with exceptional convenience and customer service. This can be seen in physical stores and eCommerce alike.

Excellent Customer Service

Strong customer service lies at the heart of Tesco’s sustained success. The retailer employs a variety of initiatives to keep consumers happy. Customer-oriented product development, for example, ensures that all stores are stocked with the items visitors actually want. This development process includes rigorous consumer testing to ensure that new products and services are well-received. Customized stores lend further appeal; each is designed based on carefully analyzed demographics.

Quality customer service means making accommodations for all consumers—including those with special needs. Tesco accomplishes this through the use of sunflower lanyards, which allow customers with hidden disabilities to secure additional assistance discreetly. The chain also provides induction loops for hard-of-hearing customers, as well as helpful visual guides for consumers with autism.

Ultimately, Tesco’s impressive customer service derives from its top-down approach, in which a commitment to customer satisfaction permeates every element of the company’s culture. Insight Traction’s Jeremy Garlick tells The Grocer that the key to large-scale retail success lies in “ understanding your customers, anticipating their needs, and giving them what they will value.” Tesco checks off all these boxes. This is true both in stores and with its website, which uses an intuitive layout to ensure that customers can quickly access the products and services they desire.

Product Diversification

Tesco may be best known as a grocery chain, but the retailer provides a surprising array of products and services. It aims to serve as the ultimate one-stop-shop for those who prioritize convenience and quality above all else. Customers can expect to find a collection of produce, dry goods, frozen products, and more. Toiletries, household products, pet food, and even apparel can also be located within Tesco stores and on the retailer’s eCommerce website.

Beyond its many product offerings, Tesco also provides a few key services to enhance customer convenience. Tesco Bank, for example, offers everything from credit cards to pet insurance. These digital offerings play largely into Tesco’s eCommerce strategy, with banking customers capable of accessing their account information online.

Fine-Tuned Logistics

Quality customer service is not possible without an effective logistics and supply chain strategy. Strong relationships with suppliers are essential, especially as Tesco seeks to diversify its already vast product collection further. Efficient routes ensure that produce and other time-sensitive products arrive promptly in stores—and are quickly distributed to customers taking advantage of the chain’s affordable home delivery program.

Ongoing investments in telematics promise to further improve Tesco’s already fine-tuned supply chain. New monitoring tools offer greater insight into the trip status and real-time decision-making—and how these elements play into both profit margins and long-term customer satisfaction.

Digital customers, in particular, appreciate Tesco’s tight supply chain. When they order items online, they can rest assured, knowing that their favorite products will consistently be in stock. What’s more, online customers feel confident that delivered items will be fresh and of exceptional quality.

Insane International Expansion

Tesco may currently dominate the UK grocery market, but it’s also an international force. While the retailer pulled out of the United States in 2014, it has enjoyed sustained growth in Eastern Europe and Thailand.

Just as Tesco targets its international in-store efforts to reflect local populations, it designs its global eCommerce strategy around a diverse consumer base. Different websites are offered in each target country, with text provided in both English and the respective region’s primary language.

Customer Loyalty

Brands such as Costco and Amazon prove that customer loyalty can pay dividends for a company’s bottom line. Tesco demonstrated this long ago with the Clubcard, which encourages customers to prioritize the chain over competitors.

Today, the Clubcard continues to play a crucial role in Tesco’s success. Further transformation is in store, as Tesco recently unveiled a £7.99 per month subscription service called Clubcard Plus . Subscribers will receive significant discounts above and beyond those offered through the traditional Clubcard, including a permanent 10 percent off many of the store’s most beloved brands. Given the current popularity of subscription services, this could prove an excellent opportunity to get existing customers even more enmeshed in the Tesco ecosystem and more responsive to eCommerce marketing automation efforts.

Tesco’s eCommerce strategy reflects the brand’s commitment to value and convenience. These priorities are evident in everything from the logo to the images and even the general layout. Website visits are just as efficient and orderly as in-person purchases at Tesco’s physical locations. Tesco’s website, like its stores, may not be fancy—but it gets the job done. In this Tesco case study, we’ve analyzed several of the key eCommerce strategies that help Tesco’s page stand out in a competitive digital marketplace, as well as a few areas that warrant improvement.

Analyzing Tesco’s Homepage

What We Liked

• Easy to navigate . Today’s impatient customers demand easy-to-navigate websites that almost instantly get them from point A to point B. Tesco’s homepage appeals greatly to convenience-oriented online shoppers, who can quickly find desired products via a simple search tool. Headings highlight main categories, including groceries, clothing, banking, and even recipes.
• Visually-appealing fullscreen displays . Rather than distract website visitors with several separate visuals, Tesco’s website maintains a single, but decidedly bold display. This impactful background stretches across the entire screen and is layered behind text and customer prompts. The homepage, featuring fresh produce, has eye-catching graphics that reflect the commitment to quality that emerges in every Tesco case study
• Minimalist, but not dull . Minimalist displays dominate modern web design. Sometimes, however, white space feels excessive. Tesco strikes an ideal balance by keeping clutter to a minimum without relying on a bare-bones approach.
• Easy logo identification . Customers can always spot the Tesco logo in the upper left-hand corner, surrounded by just enough white space to ensure that it stands out.

What We Didn’t Like

• Customer testimonials . Reviews from happy customers may prove desirable in some contexts, but there is a time and a place. These particular testimonials take up the page’s most prominent space, which could be better served by showcasing exciting deals or products.
• Tabs that open into new pages . Ideally, when clicking on a link that appears to be a tab (such as the Delivery Saver tab), the new content should open in the same page, instead of loading an entirely new page.

Analyzing Tesco’s Category Page

• Sticky cart functionality . As shoppers browse the website and add items to their carts, they can keep track of these intended purchases on the right side of the screen. This intuitive design allows for a seamless Tesco checkout process , thereby increasing the likelihood of conversion.
• Variety of filters . A wide array of filters are provided to allow customers to browse through products based on brands and categories. Furthermore, customers can customize their browsing according to specific dietary filters such as vegan or Halal. This plays into Tesco’s overarching emphasis on personalized shopping.
• Usually bought next . Situated at the bottom of each category page, this helpful section makes it easy to pair similar grocery items. This increases customer convenience while also helping to improve sales and final revenue on Tesco’s end.

What We Didn’t

• Difficult filter navigation . There’s a lot to be said for the variety of filters at customers’ disposal, but the actual process of navigating them can prove complicated, particularly compared to competitor websites.
• Navigating to different items within categories . Navigation can prove surprisingly difficult for those browsing various items within categories. The constant need to return to the homepage could quickly grate on otherwise amenable customers.
• Lack of search functionality within categories . Items cannot be sought via keywords within specific category pages. All searches must be completed using the main search bar on the top of each page. For many users, this may represent the website’s greatest weakness, as keyword category searches are an expected feature among competitors.

Analyzing Tesco’s Product Page

• Time-limited delivery notice . Produce delivery is inherently time-sensitive, as are several other services that Tesco provides via its website. The retailer harnesses the power of time-limited delivery notices to ensure that consumers use products when they’re freshest and most appealing.
• A wealth of product information . Product pages contain a wealth of relevant information, including everything consumers could possibly want to know about each item’s nutritional content, country of origin, and even preparation instructions.
• Customer reviews . Shoppers on the fence about a particular product can read customer reviews to get a better idea of whether they actually want to invest in said item. With a wealth of alternatives available, they can take solace in knowing that other options are always on hand.
• Nondescript Add to Cart button . Tesco’s approach for adding options to its carts may get the job done, but this could be an excellent opportunity for adding a bit of visual flair without detracting from the website’s minimalist approach.
• Too much text combined with too small product images . Many shoppers regularly purchase items without actually knowing their names. Rather, they focus on packaging. Tesco’s small pictures make it difficult for these shoppers to identify the elusive products they want. Some may end up with unexpected and unwelcome surprises upon delivery.
• Too much information . While it’s useful to know the origin of each item, including the exact address may seem like overkill to some users. This detailed information detracts from Tesco’s otherwise streamlined product pages.

Analyzing Tesco’s Checkout Process

• Numerous delivery slots are available . A variety of helpful slots for receiving grocery deliveries are provided on an hourly basis throughout the day. This dramatically improves customer convenience, particularly for those who work long hours and might not be available for the limited delivery times provided by some of Tesco’s key competitors.
• Automatic Click+Collect locations . Those who opt to collect deliveries at Tesco stores can look to this feature to automatically display a variety of nearby locations. This makes in-person delivery collection nearly as convenient as Tesco’s impressive delivery setup.
• Several Delivery plans are available . Shoppers who aren’t in a big hurry can elect to have their orders delivered mid-week for a reduced charge. Meanwhile, demanding customers are asked to pay extra for same-day delivery. Customers love options, particularly when they believe those options prompt significant savings.
• Oddly unavailable Click+Collect hours . Shoppers who plan their grocery pickup several days out will be surprised to find that some collection times up to a week out are unavailable. Hence, while Click+Collect provides exceptional functionality for last-minute pickups, it’s not always ideal for those who prefer to schedule in advance.

Eager to learn more about Tesco’s strategy and the technologic functionalities that make Tesco’s website so easy to use, we harnessed the power of BuiltWith to scan the website. A few of the notable technologies we spotted include:

• Omniture SiteCatalyst . Tesco’s web analytics are provided by Adobe’s Omniture SiteCatalyst — an expensive, complex system when compared to its main competition (Google Analytics). If set up correctly, however, Omniture SiteCatalyst provides excellent customer support.
• Hotjar . One of the world’s most famous screen recording and heatmaps tools, Hotjar offers a range of behavior analytic services ideal for businesses such as Tesco, which aim for a targeted approach based on actual customer behavior.
• Optimizely . This top experimentation platform plays significantly into modern web innovation. Despite its name, however, Optimizely may increase page load times throughout the Tesco site.
• OpinionLab . OpinionLab does an admirable job of collecting customer feedback on every aspect of Tesco’s webpage. This allows Tesco to customize better its web offerings based on actual customer opinions
• SendinBlue . User experience is a huge point of contention for SaaS provider Sendinblue. Clients regularly struggle with forms, automation, and APIs. ContactPigeon may prove a more customer-oriented alternative.

Some of these eCommerce tools are also used by John Lewis, UK’s homeware giant , so we do realize that these technologies play also an important part in a retailer’s business model and online success.

• As of 2019, Tesco boasted over 6,800 shops worldwide.
• Tesco currently employs over 450,000 employees around the world.
• Tesco had a 26.9 percent market share in the UK in 2019.
• Of the UK shoppers who primarily visit Aldi, 45 percent highlight Tesco as their main secondary store.

Breaking Tesco News:

• Tesco changes bonus rules after Ocado success hits pay – Read more here
• Coronavirus: The weekly shop is back in fashion, says Tesco boss – Read more here
• Tesco launches half price clothing sale – but some slam the company as ‘irresponsible’ – Read more here
• Tesco, Sainsbury’s, Asda and Aldi put restrictions on items amid stockpiling –  Read more here
• Tesco sells its Thai and Malaysian operations to CP Group.   Learn more here
• In September 2021 Tesco launched a zero-waste shopping service, providing customers with containers. – Learn more here.

When did Tesco begin?

Tesco technically began in 1919 but did not receive its current name until 1924. The company originally consisted of market stalls, with the first shop that might be recognizable to modern consumers not opening until 1931.

What made Tesco successful?

Tesco is popular in the UK and abroad due to its combined emphasis on quality, convenience, and affordability. The Clubcard plays a huge role in the retail chain’s continued popularity, as it keeps customers coming back for deals.  So why is Tesco so successful? It is because of its customer-centric approach, that it gradually helped Tesco to develop a very loyal customer base and equity and a very powerful multinational brand.

Who is Tesco’s owner?

Tesco is currently experiencing a shakeup in leadership. After serving as CEO for several years, Dave Lewis announced his resignation in 2019. He will be replaced by Ken Murphy in 2020. John Allan currently serves as the chain’s non-executive chairman.

What is Tesco industry sector?

Tesco PLC is a retail company. Its core business is grocery retail but they also are in retail banking and assurance industries as well, as part of their product diversification strategy.

How many stores Tesco has?

Tesco has 6993 stores in 12 countries

How profitable is Tesco?

Tesco’s revenue grew by +12% YoY in 2019 hitting  £63.91 billion.

Is Tesco in the public or private sector?

While Tesco was initially a privately-held company, it became a public limited company (PLC) in 1947 and has continued to operate under this approach. However, despite Tesco’s status as a PLC, it remains firmly part of the private sector.

Discover more resources about FMCG retailers

• Sainsbury’s Marketing Strategy: Becoming the Second-Largest Supermarket Chain in the UK
• ASDA’s marketing strategy: How the British supermarket chain reached the top
• The Marks and Spencer eCommerce Case Study: 3 Growth Lessons for Retailers
• The Ocado marketing strategy: How it reached the UK TOP50 retailers list
• ALDI’s marketing strategy: The key growth ingredients of the FMCG titan
• Walmart Marketing Strategy: Decoding the Success of the US Multinational Retailer
• Analyzing Lidl’s Marketing Strategy: How the Discount Supermarket Leader Scaled
• FMCG Marketing Strategies to Increase YOY Revenue

The Tesco Case Study: An overnight Success?

As our analysis showed, a variety of factors play into Tesco’s success. The retailer has a long history of using cutting-edge practices (like the virtual store mentioned above) to set itself apart from the competition. Much of its current success, however, relies on its perception as a convenient and affordable chain.

Tesco’s success is not a matter of luck. On its website and in its stores, the retailer emphasizes customer-oriented practices designed to make every shopping experience as seamless and as enjoyable as possible. This simple yet effective approach promises to keep the retailer at the forefront of the grocery industry in years to come.

If you’re looking to emulate the qualities evident in this Tesco case study, don’t hesitate to get in touch. Contact us today to book a free marketing automation consultation.

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TESCO – British Retailer that redefined Grocery Shopping

The first time I visited a ‘Tesco Extra’ store was at midnight, making an emergency run for next morning’s breakfast. The store seemed to occupy the area of an entire football field in Ashby-De-La-Zouch, UK. Even at an ungodly hour, Tesco was well-lit with visiting customers.

Inside, there were never-ending aisles lined up with groceries, food items, clothing, electronics, and whatnot. It was easy to lose way and lose track of time in the colossal supermarket.

I thought to myself that this would be the only store of its kind in the county, but I was wrong.

Tesco has 4008 stores across the UK and Republic of Ireland , with 7005+ stores and franchises across the world. In Europe, Tesco has established itself in Hungary, Slovakia, Czech Republic, Poland and Turkey. In Asia it has stores in Thailand, South Korea, Malaysia, Japan and China.

TESCO is much more than a chain of supermarkets selling a million products. It’s a giant conglomerate, spanning across so many verticals. It’s the equivalent of one of the FAANG companies but in the Grocery & Retail sector. It becomes imperative for business enthusiasts like you and me to understand the business model of this retail giant called Tesco.

It’s considered a part of the ‘Big Four’ supermarkets alongside ASDA, Sainsbury’s, and Morrison’s in Europe.

The Birth of Supermarkets in Britain

Founded in 1919 by a war veteran – Jack Cohen , Tesco began as a grocery stall in the East End of London, making a profit of £1 on sales of £4 on day one. Tesco’s first store was launched in 1929, selling dry goods & its own brand of Tesco Tea. A hundred more Tesco stores were opened in the next 10 years.

With 100+ mom-and-pop stores in Britain, Jack wanted to expand his product range. He traveled to the US in 1946 and noticed the self-service system, where customers would select different products on the shop floor and finally checkout at a counter. Jack brought this concept back to Britain, giving birth to Tesco Supermarkets and changing the face of British Shopping. His motto was to “stack ‘em high, and sell ‘em low (cheap).”

Tesco has a wide range of supermarkets depending upon their size, range of products, and location. This also helps regulate their Supply Chain to reduce wastage.

Tesco Business Model is based on various verticals

Tesco has deep-rooted its businesses in the European market so well, it’s difficult to miss out on the Tesco hoarding anywhere. Its Businesses and subsidiaries are:

A glimpse into the Complex Supply Chain

A supply chain is one of the critical aspects of the business model of a giant retailer like Tesco. Tesco has its priorities set when it comes to procuring products from different parts of the world:

• Use expertise to offer a better range of products at reasonable prices
• Use economies of scale to buy more for less
• Leverage and maintain relations with global branded suppliers
• Grow the brand

It procures goods from over 44 countries, majorly China. A stock of up to 90,000 different products (30% are food & beverages) is transferred via the global sourcing office located in Hong Kong. Keeping wholesalers out of the loop, Tesco procures directly from suppliers. The conglomerate has developed and maintained long-lasting relations with suppliers’ world over—the main ones being General Mills, Kellogg, Mars, and Princes.

Tesco has set up a separate division to regulate its supply chain, “the machine behind the machine” – Tesco International Sourcing (TIS). It can be compared to the East India Company of the 18 th -19 th Century, catering to only one customer – Tesco.

TIS is connected to over 1000+ suppliers across 1200+ factories . It’s responsible for over 50,000 Tesco product lines in terms of quality control, sourcing, production, designing, timely delivery, and sorting trading/customs documentation.

All activities are coordinated centrally at TIS, with just 533 staff members. These staff members undergo rigorous training to detect & analyze Supplier-violations and conduct Auditing.

Tesco coordinates with TIS on a daily basis to procure products in the following ways:

• The local team uses customer insights to create a Product Brief (new or modified) specified for each region.
• TIS analyzes the product brief and develops a Product Sourcing Plan depending upon – stores that need this product and figuring out minimum transport time and cost, as per the region.
• The Plan is executed, and specific demands are handed out to Suppliers all over the world. Expert TIS Buyers make sure the best deal is made.
• Inbound logistics are consolidated at specific Tesco Depot to receive the product efficiently from Suppliers.
• Local teams then make sure the product is distributed to different Tesco stores from the Depots.

Tesco adding eCommerce to the mainstream business model

Being in the Top 50 retailers globally as of 2021 , Tesco’s annual revenue worldwide in 2020 was £58.09B , a 9.1% decline from 2019 (due to the Pandemic & disposing of its Asia operations , to focus on the core business in Europe).

It shifted from Brick & Mortar to Brick & Click stores. The Click+Collect functionality on its website accounts for 43% of E-grocery sales in the UK. The Click+Collect concept enables customers to place their orders online and collect their orders a few hours later at the nearest Tesco Depot. Tesco created these specialized Depots for online orders only.

Despite shutting down most its mall operations, Tesco survived 2020 through its online retail store Tesco.com , with double the orders. Its E-commerce net sales had shot up by 31% from 2019-2021.

A Global Operations & Technology Center in Bengaluru was also set up in 2004. This center serves as the backbone of distribution operations for Tesco worldwide. Its business functions are- Finance, Property, Distribution Operations, Customers & Product. The employees at this Center are Engineers, Analysts, Designers, and Architects.

Tesco’s Marketing Strategy

Tesco has always believed in acquiring loyal customers and regaining stakeholders’ trust. It aims to reach customers from all financial backgrounds. So it launched 2 of its own sub-brands – Tesco finest for the affluent customers and Tesco Everyday Value for the rest of the crowd.

Tesco also launched the Club Card in 1995 as a Membership card, to maintain customer loyalty and keep them coming back. The Card operates on a point-based system with discounts on products, & other subsidiaries like double data on Tesco Mobile. With 5 Million subscribers in the first year , Tesco finally overtook its competitor – Sainsbury’s to become No.1 in the UK.

The Club-card strategy was used to obtain customer data and observe buying habits. This data was analyzed, allowing Tesco to put the right products on shelves while eliminating unpopular ones. Tesco realized that the Club Card isn’t just a quick fix & temporary promotional tool; it’s a promotion in itself. This made the Tesco Club Card unique and long-lasting.

Tesco also realized that spending Billions on traditional marketing efforts and maintaining a ‘one-size-fits-all’ brand image wouldn’t work. It decided to hyper-target specific customers and to earn their trust. For starters, thousands of head-office staff and senior executives were sent to work in stores – to demonstrate how Tesco values its customer. Customization became key for its new marketing strategy; sending out discounts on birthdays via Emails and campaigning from door-to-door.

Tesco also made a partial shift to Digital Marketing which costs much lesser and has a wider outreach. It created well-tailored profiles on all social media platforms. On Twitter, it has more than 15 accounts, separate for each of its business units. The online customer care account on Twitter is active 24-7.

All supermarkets commonly advertised themselves to have quality products at a reasonable cost; Tesco wanted to differentiate itself as a unique brand. It introduced step-by-step Recipes prepared from ingredients available at any Tesco store, with Chef Jamie Oliver as its Health Ambassador . Tesco Food and its variety of recipes were a massive hit. Later on, the monthly Tesco Magazine as a food & lifestyle magazine was also launched, with 4.65Million readers worldwide.

The beginning of the pandemic in March 2020 left people apprehensive about visiting a physical store to buy groceries. To deal with customers’ concerns, Tesco came up with an instructional advertisement in April ‘20. With crisp instructions similar to that of an in-flight safety video, this ad showed customers how to physically shop and behave at Tesco stores. It was considered to be the most effective advertising and communications campaign of 2020 as per YouGov BrandIndex .

Competition

Tesco’s earliest competitor has been Sainsbury’s since the 70s. The Tesco Club Card strategy in 1995 helped it overtake Sainsbury’s to become the No.1 Retailer in the UK, but not for long. The ‘Big Four’ supermarkets in Europe have been in close competition throughout the years. Tesco has acquired a 28% majority stake in the UK market.

The horse meat and accounting scandals were a real setback for Tesco, letting competitors take over the European market. The newest German entrants – Aldi and Lidl had caught customers’ attention and market share in a short span of time.

With a combined market share of 12%, these German retailers posed a threat to Tesco. So much so that Tesco began the ‘ Aldi Price Match ’ campaign to curb the growth of the German discounter and win back customers. Tesco started price-matching thousands of its products with that of Aldi, offering better quality and branded products at Aldi’s prices.

Tesco has a majority market share in Britain, with Sainsbury’s and ASDA in tow:

Tesco Adding Sustainability to its business model – The Little Helps Plan

It’s a well-known fact that giant conglomerate retailers are one of the major causes of rapid climate change and increasing carbon footprints. Tesco realized its impact on the planet and launched the Little Helps Plan as a core part of business in 2017. This plan serves as a framework to attain long-term sustainability. Its four Pillars – People, Products, Planet, and Places are aligned with the UN’s Sustainable Development Goals.

Until now, the Plan has enabled Tesco to:

• Permanently remove 1 Billion pieces of plastic from its packaging
• Redistribute 82% of unsold food, safe for human consumption
• Remove 52Billion unnecessary calories from foods sold

Apart from this, it also aims to increase sales of Plant-Based Meat alternatives by 300% by 2025. At present, it has 350 plant-based meat alternatives on the shelf.

Apart from partnering with various other organizations, Tesco entered a 4-year partnership with World Wide Fund for Nature (WWF) to address one of the biggest causes of wildlife loss – the global food system. It aims to eliminate deforestation from products, promote recyclable/compostable packaging and minimize food waste.

Tesco is one of the few successful retailers in the world, with a compelling history. Tesco has overcome numerous issues across its supply chain, faced global criticism, and still stands undeterred in the European market with its rock-solid business model. It has always adapted to its unpredictable consumers and continues to do so while caring for the planet.

The business is healthy. We said we would rebuild the relationship with the brand and consumers; you will see that in every measure of customer satisfaction we do that. The business is healthy, vibrant and there is a lot of optimism of what we can do going forward. CEO Dave Lewis, who took over Tesco in 2014 (during the struggle years) & stepped down in September 2020

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An Engineering grad, currently working in the fields of Big Data & Business Intelligence. Apart from being immersed in Tech, I love writing and exploring the business world with a focus on Strategy Consulting. An ardent reader of Sci-Fi, Mystery, and thriller novels. On my days off, I would spend time swimming, sketching, or planning my next trip to an unexplored location!

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Tesco Change Management Case Study

Change is a necessary part of any business’s growth and success. However, managing change can be a challenging task, especially for a company as large as Tesco. 

The UK-based retail giant faced numerous challenges during its journey of growth, including increasing competition, changing consumer preferences, and economic uncertainties. 

To overcome these challenges, Tesco embarked on a change management journey that transformed the company and enabled it to become one of the world’s largest retailers. 

In this blog post, we will delve into Tesco’s change management case study, discussing the strategies the company employed to manage change, the challenges it faced, and the results and achievements of the change management program. 

We will also examine the lessons learned from Tesco’s success story and provide insights into best practices for effective change management

Background of Tesco 

Tesco is a British multinational retailer that was founded in 1919 by Jack Cohen. Initially, the company started as a market stall in London’s East End, selling surplus groceries from a stall. 

In the 1920s, the company expanded its business by opening its first store in Burnt Oak, North London. 

The company went public in 1947 and continued to expand its business throughout the UK in the following years. 

By the 1990s, Tesco had become the largest supermarket chain in the UK.

However, despite its success, Tesco faced several challenges in the early 2000s. Increasing competition from discount retailers such as Aldi and Lidl, changing consumer preferences, and economic uncertainties had a significant impact on the company’s growth. 

Tesco’s sales started to decline, and the company’s market share was shrinking. To address these challenges, Tesco’s management team realized the need for a change management program that would transform the company and enable it to regain its position as a market leader.

History and growth of Tesco 

Tesco’s success story began in the early 20th century when Jack Cohen, the founder of Tesco, started selling groceries from a stall in London’s East End. By the 1920s, Cohen had established his first store in Burnt Oak, North London, under the name Tesco. 

The name “Tesco” was derived from the initials of TE Stockwell, a supplier of tea to Cohen, and the first two letters of Cohen’s surname.

In the following years, Tesco continued to expand its business by acquiring other retailers and opening new stores throughout the UK. 

By the 1970s, the company had become one of the largest supermarket chains in the UK. In the 1980s, Tesco introduced new products and services, including Tesco Metro stores, Tesco Express, and Tesco Clubcard, which enabled the company to enhance customer loyalty and increase sales.

In the 1990s, Tesco’s growth continued, and the company expanded its business beyond the UK by entering new international markets such as Poland, Hungary, and the Czech Republic. By the early 2000s, Tesco had become the largest supermarket chain in the UK, with over 2,500 stores worldwide.

However, the company faced several challenges in the early 2000s, including increasing competition, changing consumer preferences, and economic uncertainties, which had a significant impact on the company’s growth. Tesco’s management realized the need for a change management program that would transform the company and enable it to regain its position as a market leader.

Key Reasons of making changes at Tesco 

There were several key reasons for the changes at Tesco, including:

• Increasing competition : The rise of discount retailers such as Aldi and Lidl had a significant impact on Tesco’s market share and profitability. These retailers offered lower-priced alternatives, which attracted customers away from Tesco’s stores.
• Changing consumer preferences: Consumer preferences were shifting towards healthier and more sustainable products, which Tesco was slow to respond to. This led to a decline in sales and customer loyalty.
• Economic uncertainties: The global economic recession of the late 2000s had a significant impact on Tesco’s financial performance. Consumers were more price-sensitive, and there was increased pressure on retailers to reduce prices.
• Internal issues: Tesco’s rapid expansion had resulted in organizational complexity, which made decision-making slow and inefficient. There were also issues with employee morale and engagement, which impacted the company’s ability to deliver high-quality customer service.

Steps taken by Tesco to implement change management 

To address the external and internal challenges, Tesco’s management team realized the need for a change management program that would transform the company and enable it to regain its position as a market leader. The changes that were implemented included a focus on cost reduction, improving customer service, and enhancing employee engagement.

To implement the change management strategy, Tesco took several steps, including:

• Leadership commitment: The company’s senior leadership team was fully committed to the change management program and provided clear direction and support throughout the process.
• Communication : Tesco developed a comprehensive communication plan to ensure that all employees understood the rationale for the changes and their role in implementing them. The plan included regular updates, town hall meetings, and training sessions.
• Cost reduction: Tesco implemented a cost reduction program to improve efficiency and profitability. The company reduced its product lines, renegotiated supplier contracts, and streamlined its supply chain.
• Customer focus: Tesco implemented a new customer service strategy, which included improving the quality of its products, enhancing the in-store experience, and increasing customer engagement through loyalty programs and personalized marketing.
• Employee engagement: Tesco recognized the importance of employee engagement in delivering high-quality customer service. The company implemented initiatives to improve employee morale, including training programs, recognition schemes, and improved working conditions.
• Technology: Tesco invested in new technologies to improve its operations and enhance the customer experience. This included the introduction of self-checkout machines, mobile payment options, and online shopping platforms.
• Measurement and feedback: Tesco established metrics to measure the success of the change management program and solicited feedback from employees and customers to identify areas for improvement.

Positive outcomes and results of change management by Tesco 

The change management program implemented by Tesco resulted in several positive outcomes and results, including:

• Increased profitability: Tesco’s cost reduction program resulted in improved profitability, with the company’s profits increasing by 28% in the first half of 2017.
• Enhanced customer experience: Tesco’s focus on improving the customer experience led to increased customer satisfaction and loyalty. The company’s customer satisfaction ratings improved significantly, and it was named the UK’s top supermarket for customer service by consumer watchdog Which? in 2018.
• Improved employee engagement: Tesco’s initiatives to improve employee engagement resulted in increased employee morale and motivation. The company’s employee engagement scores improved significantly, and it was recognized as one of the UK’s top employers in 2019.
• Streamlined operations: Tesco’s focus on improving efficiency and reducing complexity resulted in streamlined operations and faster decision-making. The company was able to reduce its product lines and negotiate more favorable supplier contracts, resulting in improved margins.
• Strong financial performance: Tesco’s change management program helped the company recover from a period of declining sales and market share. The company’s financial performance improved significantly, with revenue increasing by 11.5% and profits increasing by 34.2% in 2018.

Final Words 

Tesco’s change management program is an excellent example of how a company can successfully transform itself in response to external challenges and changing market conditions. The program was comprehensive and multi-faceted, addressing the company’s challenges from multiple angles. Tesco’s leadership commitment, communication strategy, and focus on cost reduction, customer service, and employee engagement were all critical factors in the program’s success.

The positive outcomes and results of the program demonstrate the importance of change management in driving organizational success. Tesco was able to recover from a period of declining sales and market share, and become a more efficient, customer-focused, and profitable organization. The lessons learned from Tesco’s change management program are applicable to businesses of all sizes and industries, highlighting the need for organizations to remain agile and responsive to changing market conditions.

About The Author

Tahir Abbas

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How Tesco Became The Biggest Retailer In The UK

Table of contents.

There are certain brands that always seem to attract global attention and one of those is Tesco. It’s one of the largest grocery store chains in the world and over its 100-year history, it has gone through a rollercoaster of ups and downs that have brought it to where it is today.

• Stores: 4,673
• UK Employees: 336,392
• The top retailer in the UK
• Ranks 17th in NRF Top Global Retailers for 2021 
• Q1 2021 Growth in Online Sales: 22.2%
• FY21 Sales: £53.4 bn

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The Origin Story

The giant corporation that we know today had some very humble beginnings. The idea found its roots back in 1919 when Jack Cohen, the son of Polish immigrants, decided that he was going to sell groceries from a stall in East London [1] . For the first few years, that is all it was – a market stall run by a man with a big dream. But over time, as he gained confidence in what he was doing, he began to think that maybe he was destined for something bigger.

To dip his toe in the water, he opened up the very first Tesco store in 1929 in a small town in Middlesex. The brand took off almost immediately, much to the surprise of Cohen, and he realized that there was room for growth. He had stumbled onto a rather simple premise, in terms of providing food and drink in a very affordable and approachable way, and quickly started to work on expanding the concept as far and wide as he could.

Cohen’s unique personality and selling style was something that he engrained in those early sales teams, pushing them further than they ever thought they could go. He was someone who valued hard work above all else and believed that if you were out there working to make things happen, things would conspire for your benefit. This ethos is something that still lives in the company today.

In the years that followed, Tesco grew from strength to strength until it got to a stage in 1947 where it was large enough to list on the London Stock Exchange. In the two decades that followed the listing, the company continued to grow organically but it also made some aggressive acquisitions that rapidly increased the organization’s footprint. At the end of the 1960s, there were around 800 stores in operation, all maintaining healthy profitability and a growing customer base.

The strong brand was then leveraged to venture out of food and beverages specifically, and into a range of other areas including clothing, electronics, financial services, telecoms, media, internet services, and software. They also expanded geographically into the rest of the UK, Europe, and a brief but ultimately unsuccessful time in the USA.

The Tesco of today is a corporation much bigger than Cohen could have ever imagined, and that’s a testament to the company that he was able to build and the business philosophy that still undergirds their success to this day.

Creating Their Own Brands

We’ll start this strategy study properly by diving into what is widely considered the most important part of the Tesco strategy – which is the creation and scaling of their own in-house brands. When the company started they acted simply as a retailer, buying products from suppliers and then controlling the end-user buyer experience and distribution thereof. However, as they began to grow they came to the same realization that is so common for these massive product curators.

They realized that they could compete and win against these other brands because they had access to invaluable sales data, a loyal customer base who was tied into their stores, and the distribution required to bring their own brands to a mass market almost overnight. All of this while regaining a significant portion of the margin as they did so.

This is a key trend that we’ve seen across major retail conglomerates, but it’s received even more attention in the online era as Amazon has taken it to the next level. Especially in the case of common household goods where it is quite difficult to differentiate the product itself, brand and price become all that matters.

Tesco’s clothing line and their food brands provide high-quality items at prices that undercut the other 3 rd party brands that are trying to win shelf space in the stores. This makes it abundantly clear that by owning the customer relationship and the distribution, you have an immense amount of control in the value chain. Manufacturers are dependent on retailers like Tesco because they need to access the consumer market, and this places all the power in the hands of the retailer.

This business model has been incredibly successful over the past 50 years. Tesco has grown a substantial business that customers trust and whenever they want to win back margin, they can create their own white-label brand and use their pricing power to whittle away at the market share built up by other brands. The big question here though is how long will this last? [2]

In modern times we’ve seen a drastic shift away from brick-and-mortar retail and into online shopping. This was obviously accelerated by the COVID-19 pandemic, but it was something that was coming inevitably anyway. As we move to a future of online shopping, Tesco’s early advantage in terms of distribution becomes less relevant. Manufacturers and suppliers can start to build online presences that give them direct access to the consumer market and thus they can eliminate the Tesco leg entirely, provided they have the brand strength to do so.

This is where the world is moving towards, where the middlemen are eliminated over time and we see a rise of direct-to-consumer brands. This is not to say that Tesco is going to disappear. In fact, their online shopping sales have been incredibly impressive. But they have to think differently about the company they are going to be as we shift into this new paradigm.

It’s definitely something on their roadmap and they are making a lot of investments in this vein, but it’s going to be challenging to transform such a large company with so much tied up in the brick-and-mortar of retail stores. Their ability to adapt and adjust will determine whether they remain a force to be reckoned with in the years to come.

Key Takeaway

• If you control the direct relationship with the customer, you have tremendous power in the value chain that allows you to win market share and margins much more efficiently.

Horses for Courses

The next piece of the Tesco strategy that has proven so valuable for them has been their ability to adapt their value proposition for different contexts. When it comes to retail, you have to have a very good understanding of what your customers in that location are looking for, so that you can tailor your offering accordingly.

It’s tempting to think that you can copy-paste a winning formula wherever you want and scale quickly and easily – but that couldn’t be further from the truth. Even with a simple concept like a grocery store, there is a range of different nuances that determine how the store should be set up, what should be stocked, and how they should craft the buying experience.

Tesco operates 5 different types of stores:

• Tesco Extra
• Tesco Superstores
• Tesco Metros
• Tesco Express
• One Stop Shop

Each of these stores has a different use case, and it targets a unique subset of their customer base. The company has worked very hard to identify the specific items, and setup that is best suited for each one. For example, the Tesco Extra stores and the Tesco Superstores are the biggest ones in terms of size and aim to carry as much as possible so that customers can do all their shopping in one place. This is in sharp contrast to the Tesco Metros and the Tesco Express stores which are focused on convenience and speed, rather than a variety of choices.

Every part of the experience for each category is intentional and fit for purpose. Even the training that the staff will go on differs depending on the type of store that they’re going to be working in. What remains consistent is the brand, the product quality, and the prices. Everything else varies according to what that particular customer is looking for.

It’s also interesting to note that these store categories have different trajectories and trends. If you look at the last couple of years (ignoring the pandemic), the big retail outlets have been struggling for growth, while the convenience stores are growing rapidly. This shows a clear trend in terms of consumer behavior and because the stores are all set up differently, the company can respond to these changes.

Essentially, each category of store can be thought about as a different company entirely – allowing lots of flexibility to adapt and adjust accordingly. If they didn’t have this clear separation, it would be difficult to understand the data they were receiving, and they would have less chance of successfully diagnosing the nature of changes in customer behavior.

Taking this one step further, it’s clear that their online shopping vertical is a new type of store and will have unique aspects that set it apart from the rest. As Tesco follows the growth of online shopping they’ll be able to shift their efforts to these new channels because they have the data that they need to be able to do this with confidence.

• Context is everything in business. By separating your operations into subsets that cater to different contexts, you’ll have the data you need to adjust and adapt to changing trends as they arrive.

Sustainability

A key component of Tesco’s forward-looking strategy is to become as sustainable and environmentally friendly as possible. This is not too out of the ordinary in the modern context as companies around the world work towards mitigating climate change, but Tesco has really gone above and beyond to make this a part of their company DNA.

The biggest offenders in their value chain are the delivery vans which are constantly transporting goods from suppliers to warehouses and then eventually to the stores themselves. These vans number in the thousands and they are running almost 24/7 ensuring that stock levels are where they need to be at all times.

Tesco announced recently that they have begun to transition all those vans to electric vehicles in an attempt to minimize the carbon footprint and work towards a more sustainable goal. Their plan is to have their entire delivery fleet transitioned to electric by 2028 which is a very ambitious plan indeed [3] .

This is but one of their sustainability initiatives that are at the forefront of the company they want to become in the future. They are working tirelessly to integrate this into their corporate ethos for a few reasons:

• Sustainability matters. We all have to be more thoughtful about what we’re building because the impact we’re having on our planet is significant. So, from pure self-interest, a company needs to embrace this value if they are to be robust and to last over the next hundred years. Without this focus, we might find ourselves in a very dangerous position in a generation or two’s time.
• Customers demand it. Building on the point above, there is tremendous social pressure for corporations to become more sustainable because of the heightened awareness we now have of the problems that face as a species. Customers are placing sustainability and environmental concerns as key factors in their purchasing decisions and Tesco knows that. So, they are leaning into this as a key value for the future so that they can continue to build the strong brand trust that they have with their existing consumer base.
• Prices are trending downward. As we shift away from fossil fuels and towards renewable energy, the relative prices will come down and that can have a significant impact on Tesco’s profitability. It might require a lot of investment in the short term, but that will pay off by orders of magnitude as the world shifts and economic incentives work their magic.
• Competitive Advantage. Getting in on this early and working to build this into the future of the company could prove to be a significant competitive advantage for competing against their competitors. This is a clear trend that everyone can see, so those companies that get ahead of the curve will be able to leverage the early momentum to capture more and more of the market going forward.
• Opens up opportunities for innovation. Whenever there is a radical shift in thinking, it creates an opportunity to go back to the first principles. For large companies, these moments are few and far between so it’s important to use these natural breakpoints to re-examine your strategy and plot the best path forward. Tesco is definitely trying to do that so that they can remain relevant as we move beyond pure retail and into a hybrid model where you need to serve customers in-person as well as online.

Those are just some of the reasons why Tesco is giving so much credence to how sustainable their operations are. It’s also important to note that they are thinking beyond their direct circle of influence. Another significant contributor to carbon emissions is their customers who drive to the stores themselves. To mitigate this, they’ve begun to roll out thousands of charging points to their larger retail stores to support customers with electric vehicles and encourage more people to move in this direction.

This is something we’ll see a lot more of going forward, and Tesco remains one of those leading the charge, at least in the European context.

• Sustainability is a key value and operational principle that must be at the forefront of any company looking to remain relevant going forward.

The Clubcard Loyalty Program

It seems that every company these days has some form of loyalty program where they try to reward repeat purchasers in exchange for valuable sales data – but Tesco was one of the first to go this route. Their Clubcard program allows regular shoppers to benefit from automatic discounts that are applied at check-out and it makes the already-low prices even more beneficial. This obviously creates loyalty for their key customers who will use the card to get better prices for their groceries, but the more interesting aspect is what it allows Tesco to do with the data.

Before loyalty programs, large retailers like Tesco were unable to tie specific purchases to specific customers. They would be able to access aggregated sales figures about the sorts of items that were being purchased, and they could use that information to adjust their offering accordingly, but you were limited in terms of how useful it could be. Any granular demographic data had to be assumed based on the store itself and this didn’t allow for much nuance.

The modern loyalty programs, like the one that Tesco runs, offer a much more sophisticated set of data that is incredibly valuable for product development, planning, and demand forecasting. By tying each purchase to a specific customer’s card, Tesco gains a range of new insights into purchasing behavior and they can arrive at a much more granular understanding of what is actually happening in their stores.

Here are some of the ways that they can use this data:

• Demographic Analysis. Tesco can identify specific segments of their customer base and analyze purchasing habits in these unique categories. For example, they can compare their male base to their female base. They can look at how age affects the sorts of items that are purchased. They can look at ethnicity and how that impacts the brands that are most in-demand. All of these slices help to break a massive consumer base into smaller segments that can be more effectively sold into. This affects the marketing messaging, the placement of goods in the store, the outbound sales efforts, and much more.
• Lifetime Value Analysis. When you’re able to track specific customers over time, you gain a lot of insight as to how they engage with your brand and how that plays out over time. Through a more nuanced calculation of a customer’s lifetime value, it informs how they invest time and resources going forward – to maximize this value and build a strong core of loyal shoppers. This is also vital in the other direction when looking for red flags that might point to something that is going wrong along the way. When you can track this effectively, you’re in a much better position to make long-term strategic decisions that are data-driven and attached to the real-time data on the ground.
• Shopping Cart Make-Up . If we move up one level of abstraction, we can analyze the make-up of a customer’s shopping cart to understand the relative associations of different items in the store. When Tesco tracks this over time and matches it to key demographic information, they can start to understand the different use cases and common groups of items that are purchased – allowing them to adjust their offering and store placement accordingly.
• Track the performance of marketing campaigns . When Tesco undertakes various marketing initiatives, it can be difficult to track how well they perform in terms of driving sales in various target markets. The Clubcard loyalty program gives them the data that they need to do this effectively, allowing the company to track whether the marketing message is working with their target audience or if things need to be changed. Once they’ve found a winning formula, they can quickly scale that out across the rest of their stores with a lot more confidence that their investment is going to pay dividends.

Those are just some of the ways that Tesco uses this data to inform their business decisions but hopefully, it gives you a sense of why it’s such an important part of their strategy. The data alone is much more valuable than the discounts that they offer in exchange, making it one of the most impactful revenue generation mechanisms that the company has at its disposal.

• Granular customer data is worth its weight in gold and anything you can do to gather and process it effectively, should be a priority for your organization.

The Price Match Guarantee

The world of grocery stores is incredibly competitive and unless you have a specific niche focus, there is going to be a lot of competition around price. In 2014, Tesco was going through a difficult period and found itself losing ground to some up-and-coming chains that were doing anything they could to undercut Tesco’s prices and win customers away from the incumbent. Tesco realized that they couldn’t afford this to happen for very long and so they came up with what they call the ‘Brand Guarantee Scheme’ to try and mitigate against this trend.

The idea was that if a customer got to the check-out and their basket of ten or more branded items was more expensive than what could be found at a rival store, customers would receive the difference as a discount when they paid. These prices were independently verified on a daily basis and gave customers the confidence that there were no better deals out there.

This simple psychology was enough to retain the vast majority of their regular customers and removed the one major objection that might convince someone to switch to another brand. It didn’t matter whether the amount was large or small, it provided peace of mind that when you bought at Tesco, you were getting the best deal that there was.

What makes this more interesting though is that this wasn’t the first time they had tried to implement a price match system to enable this sort of deal. Previously, they would go through the same process of matching prices but instead of giving the discount right away, they would offer a gift voucher to the value of the difference between the Tesco price and what it cost at another store.

It wasn’t until they listened to customer feedback and heard that many shoppers never got to use those benefits because they forgot about the vouchers, did they realize that they needed to remove the friction entirely [4] . Creating vouchers just added another step into the process that actually was a point of potential error. And even though it was completely within the customers’ control, the impression was that they were losing out.

When the company took that away and chose to implement the discount immediately as they paid, this completely disappeared and customers found the process quite magical. They didn’t have to do anything, yet they knew that if there were savings to be had, Tesco would make sure that they got them.

Achieving this took a lot of technological investment and considerable expense to do the requisite daily market research, but it made the purchasing experience a delight and that’s what keeps customers coming back time and time again. It sends a signal to customers that you’re looking out for them and will do whatever it takes to make their grocery shopping a breeze. To this day, the Tesco Brand Guarantee is one of those components that is severely underrated in terms of the company’s success up to this point.

• The more friction you can remove from the customer journey, the more magical the experience becomes, and the more likely customers are to return.

Aggressive Acquisitions

Another key strategy that typifies who Tesco has been as a company has been its track record of large international acquisitions which looked somewhat impulsive in retrospect. They bought a wide range of different brands in countries like Poland, Japan, India, Malaysia, the Czech Republic, Hungary, Slovakia, and more [5] . In each case, they were hoping to grab a piece of the local market and then apply their technology, data, and operational know-how to rapidly scale the operations.

In most cases, they left the brand as is rather than applying the Tesco name to it, giving them diversification but also underplaying the role that they would play in those specific regions. If you look at their growth over the past few decades, a lot of it can be attributed to these deals – though it’s difficult to know exactly how much value was added in the process. Once each acquisition was absorbed under the umbrella, there are just too many variables to make an educated statement on the overall success rate.

What cannot be denied is that this was a very intentional strategy on their part. By taking the financial power that they had built up in the UK, they were able to go into new markets and take risks on brands, knowing that any losses would be subsidized by the market-leading position back home. This might not be the most efficient way to grow, but it does give you scale and speed when certain acquisitions do provide the value you were expecting.

There is lots of debate about the pros and cons of a strategy like this, but Tesco have stuck with it for their entire history and this land-grab mentality rings true today. It’s only possible when you have a significant war chest and an existing set of operations that can sustain the shocks that come with potential market failures, especially when you are moving as fast as they do.

In the next section, we’ll look at an example of where things went wrong and see what we can learn from it.

Aggressive acquisitions should only be considered when you have a large war chest and you can manage the downside risks as they present themselves.

The Failed US Expansion

Tesco hasn’t always got it right and we can often learn as much from the failures as we can from the success stories. Back in 2006, the company decided that they wanted to enter the United States and try to replicate some of the success they had found in the UK. The strategy was to open a chain of small-format grocery stores in a few states in the West of the USA, specifically Arizona, California, and Nevada. These stores wouldn’t carry the Tesco name but instead were branded as ‘Fresh and Easy’.

In the first five months they opened 60 stores, they had 150 by the end of the first year, and over the next 6 years, they expanded to have over 200 at their peak. However, they found it much more difficult to get a foothold in the market than they had originally anticipated.

It’s not entirely clear as to why the stores failed but it’s likely due to a combination of these factors [6] :

• Unfamiliar Shopping Experience. The Fresh and Easy concept was to mimic the small convenience stores from the UK – offering people a shop where you should shop daily for the food and drinks that you needed. This was a stark contrast to the typical American shopping experience which was to purchase groceries in bulk and shop much more infrequently as a result. This difference in culture meant that they could never really get the traction they wanted, and it didn’t seem to fit the buying patterns of American consumers.
• Economic Recession. The timing of this expansion was really unfortunate because it happened in the middle of the worst economic crisis that the USA (and the world) had seen for a long time. As the sub-prime mortgage crisis took hold, unemployment soared, and the purchasing power of the middle class was significantly harmed. This effect was further concentrated in these Western states and so there was a disproportionate impact on the overall demand. This was not something Tesco could have predicted or planned for, but it’s a good reminder that you don’t operate in a silo. You’re reliant on economic conditions around you to sustain whatever operations you’re involved in.
• Misaligned Product Offerings. The one common criticism that the roll-out faced was that the store focused too much on ready-to-go, microwaveable meals – something that was very popular in the UK but had less buy-in across the USA. When it came to convenience food, the US market was much more comfortable with fast-food outlets and that meant that the demand for the Fresh and Easy offering wasn’t as strong as it could have been.

As always, these reasons are purely anecdotal and it’s not entirely clear what role they played, but the key learnings were that you need to deeply understand the psychology and the buying behavior of a new target market before you enter it. If you don’t, you place the entire project at risk and this can have drastic consequences financially as well as from a reputational perspective.

Tesco had reportedly lost around $2bn when they decided to pull out of the country in 2013 and they’ve never gone back. They continue to focus on the UK market which they know very well and select other European and Asian customer bases which provide some diversification.

• When you’re entering a new market, it’s critical that you understand the nuances and psychology of the customers in that new segment. Without this, you might miss the mark and suffer significant financial damages.

Tesco remains one of the most well-known grocery store brands worldwide and their ability to combine retail dominance, strong logistics capabilities, and sophisticated use of customer data is what will be the foundation that they build their future on.

They face many challenges in the year to come as more and more customers shop directly from brands, but the company is well aware of that and is doing all that they can to pivot the company effectively for this modern paradigm shift. In this strategy study, we’ve aimed to highlight some of the key areas that they’re focusing on with the hope that you can learn from them and apply them to your own context.

As a quick refresh, here are those main takeaways from the Tesco story:

• Aggressive acquisitions should only be considered when you have a large war chest, and you can manage the downside risks as they present themselves.

Remember to take the necessary time to understand the customer context, leverage the power of data, and invest in sustainability so that you can remain relevant for decades to come.

Technology and Operations Management

Mba student perspectives.

• Assignments
• Assignment: Digitization Challenge

Tesco: A digital transformation

Tesco is the leading grocer in the UK, accounting for 25% of all grocery sales offline and 43% of all grocery sales online [1]. In the last 15 years, Tesco has digitally transformed their customer experience, business model and operating model through investments in a state-of-the-art website with click-and-collect functionality, a digitalized in-store experience and a data-driven customer loyalty platform.

How is Tesco using technology to differentiate their Business and Operating Model?

Tesco has continually been investing in technology to develop an omnichannel customer experience and to maintain a competitive edge in an increasingly digitized UK grocery landscape. Three technological advancements that have created opportunities, as well as some challenges, for Tesco have been:

• Moving from ‘bricks and mortar’ to ‘bricks and clicks’ with the emergence of Tesco Direct, an online grocery platform with ‘click-and-collect’ functionality

In the early 2000s, the UK was prime for online grocery shopping and home delivery due to high technology adoption rates and areas of high population density. In 2000, Tesco was quick to respond to this opportunity, adapting their business model by establishing an online grocery channel, ‘Tesco Direct’ (Exhibit 1) [2]. By 2006, online sales were rapidly growing (CAGR of 23%) and in order to meet fulfilment demands, Tesco augmented their operating model by investing in ‘grocery dotcom centres’ [3], warehouses solely for online order fulfilment purposes equipped with innovative ‘goods to person’ picking technology (Exhibit 2) [4]. In 2011, to offer further convenience to customers and to improve business model profitability through lowering home delivery costs, Tesco led the competitive pack by offering an omnichannel ‘click and collect’ function, whereby customers placed orders online and collected bagged groceries at a collection point of their choice. Despite revenue upside, the shift to a ‘bricks and clicks’ omnichannel offering came with challenges for Tesco’s operating model: heavy investment in development of an online platform, investment in ‘grocery dotcom centres’ (approximately £1.5-3.5M per warehouse) [5], investment in a home delivery labour force and supply chain ordering difficulties due to inaccurate forecasting of online grocery orders given a lack of historical data.

Exhibit 1: Tesco Direct online website [2]

Pathways to Just Digital Future

Exhibit 2: State of the art goods-to-person picking technology [6]

• Implementation of a digitalized in-store experience

To improve the efficiency of Tesco’s operating model, Tesco invested in digital in-store initiatives. ‘Scan as you shop’ handheld devices (Exhibit 3) and self-check-out stations (Exhibit 4) were placed adjacent to the usual employee manned check-out stations to provide customers with the technology to perform the check-out function without involvement from Tesco employees [7]. From a business and operating model perspective, this results in efficiency cost savings as fewer employees are required to perform manual check-out [7]. However, self-checkout has not come without challenges – the lack of employee supervision has led to significant levels of fraud for Tesco (approximately ~£8M per year) [8]. Tesco is combating this thievery through digital receipt technology and specialized cameras at self-checkout stations to alert staff real-time to ‘irregular’ customer scanning activity [8].

Exhibit 3: Scan as you shop handheld device [9]

Exhibit 4: Self Service Checkout [10]

In addition, in-store video cameras, such as the ‘broccoli cam’ (Exhibit 5), detect when fruit and vegetable trays in the fresh foods aisles are depleted, sending instant messages to the shop-floor employees for immediate replenishment [7]. Electronic shelf-edge labels (Exhibit 6) circumvent the need for Tesco employees to change 5-10 million paper labels monthly, freeing up valuable employee time to focus on serving customers [7, 11]. Moreover, electronic shelf-edge labels allow for instantaneous price-changes throughout a given day, allowing Tesco to implement promotional prices at a moment’s notice. Finally, employees are equipped with portable smart badges which, upon scanning an item, provide employees with information on stock levels and further product details, allowing shop floor employees to answer customer queries live [7].

Exhibit 6: Electronic shelf edge labels [7]

• Development of Tesco Clubcard – a sophisticated data-driven customer loyalty scheme

The Tesco Clubcard loyalty scheme tags a unique customer ID to every purchase, resulting in the amalgamation of millions of customer purchasing data points [13]. Tesco leverages big data analytics and algorithms to adapt the supply chain and product offering to purchasing trends, predict future customer purchasing habits and generate personalized online and offline discounts [14]. This has created opportunities for Tesco’s business and operating model as approximately 16.5 million customers subscribe to Clubcard in the UK, driving greater customer lifetime value and loyalty through repeat purchases due to personalized discounts and allowing greater accuracy into forecasting customer demand by region and product category [5]. What additional steps Tesco should consider implementing?

Moving forward, Tesco needs to leverage smartphone technology to digitally innovate the in-store customer experience by equipping customers with knowledge and personalization in-store. For example, the existing Tesco App could be expanded provide a functionality to help customers locate specific items within superstores and to replace the ‘scan as you shop’ handheld devices for a seamless digital experience using digital wallets. This could create an operating model opportunity by further decreasing in-store headcount and costs. Finally, Tesco could overcome the difficulties users face scanning barcodes in self-checkout machines by utilizing innovative Toshiba technology which no longer requires barcodes [15].

[766 words excluding exhibits]

References:

[1] Planet Retail, www1.planetretail.net/, accessed November 2016

[2] Tesco Direct website, http://www.tesco.com/groceries/ , accessed November 2016

[3] ‘Tesco goes into the darkness’, Retail Gazette, http://www.retailgazette.co.uk/blog/2014/01/42030-tesco-goes-into-the-darkness , accessed November 2016 [4] ‘Insight supermarkets dark stores’, The Guardian, https://www.theguardian.com/business/shortcuts/2014/jan/07/inside-supermarkets-dark-stores-online-shopping , accessed November 2016 [5] Tesco annual report, https://www.tescoplc.com/media/264194/annual-report-2016.pdf , accessed November 2016

[6] Tesco ‘goods to person’ picking image,   http://www.expo21xx.com/material_handling/13440_st3_conveyor_elevator/default.htm , accessed November 2016~ [7] In-store innovation at Tesco, Tesco PLC presentation by CIO Mike McNamara, https://www.youtube.com/watch?v=noa4SmYhjTA , accessed November 2016 [8] ‘Tesco trials digital receipts and self scanner tech that aims to reduce theft; Marketing Week, https://www.marketingweek.com/2016/10/21/tesco-trials-digital-receipts-and-self-scanner-tech-that-aims-to-reduce-theft/ , accessed November 2016 [9] Tesco scan as you shop image, http://www.tesco.com/scan-as-you-shop/i/diagram.png , accessed November 2016

[10] Tesco self-check out image, https://www.engadget.com/2015/07/30/tesco-automated-checkout-voice/ , accessed November 2016

[11] ‘Tesco is back’, Forbes, http://www.forbes.com/sites/kevinomarah/2016/04/14/tesco-is-back/#5839eaca1c64 , accessed November 2016

[13] ‘Clubcard built the Tesco of today but it could be time to ditch it’, The Telegraph, http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10577685/Clubcard-built-the-Tesco-of-today-but-it-could-be-time-to-ditch-it.html , accessed November 2016 [14] ‘Tesco: how one supermarket came to dominate’, BBC News, http://www.bbc.com/news/magazine-23988795 , accessed November 2016 [15] ‘New Toshiba supermarket scanner does away with need for bar codes’, Digital Trends, http://www.digitaltrends.com/cool-tech/new-toshiba-supermarket-scanner-does-away-with-need-for-bar-codes/ , accessed November 2016

Student comments on Tesco: A digital transformation

I completely agree with the idea of Tesco using technology to enhance the customer’s experience in the store. I also think that Tesco’s biggest advantage is the vast trove of data it is now collecting on shoppers through its mobile app and loyalty program. There are benefits to both the brand and consumer of Tesco having this data.

On the consumer side, Tesco can use this to enhance the customer experience, as you mentioned above. For example, since Tesco knows what a shopper has purchased, and how frequently, on average, either that shopper or similar shoppers replace a specific item, Tesco could use this to remind shoppers to buy something that they may be running low on. They can also use this to delight shoppers by suggest recipes using things they’ve purchased or offering savings on things they might want to try. They will need to handle this carefully as to not venture into “creepy” territory.

On the brand side, Tesco can unite the data from the POS and mobile device to understand which products a shopper was considering, but did not ultimately purchase. This information is extremely valuable to brands and can help them target shoppers in a way that maximizes their spend.

Thanks for a great post! It’s interesting to see how advanced Tesco is compared to US grocery retailers, especially with its online delivery platform. I think the biggest advantage for Tesco here is the data they have been able to collect with its loyalty program. I agree with Katherine that the next step is creating personalized communication at the customer level to enhance the customer experience and increase traffic in stores. My concern here is Tesco’s ability to retain strong margins. Grocery retailers already face low margins, and I’m curious to know how these investments have impacted its performance.

Wow – this is so interesting. I had no idea that Tesco was doing so much…I especially love the Broccoli cam!

One concern I have is how whether consumers actually value all these additional digital applications. A Harvard Business Review article from 2014 (“Tesco’s Downfall is a Warning to Data-Driven Retailers” [1]) discussed Tesco’s declining performance despite all the investments they had recently made in digital technology and data analysis. They quoted a Telegraph article which said “…judging by correspondence from Telegraph readers and disillusioned shoppers, one of the reasons that consumers are turning to [discounters] Aldi and Lidl is that they feel they are simple and free of gimmicks. Shoppers are questioning whether loyalty cards, such as Clubcard, are more helpful to the supermarket than they are to the shopper.”

As a consumer I would agree…although the products discussed above sound interesting…how much do value do they really provide for myself as a shopper?

[1] https://hbr.org/2014/10/tescos-downfall-is-a-warning-to-data-driven-retailers

Great read CC! It’s amazing to know that a 100-year-old retailer such as Tesco has been investing capital and innovating to stay competitive in the digital age. I loved the simple yet far-reaching functionalities of the innovations you mentioned, especially ‘the broccoli cam’ and the electronic shelf labels.

It is well known that Clubcard was pivotal in establishing Tesco as a dominant player in UK [1] but it might be time to update the way it works. With the advent of smartphones, most consumers have their loyalty programs on their phones, with easy real time access to their benefits and rewards. Customers are also happier

Tesco also has a huge potential in updating its supply chain through digital initiatives. More and more firms are relying on technologies such as Sensors & geolocation, robotics, big data and cloud services to gain supply chain efficiencies and cost savings. [2] Things are clearly working in Tesco’s favor as they enjoy fastest growth in three years as Aldi and Lidl slow [3]. Hope they realize the huge potential that digitization has to offer and keep evolving

[1] http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10577685/Clubcard-built-the-Tesco-of-today-but-it-could-be-time-to-ditch-it.html

[2] https://www.atkearney.com/documents/10192/6500433/Digital+Supply+Chains.pdf/a12fffe7-a022-4ab3-a37c-b4fb986088f0

[3] http://www.telegraph.co.uk/business/2016/11/15/tesco-enjoys-fastest-growth-in-three-years-as-aldi-and-lidl-slow/

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Please note you do not have access to teaching notes, retail multinational learning: a case study of tesco.

International Journal of Retail & Distribution Management

ISSN : 0959-0552

Article publication date: 1 January 2005

This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process.

Design/methodology/approach

This research draws on a dataset of 62 in‐depth interviews with key executives, sell‐ and buy‐side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion.

The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or “shocks” in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step‐by‐step incremental approaches to expansion.

Research limitations/implications

The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations.

Practical implications

This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self‐reflection seriously.

Originality/value

The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process.

• International business
• Multinational companies

Palmer, M. (2005), "Retail multinational learning: a case study of Tesco", International Journal of Retail & Distribution Management , Vol. 33 No. 1, pp. 23-48. https://doi.org/10.1108/09590550510577110

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Copyright © 2005, Emerald Group Publishing Limited

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Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

• international business
• multinational companies

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• 10.1108/09590550510577110

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• Retail Business & Economics 100%
• Multinationals Business & Economics 75%
• learning Earth & Environmental Sciences 72%
• globalization Earth & Environmental Sciences 43%
• Internationalization Process Business & Economics 28%
• international distribution Earth & Environmental Sciences 23%
• emerald Earth & Environmental Sciences 17%
• Internationalization Business & Economics 15%

T1 - Retail multinational learning

T2 - a case study of Tesco

AU - Palmer, Mark J.

N2 - Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

AB - Purpose - This article examines the internationalisation of Tesco and extracts the salient lessons learned from this process. Design/methodology/ approach - This research draws on a dataset of 62 in-depth interviews with key executives, sell- and buy-side analysts and corporate advisers at the leading investment banks in the City of London to detail the experiences of Tesco's European expansion. Findings - The case study of Tesco illuminates a number of different dimensions of the company's international experience. It offers some new insights into learning in international distribution environments such as the idea that learning is facilitated by uncertainty or "shocks" in the international retail marketplace; the size of the domestic market may inhibit change and so disable international learning; and learning is not necessarily facilitated by step-by-step incremental approaches to expansion. Research limitations/implications - The paper explores learning from a rather broad perspective, although it is hoped that these parameters can be used to raise a new set of more detailed priorities for future research on international retail learning. It is also recognised that the data gathered for this case study focus on Tesco's European operations. Practical implications - This paper raises a number of interesting issues such as whether the extremities of the business may be a more appropriate place for management to experiment and test new retail innovations, and the extent to which retailers take self-reflection seriously. Originality/value - The paper applies a new theoretical learning perspective to capture the variety of experiences during the internationalisation process, thus addressing a major gap in our understanding of the whole internationalisation process. © Emerald Group Publishing Limited.

KW - international business

KW - learning

KW - multinational companies

KW - retailers

UR - http://www.scopus.com/inward/record.url?scp=18844441797&partnerID=8YFLogxK

UR - http://www.emeraldinsight.com/journals.htm?articleid=1464111&show=abstract

U2 - 10.1108/09590550510577110

DO - 10.1108/09590550510577110

M3 - Special issue

SN - 0959-0552

JO - International Journal of Retail and Distribution Management

JF - International Journal of Retail and Distribution Management

Case Study: Tesco

Tesco is a British multinational groceries and general merchandise retailer with its headquarters in the United Kingdom. Not only is Tesco one of the most valuable brands in the UK, but it is also the sixteenth most valuable retail brand worldwide as of 2021. In the UK, Tesco is the leading grocery retailer with a consistent share of over 27 percent of the market and is classed as one of the ‘big four’ supermarkets.

​The executive team for Tesco is based across Ireland, Asia and Europe with all functional team leads reporting to CEO, Ken Murphy. In 2018, Natasha Adams, then CPO and now CEO Tesco Ireland, attended Wavelength’s immersive learning study tour, Wavelength USA 2018 alongside 20 other exec level leaders from different sectors/continents, and in 2019 attended our bespoke ‘Silicon Valley Immersion’ with fifteen members of the Tesco Executive team.

Between 2014-2021 under the leadership of Sir Dave Lewis, the Tesco leadership team orchestrated a spectacular turnaround, resulting in a 34% surge in profits. However, then, as now, the retail landscape was under intense pressure as consumer behaviours changed, which has had a profound impact on the way in which people shop and eat.

Mindful of the pace of change and increasing customer demand, Tesco needed to pay serious attention to how it was innovating to remain relevant in this fast-paced, disruptive environment. How could they create the necessary conditions to use innovation as their catalyst for growth?

Wavelength were delighted that Tesco thought of us as their ideal partners in their journey towards embedding innovation in their strategy and outlook.

Silicon Valley Immersion Trip

“As a leadership team and as an organisation as a whole, we had to ask ourselves some tough questions. How could we collectively open our minds to innovate in a different way and think about innovation in the longer term? We needed to understand and feed off the big disruptions happening globally and specifically within the retail market,” commented Natasha Adams, former CPO and currently CEO, Tesco Ireland.

“Having attended the Wavelength USA trip the year before, I saw very clear synergies between that experience and the experience we wanted to create in the Tesco Silicon Valley Immersion trip. It was an opportunity to do something bespoke to focus on strategically important key themes.”

Tesco were seeking some very clear outcomes – namely, to change individual leaders’ frames of reference, mindset and expectation of innovation in their individual areas of the business. They wanted to stimulate a collective disruption around what the business was doing – and still needed to do – to fulfil their overarching strategy; all whilst remaining relevant and at the forefront of retail innovation.​

“We wanted to answer the question: ‘how do we become an innovative business where innovation flourishes to the advantage of our customers?’ This trip was about getting the stimulus to start that journey,” added Natasha.​

The bespoke Silicon Valley Immersion trip that Wavelength created for Tesco in 2019 was a world-class, unique three days packed with stimulus and encounters with the innovators, the disruptors and the enablers from across the Valley. The trip was curated around Tesco’s key strategic themes: food, loyalty, data, future of payments and AI.

Hosts included Silicon Valley Bank, Salesforce, Grove Collaborative, Starship Technologies, Andreesen Horowitz, Mayfield and a unique special event with a range of Silicon Valley entrepreneurs, commentators and thought leaders.

Tesco Leaders' Event - Bringing Silicon Valley To London

Following the success of the bespoke Silicon Valley trip, Wavelength supported the next stage of the Tesco Innovation journey by designing a bespoke experience for the group which would recreate and build upon their Silicon Valley Immersion. This formed part of the Tesco October 2019 bi-annual two-day Leaders’ Event, which brought together 50 top global Tesco leaders.

Natasha was keen to involve elements from across the Silicon Valley programme in the Leaders event, with the aim of broadening the level of awareness for the need to innovate differently.

Experience and Results

For Natasha, the highlights of the Silicon Valley Immersion programme were in its breadth and diversity of content, and the top-notch quality of conversations.

“The openness and willingness of the host companies to engage with the Tesco Group meant that the brief for the trip was 100% met. And the real highlight was that the trip stimulated the disruption conversation and challenge we wanted and needed to move forward with our strategic plans” she said.

The participation of the Tesco top team in Wavelength programmes ignited serious change across the company.

As a direct result, Tesco completely re-examined and relaunched their approach to innovation – culminating in September 2020 with their launch of ‘Tesco Red Door’, their new approach to disruptive innovation. They invite innovators with new products, ideas, or emerging technologies with the potential to cause disruption in the future to contact this Group Innovation Team.

This team is now a single point of contact, responsible for quickly evaluating ideas, supporting partners to access Tesco, and helping them to develop and implement their ideas.

This team enables start-ups with products and services that could step change Tesco’s business to partner with them whilst the ‘mothership’ focuses on incrementally increasing service delivery to 24 customers every week. Current pilots include partnering with:

• Manna to deliver groceries by Drone,
• Turing to use AI to transform product development,
• WhyBuy offering the opportunity for customers to access products and services without the cost of ownership.

A new role has also been created – Group Innovation Director. This role reports directly to the CEO and has a small working team with 100% backing from the executive team.

Smaller outcomes, but no less important, are that the executive team now have a markedly different perspective, connecting with entrepreneurs with whom they have built – and continue to build – key strategic partnerships.

What SAGA said

You managed to do that difficult thing of getting people to think more broadly about their profession, sharing fresh thinking from other companies and weaving this into a stimulating and entertaining narrative – great result!

Ala’a Eraiqat Group Chief Executive Officer & Board Member Abu Dhabi Commercial Bank

Dave did a thorough job of understanding ADCB journey towards Service Excellence, where we were, and what our ambition is. Dave tailored his speech in line with ADCB’s Service Ambition and illustrated the service road map beautifully to the audience. His speech was a catalyst that has reignited our leaders passion for service excellence, which is clearly evidenced by the increase in the number of change initiatives that have been kicked off and successfully implemented since the event. Would definitely recommend Dave as a speaker to help put to the customers and the employees back at the top of the agenda where it always belongs.

Alain Moffroid, Regional Managing Director Europe, Rentokil

Thank you for the brilliant session you delivered. We have received extremely positive feedback and it was a key contribution to the success of the two days. Both content and delivery were truly excellent, congratulations!

Alan Webber, Former Managing Editor, HBR & Co-Founder, Fast Company Magazine

If you have a chance to work with Steve Cadigan - for any reason at all - grab it! You will learn a lot. You will enjoy the experience. You will benefit from knowing and working with Steve in ways large and small. And it’s not just about the work. It’s about what kind of person Steve is. Trust me: you want to work with Steve.

Alexandra Humphries, Group Learning and Development Manager, Rentokil Initial

Working with Wavelength and their speakers was really easy. Sarah helped us shortlist a number of different speakers that were suitable for our event. Tokunbo was a great speaker, he listened to our needs about the event and what we wanted to achieve. His delivery was fantastic and we received great feedback on the session. Tokunbo spoke about the importance of embedding a long-term strategy that celebrates difference, of developing a culture of mentoring, championing and sponsorship, and that excellence is everywhere - and how employees should find it and then nurture it.

Alexandra Pierce, Group Head of Organisation Development & Culture, Aldermore Bank

I feel grateful, inspired and humbled by the incredible work of Alder Hey Innovation led by Iain Hennessey and his team. Their customer obsession, outside the box thinking and bravery in pushing the boundaries of technology to save the lives of children faster and better is refreshing and inspiring. Aldermore Bank shares a unique connection in the name, which symbolises strength, confidence and determination. I’m really proud to be part of this business and am filled with hope for how we can take and implement learnings from Alder Hey to create more value for our customers.

Alice Webb, CEO & Co-President, Mercury Studios, Universal Music Group

Aravind is an inspirational example of how to do good business and do good at the same time. This trip is built in that image, feeding your brain and your soul in equal measure. I can’t recommend it highly enough. The impact will stay with you for years!

Anonymous Survey – Corporate Respondent

For me, the most significant impact has been a personal one. I have never felt more inspired by the experience and many have observed a huge lift in my confidence and leadership presence.

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• Adapting to COVID-19: the Tesco story

quarterly issue 2

Author: ICAEW Insights

Published: 17 Jul 2020

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Alan Stewart from Tesco explains how his organisation’s business model responded to the challenge of COVID-19.

“A challenge like no other” is how Alan Stewart, Chief Financial Officer of Tesco, describes COVID-19. “Our business probably changed more in the couple of months following the outbreak than in the whole of the last 10 years,” Stewart says. “The pressure was felt across all our teams and I’m so proud of the way our colleagues have responded so quickly and selflessly to put our customers first.”

Tesco’s finance team played a critical role in the company’s immediate response to the crisis, working with colleagues to support the rapid implementation of vast operational changes. The business more than doubled its capacity for online grocery shopping – in April, it became the first UK retailer to fulfil one million online grocery orders in a week.

At the peak of the crisis, Tesco recruited almost 50,000 new temporary staff to support its workforce already on the shop floor, in distribution centres and working as delivery drivers. It wasn’t just behind the scenes that Tesco’s finance team was making a difference, however. Team members also took to the shop floor.

“Every Christmas, we ask colleagues from the office to support with store shifts at a time of increased customer demand,” explains Stewart. “In the initial few weeks of the COVID-19 crisis, we again asked and the response was fantastic, with so many colleagues in finance and across all teams ready and willing to help out where the pressure was greatest. I’m sure we’ll do more of this in future,” he says.

Like many around the country, one important change that the finance team made in the early days of the crisis was a shift to remote working. The transition went smoothly, largely because the organisation’s culture was already supportive of the practice. “In the finance team, we take a very open approach to flexible working to promote a better work-life balance,” says Stewart. “This meant we were already well versed in the technology for remote working and our colleagues have been able to collaborate seamlessly.”

Reflecting on one notable change, he goes on: “The key lesson has been ensuring we communicate well and show empathy towards one another. We now have shorter, but more frequent, conversations. This enables everyone to remain focused on the priorities, without needless meetings taking place.”

While the boom in online groceries has generated sales for Tesco, the pandemic has also led to significant additional costs, particularly in payroll. “It is our role to both support and challenge our colleagues in the wider business to ensure that we remain disciplined in our approach to costs and cash,” explains Stewart.

The UK faces a very uncertain economic outlook in the near term, yet people still need to eat. “The finance team plays an essential role in providing the right insights on how our customers are shopping, which helps to inform the decisions the business makes,” says Stewart. “Tesco usually serves around 80 million customers every week, which means our finance team can help to drive change on an incredible scale.”

• Adapting to COVID-19: the Jacobs story
• Cyprus’ financial response to COVID-19
• COVID-19 is changing the way global supply chains work
• The UK’s financial response to COVID-19

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How Tesco virtually created a new market on a country's lifestyle

South koreans have amongst the longest working hours in the world. uk's giant retailer sought to turn this to its benefit..

• Print Edition: Feb 15, 2015

Executive Summary

South Koreans have amongst the longest working hours in the world, with young, upwardly mobile executives often too busy to go shopping for grocery at a traditional store. The UK's giant retailer, Tesco, sought to turn this disadvantage to its benefit. It introduced "virtual stores", which are essentially a display of products on walls of metro stations and bus stops. Commuters, especially the tech-savvy, ultra-busy lot, could scan the QR codes of the products on display with their smartphones, and place their orders even as they waited for their trains or buses. This case study looks at how Tesco "virtually" created a new market based on a country's lifestyle.

In 2011, when domestic sales of the UK's retail giant Tesco slumped, it fell back on its second-largest market, Asia, which accounted for 30 per cent of its total profit. Tesco's success in Asia, and specifically in South Korea - currently its largest market outside the UK - is based on its ability to adapt to the local consumer.

Tesco's expansion into Asia has been an important focus for the company since the late 1990s. Following its acquisition of Thailand's Lotus in May 1998, the company announced a 142-million investment in South Korea in March 1999 by partnering with Samsung to develop hypermarkets. Through its tie-up with Samsung, Tesco made a localisation effort to adapt its Homeplus stores to the local consumer.

The latest example of this localisation was the launch in 2011 of its first virtual store, located in a Seoul subway station, an idea based on the observation that the typical Seoul commuter did not have the time to shop at her nearest brick-and-mortar Homeplus store.

The Virtual Store

The virtual stores are set up in public spaces, most often in subways and bus stops with high foot traffic and frequented daily by tech-savvy commuters. This is how such stores work:

- Interested customers download the Homeplus app into their smartphones.

- They then use their smartphones to scan the QR codes of the products they want to purchase. The posters in the virtual stores are designed to resemble the actual aisles and shelves of a regular Tesco store, making the experience very user-friendly.

- The scanned products are stored in the customers' online shopping basket, who pay online once their order is completed. Homeplus reported that the majority of the orders are placed at 10 am and 4 pm, when people are commuting to and from work.

- Customers schedule a time for home delivery. Same-day delivery is the norm, so that customers can get their products by the time they get back home from work.

The virtual store has been a huge success with commuters and drove over 900,000 app downloads in less than one year, making the Homeplus app the most popular shopping app in South Korea. Online sales increased 130 per cent since the introduction of the virtual stores and registered app users increased by 76 per cent. In February 2012, Tesco Homeplus announced it was extending the virtual store concept to 20 new locations across the country. Today, there are 22 Homeplus virtual stores in South Korea, and the brand is the country's No. 1 online retailer.

Understanding the Consumer

South Korea, a country of around 50 million people, is the fourth-largest economy in Asia and the 12th largest in the world. Compared to other Asian countries, South Koreans generally have higher levels of education, higher average household income, and better living standards. Over the past few decades, the country has built itself up with its largest resource - people - and has achieved rapid economic growth through exports of manufactured goods. It is now a major producer of automobiles, electronics, steel and high-technology products such as digital monitors, mobile phones, and semiconductors.

Over the past decade, South Korea has advanced tremendously and has been shaped by constant innovation, technology and westernisation. In today's world, shopping habits and behaviour of South Korean consumers are impacted by several key factors.

Extensive use of technology/connectivity: According to a report by McKinsey & Co., South Korea is one of the most advanced countries in terms of broadband penetration, and has more than 10 million smartphone users. In other words, one in five South Koreans use a smartphone. Additionally, according to Nielsen, households in South Korea are making six per cent fewer shopping trips. When they do shop for products, an increasing number of South Koreans go online.

Long working hours/busy lifestyle: Although the average annual hours worked per person in South Korea is declining, the country still comes out top among OECD countries with 2,193 hours. This is perhaps unsurprising, as the work ethic and lifestyle of South Koreans get shaped at a young age. According to the BBC, South Korean parents spend thousands of pounds a year on after-school tuition on an industrial scale. There are just under 100,000 hagwons or private academies in South Korea and around three-quarters of Korean children attend them.

Travel time on public transportation: South Koreans spend a significant amount of time on public transportation, predominantly between home and work. What has helped is that public transportation is reliable and inexpensive, and is the fastest and most efficient way to get around.

The introduction of Tesco's virtual stores in subways made use of time spent by commuters waiting for public transportation, allowing buyers to use the little time they have available for grocery shopping. Not only did this change the way buyers shopped, it also increased the potential market for Tesco. These buyers may not have otherwise had time to go grocery shopping between their personal and professional lives, opting to buy take-out instead.

All of this implies that grocery customers in South Korea are more time-poor and less price-sensitive. They value convenience and technology to accommodate their busy lifestyle.

Tesco's Value Proposition

Customer segmentation: When you enter a new market/geography, companies need to understand and analyse consumer behaviour trends, including shopping habits and purchasing behaviour, to identify who the valued customers are and how they behave.

Adaptation of value proposition: If the needs, attitudes and lifestyle of the company's "value customer" are different in the new market/geography, the company needs to adapt its value proposition and value network across the entire supply chain.

Power of technology in traditional industries: Technology has a disruptive power in traditional industries, such as retailing. In this case, the predominance of smartphones in Korea allowed Tesco to boost its revenues through an innovative approach.

Innovative marketing: The way marketing can be used innovatively to target captured audiences (such as commuters waiting for the next train in a station).

Brand Extension: One option that Tesco Homeplus may have considered in order to take advantage of is to create a new brand for the virtual stores that would have remained independent from the Homeplus brand and, therefore, limited the risk to the Homeplus brand by increasing prices.

EXPERT VIEW

RETAILERS STRUGGLING TO DEVELOP COMPETENCIES TO SUCCEED GLOBALLY

Despite the popularity of globalisation in retailing, most retailers are still struggling to develop competencies to succeed in global markets. To what extent should the "original" format and merchandise be adapted is a major issue. Walmart learnt this the hard way when its initial entry into China had the wrong merchandise. On the other hand, Mexican customers were disappointed when they did not find enough imported US merchandise in the Walmart stores. Toys R Us has learnt that there are differences in consumption patterns. The Japanese demand electronic toys, other Asian consumers demand educational toys, Europeans favour traditional toys, while American kids prefer television- and movie-endorsed toys.

The Tesco case in South Korea demonstrates that despite the company's many problems, it has been a leader in developing multichannel solutions. With consumers preferring the convenience and selection of e-commerce, traditional brick-and-mortar retailers are challenged to address how to serve this customer profitably. The home-delivery option is much valued by consumers but cannot be as profitable as the traditional store. Therein lies the dilemma.

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9.38 tesco plc.

Though still still essentially UK-based, Tesco has diversified geographically and into widely-separated market sectors: retailing books, clothing, electronics, furniture, petrol and software, financial services, telecom and Internet services, DVD rental, and music downloads.{10}

Competition

Tesco is an aggressive company benefiting from Internet technologies, as indeed are its main UK rivals. {9} Sainsbury's and Morrisons cater for more affluent customers, and Asda focuses on the more cost-conscious. Market share as of 2008 was: Tesco 30.5%, Asda 16.9%, Sainsbury's 16.3, and Morrisons 12.3%.{10} A cost breakdown is given below. {9}

Tesco has built its fortune on two business elements: an unrelenting drive to provide value to customers, and continued investment in the latest technologies — today customer relationship management, Internet and mobile phone shopping, and supply chain management (probably a private industrial network, though details are not available).

Back in 1995, however, Tesco was losing market share, causing Terry Leahy, the new CMO, to reexamine its market position and propose a three-pronged solution: {11}

1. Stop copying Sainsbury's and develop its own strategy. 2. Listen to customers throughout the company, at every level. 3. Offer goods and services as the customer valued, not what Tesco could do (i.e. adopt an outside-in strategy).

Customer Relationship Management

Tesco went to extraordinary lengths to understand its customers and add value to their lives.

1. Marketing was aimed at sensible, middle-class families, from its slogan 'Every little helps' to its no-frills website. {11} {14} 2. A loyalty card ('Clubcard') was introduced in 1995, and data subsequently fed into Customer Management Systems. {10} 3. American preferences were studied by embedding staff with US families prior to launching its USA operation in 2007. {11}

Internet Technology

Tesco has been particularly forward-looking. It was one of the first to: {10}

Outlook: Pestel Analysis

A Pestel analysis identifies the forces with most impact on Tesco performance.{9}

Tesco benefited from access to the world's most profitable market of 1.3 billion people, notably by:

1. Britains' joining the European Union, and the inclusion of 10 more countries in 2004. 2. China's entry into the WTO.

The continuing recession has made supermarket customers:

1. More cautious and cost-conscious. 2. More inclined to eat in that go out to restaurants.

As the UK's population changes (especially ages), customers:

1. Tend to eat (and therefore buy) less food. 2. Have become more health conscious, met by Tesco's increased stocking of organic foods. 3. Have been retained by Tesco loyalty programs.

Technological

Tesco were early leaders in Internet shopping, supply chain management and customer relationship management. These continue to be vital today with:

1. Customer loyalty cards and Internet shopping records providing CRM information. 2. Growth of Internet use and broadband access fueling growth in Tesco online shopping. 3. Mobile phone shopping, introduced with Cortexica Vision Systems for Tesco Wines, etc. 4. Supply chain management: rumored to be the world's best, still being extended. {4}

Environmental

Tesco has responded to Government environmental initiatives by:

1. Encouraging reuse of plastic bags. 2. Rewarding bagless deliveries with Tesco's green Clubcard points. 3. Providing practical advice of environmental issues. 4. Adding carbon footprint data to its products.

1. European VAT increases will affect nonfood sectors like clothing. 2. Increase in the UK's minimum wage will increase Tesco operating costs.

Outlook: Swot Analysis

The SWOT {9} analysis regards the UK concentration of business as a weakness, though this is a market Tesco knows well, and which saw further expansion in 2011. {13}

Outlook: Value Chain Analysis

As defined by Lynch (2006), {19} the value chain is the value added at each link in a company's key activities. For Tesco, the values are: {9}

1. Use of leading market position and economies of scale to achieve low costs from its suppliers. 2. Constant upgrading of their ordering system, approved vendor lists, and in-store processes.

Operations Management: 30%

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• Interestingly, Lidl did not bring a likelihood of confusion-based trade mark infringement claim, but a reputation-based claim. The court accepted the extensive evidence of the reputation of Lidl's logos. It held that the Tesco and Lidl logos were similar, despite some containing different word elements. Any differences in word elements did not extinguish the strong similarity conveyed by the logos' backgrounds. The court concluded that the use of the Tesco logos took unfair advantage of the reputation of the Lidl marks, in particular the value proposition conveyed by those marks. It was also detrimental to the distinctive character of the Lidl marks. 
• There was a small victory for Tesco in that it was able to invalidate some of Lidl's trade mark registrations for the wordless mark on the basis that they were applied for in bad faith (as a defensive weapon to use against others and to circumvent the proof of use requirements for registrations more than 5 years old). However, this did not alter the overall outcome of the case. 
• Importantly, at an earlier hearing, the Court of Appeal had held that the objective circumstances raised by Tesco were sufficient to create a rebuttable presumption of lack of good faith such that the burden of proving no bad faith now passed to Lidl. Lidl was not able to explain the rationale for the initial or repeat filings and so its registrations were invalidated (except for a 2021 registration, which survived). 
• Lidl's claim in passing off was passing off as to equivalence rather than trade origin. Lidl was able to successfully argue that a substantial number of customers would be misled to believe that the Tesco Clubcard Price was the same/lower than the Lidl price for the equivalent goods. That mistaken belief would deceive consumers and cause damage to Lidl because price sensitive shoppers would switch from Lidl to Tesco. 
• Lidl also won on copyright infringement. Given the degree of similarity between the logos and the fact that Tesco had access to the Lidl logos, the burden of proving lack of copying passed to Tesco. It was unable to discharge that burden. 

What does this mean for brand owners?

• The case illustrates that brand owners must be careful not to stray too close to their competitors' marks even if those marks consist of seemingly commonplace and banal elements. Simply adding different words to a mark might not be sufficient to avoid a finding of trade mark infringement.
• It also illustrates the importance of creating and maintaining records to justify why particular trade mark applications were filed (to rebut potential bad faith arguments). This is particularly so for repeat filings and where a mark might not be used in the form in which it was registered (including where it might be used as a component part of another mark) or where there are other unusual circumstances.
• Brand owners should not assume that they will be deemed to have filed an application in good faith just because they subsequently use the mark in question. Bad faith and use are different issues. Where there might not have been an intention to use a particular mark at the time of filing, but use is later commenced, a new filing might be merited.
• Protecting component parts of complex marks can sometimes be merited. Careful consideration should be given before any filing particularly as to whether and how easy it will be to prove use and any bad faith angles.

Passing off is not always as to trade origin. It can also be as to equivalence or false endorsement. It is a potentially wide tort that can sometimes go beyond a traditional trade mark infringement claim. This risk should be factored into the trade mark clearance process. 

Copyright can subsist in what some might view as banal logos. Brand owners should keep detailed records as to the genesis of any logo or figurative element of a brand to corroborate lack of copying. The risk of a copyright infringement claim should also be factored into the trade mark clearance process.

Want to know more? 

Trade mark infringement.

Lidl sued Tesco for trade mark infringement relying on a reputation-based claim under section 10(3) of the Trade Marks Act 1994. 

Lidl was able to provide substantial evidence that its marks had a significant reputation for supermarket services in the UK. 

The court considered Tesco's logos to be similar to both Lidl's wordless mark and its mark with text. This was despite the fact that Tesco's logos were nearly always used with words. The court held that visual similarity was key, the logos all being primarily viewed visually by supermarket shoppers. Any differences in word elements did not extinguish the strong similarity conveyed by the logos' backgrounds. Supermarket shoppers would be likely to focus on those backgrounds (the word elements largely comprising of promotional statements or the words Tesco or Lidl). This conclusion was reached by virtue of external reports and customer feedback put forward by Lidl. 

Although confusion was not an element to be proved, there was clear evidence of both origin and price match confusion/association, together with evidence that Tesco's employees also appreciated the potential for confusion, which fortified the findings of similarity. 

Lidl submitted strong evidence (eg surveys and witness statements of consumers) as to the link in consumers' minds between the Tesco logos and the Lidl marks.

The court concluded that the use of the Tesco logos takes unfair advantage of the fame of the Lidl logos, as Tesco benefits from the value proposition conveyed by the Lidl logos. Such use was also detrimental to the distinctive character of Lidl's logos as it would dilute the latter's uniqueness (as evidenced by the fact that Lidl was compelled to undertake corrective advertising).  Accordingly, trade mark infringement was established. 

Trade mark invalidity 

By way of counterclaim, Tesco sought a declaration of invalidity against a number of registrations for Lidl's wordless mark, on the grounds of non-use, non-distinctiveness and/or bad faith. 

Non-use and distinctiveness

The Court dismissed the non-use arguments, finding that the wordless mark had been put to genuine used by virtue of the mark with text, as consumers would (at least in the last few years) consider both iterations as originating from Lidl (applying the case of Specsavers v Asda ). 

The Court also dismissed the non-distinctiveness argument as the evidence showed that the specific combination of simple geometric shapes and primary contrasting colours was memorable and distinctive of trade origin for Lidl's logo. 

Tesco counterclaimed that Lidl had no genuine intention to use its wordless mark registrations and that they had therefore been applied for in bad faith, on the basis that:

• Lidl had applied for the wordless marks as a defensive weapon, solely to use against others and to widen its monopoly
• Lidl had filed successive applications for the wordless marks to circumvent the rules on proving use (so-called ever-greening). 

Importantly, at an earlier hearing, the Court of Appeal had held that the objective circumstances raised by Tesco were sufficient to create a rebuttable presumption of lack of good faith by Lidl such that it was now for Lidl to provide a plausible explanation of its objectives and commercial logic. Those circumstances were the combination of:

• Repeat filings 
• The assertion that Lidl had had no intention, at the time of filing the original wordless application, of using the wordless mark 
• The fact that that Lidl had never used the wordless mark. 

Lidl was not able to explain the rationale for the repeat filings (except for a 2021 registration which therefore survived). The court therefore had no option but to find bad faith and invalidate the registrations. Key findings of the court were as follows:

• A finding of actual use is not sufficient to protect against a finding of bad faith. The fact that a registered mark is later found to have been used as a component part of another mark does not (without more) evidence the existence of the necessary intention to use at the time of filing.
• Lidl's evidence and arguments did not address why the wordless mark was originally filed. Likewise, there was no evidence that Lidl knew or thought that it was using the wordless mark by using the mark with text. That the original wordless mark was filed as a legal weapon was therefore a permissible inference from the evidence. 
• Lidl was unable to explain why later wordless applications duplicated (at least, in part) the goods and services of earlier applications. 
• A 2021 registration for the wordless mark survived since there was evidence that, by that point, Lidl genuinely believed that use of the mark with text also constituted use of the wordless mark as well as evidence that the wordless mark enjoyed its own reputation. The fact that there was a 13-year gap in filings by the time the 2021 registration had been filed also suggested that Lidl did not have an ever-greening strategy by that point.

The case is consistent with previous rulings on bad faith including the EU General Court's Monopoly ruling ( see our article here ). What is interesting is that the burden of proof shifted to Lidl to prove good faith. That was fatal to Lidl and might well be to others who have no records to justify why a particular trade mark application was filed. 

This raises the question of how much evidence the other side must produce for the burden to shift in this way. Clearly, this case was somewhat unusual in that Lidl's wordless logo is a component part of another mark (just as the Specsavers logo and the Levi's red tab). Proving an intention to use it (or proving that Lidl thought that use of the word with text also constituted use of the wordless logo) was always going to be difficult, absent any records. 

Whether the burden of proof would have shifted to Lidl without that factor (ie just on the basis of lack of use and repeat filings or even just one of these) is unclear. Either way, trade mark owners are advised to create and maintain detailed records as to why particular trade mark applications have been filed to help fend off any bad faith allegations. These will be particularly important should the burden of proving no bad faith shift to them. 

The case also illustrates that brand owners should not assume that they will be deemed to have filed an application in good faith just because they have subsequently used the mark in question. Where there was no genuine intention to use a particular mark initially (or there is no evidence as to that intention), then refiling for a mark might be appropriate if there is now a desire to put that mark into use. The subsequent application should be deemed to have been filed in good faith even if the earlier one(s) was/were not. 

Passing off 

Lidl's claim of passing off was as to equivalence (price and value) rather than trade origin. The Court relied on its findings and evaluation of evidence from the trade mark claim. Specifically, goodwill was found because a UK public would recognise Lidl's marks, evincing its reputation as a discount supermarket. 

Lidl was able to successfully argue that a substantial number of customers would be misled to believe that the Tesco Clubcard Price was the same/lower than the Lidl price for the equivalent goods. That mistaken belief would deceive consumers and cause damage to Lidl because price sensitive shoppers would switch from Lidl to Tesco. 

The decision shows the potential scope of a passing off claim. 

Copyright infringement

Lidl's mark with text was considered an artistic work, capable of copyright protection under sections 1 and 4 of the Copyright, Designs and Patents Act 1988. It was treated as a graphic work, which is protected "irrespective of artistic quality" and the Court emphasised that the scope of protection is a question of fact, not degree. 

Lidl's mark was also found to be original, as the act of bringing together the Lidl text with the yellow circle and the blue background was deemed to involve the exercise of intellectual creation, involving the expression of free choice. Indeed, Tesco's own evidence as to the various combinations of apparently basic shapes and colours considered by its own designers demonstrated the creative freedoms in relation to the sign. 

Given the degree of similarity between the signs and the fact that Tesco had access to the Lidl logos, the burden of proof on showing there was no copying passed to Tesco. Unable to discharge that burden, having also failed to obtain evidence from the external design agency which helped create the Clubcard Prices logo, Tesco was found to have copied a substantial part of Lidl’s mark with text, and thus infringed Lidl’s copyright.

This is an important reminder that copyright can subsist in seemingly banal logos and of the importance of having detailed records as to the genesis of any logo or figurative element of a trade mark to corroborate lack of copying. 

This article was co-authored by Kachenka Pribanova.

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Supporting employee financial wellbeing: Tesco Stores

Case study on actions taken to help employees improve their financial literacy and decision-making

Tesco Stores’ financial wellbeing strategy was first launched in 2018. Since then they have continued to evolve the support what they offer to colleagues – to become more financially literate, make better decisions, use the tools on offer, and get into the savings habit.

Organisation: Tesco Stores

Industry: Retail

Size: 280,000 UK colleagues

Interviewee: Natasha Rice – People Director – Group Reward and Recognition

2022 brought cost-of-living worries to the fore, so they launched a range of new initiatives with a regular drumbeat of communications throughout the year. These included:

• To help colleagues maximise their earning potential, they developed Serve, Pick and Fill training, allowing colleagues to become multi-skilled across all operations in store. Coupled with their new Extra Hours Marketplace, this enables colleagues to pick up extra hours/shifts across the entire store. This allows colleagues to supplement their income in a way that suits them, giving colleagues more flexibility, providing variety and increasing job satisfaction.
• Using Deals & Discounts site to highlight, every payday, how this can help save on everyday costs like utilities, car maintenance or replacing essential white goods.
• Pay Advance, launched after a successful pilot, to all UK colleagues enabling them to access earned pay ahead of pay day. This was launched in time for Christmas.
• Enhancing Cycle-to-Work, introducing 12,18, 24-month hire terms, making it more accessible and affordable for hourly paid colleagues, and increasing the limit to £3000, supporting those wanting electric bikes to cut commuting costs.
• Their online Total Reward Statements included a two-minute personalised video showing every colleague how much their pension could be worth, alongside adverts focusing on ways to save.

Our financial wellbeing strategy, as a core pillar of our colleague EVP, began in 2018. This gave us strong foundations when we needed to double down on our efforts in this space in 2022, so that we could best support our colleagues during the cost-of-living crisis.

Our framework is based on 3-pillars of Learn, Borrow, Save. We have continued to develop and evolve the products and resources within the framework based on feedback from colleagues and the current economic environment.

As a diverse business, our strategy must be inclusive, no matter what the income level of a colleague. By using our scale and strategic partnerships, we developed bespoke content and products that are easily accessible wherever you work in our business. 

Another challenge we faced was helping colleagues to feel comfortable to talk about financial wellbeing, and break down the stigma and barriers which currently exist around the topic. We continue to have a regular drumbeat of conversation with colleagues about financial wellbeing to normalise it.

Our colleague demographic means we need a communication strategy that recognises there is not a one size fits all approach to consuming content and that 255,000 colleagues do not have online access at work.  Every 2022 campaign included printed material for our offline population with QR codes giving easy access to on-demand online content on personal devices where available.

We also have a community of Wellbeing Champions who are based on the ground in every location and are upskilled on every campaign, empowering them to deliver key messages face to face and support their peers.

Our financial wellbeing strategy success is measured by our colleague’s interaction with our 3 pillars; how many interact with our educational resources, how many use our benefits to save money every day and for the future, how many choose our pay advance and loan options, avoiding expensive, unsustainable borrowing, the core objective underpinning our proposition.

Since launch in 2018, 215,000 colleagues have visited our financial wellbeing hub, with over 2 million total page views.

In 2022 alone we saw:

• 3,138 loans funded
• over £1.1m of earned pay was accessed through Pay Advance
• increased participation year on year in our Save As You Earn schemes
• a 43% increase in colleague registrations for Deals and Discounts, with £1m saved in 2022
• 850,000 extra hours shifts have been claimed by colleagues since June 2022

Take time to understand and listen to your colleague’s needs to ensure your strategy is helpful. There are a lot of different products and support on the market, but they might not all be suitable for your workforce.

We gained a lot of insight from piloting new ideas with a smaller population of our colleagues before full roll out, however don’t be afraid to jump straight in if it is the right thing for your colleagues. In most cases with financial wellbeing any support is better than no support and you can continue to evolve and add to your proposition as you go along – you don’t have to wait for everything to be ready at the same time. Don’t be disheartened by a slow burn on some aspects of your strategy, not everything will appeal to all colleagues at the same time, the key is having the support there for colleagues when they need it.

We believe that our financial wellbeing strategy has helped our colleagues with their financial literacy and confidence. Through Learn, Borrow and Save, colleagues can access a wide range of educational material, tools and guides to help them make the right decisions for them as well products to support them at times of need. Our strategy is inclusive to all colleagues and we are continuing to develop and add to it based on feedback from colleagues. Financial wellbeing is a topic which is always on, whilst we have a solid strong foundation of support and products for colleagues currently, we will never have a ‘complete’ proposition because the external environment is continually changing with new areas of support need to be added at the right time. It is really rewarding to be able to see the difference you can make to colleagues with the right support, on such an important topic.

Tackling barriers to work today whilst creating inclusive workplaces of tomorrow.

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Case study on how one organisation implemented a range of pay and benefits measures to support employee financial wellbeing

Case study on how a lunchtime seminar programme is helping employees plan for retirement

Case study on how an employee financial wellbeing survey resulted in free breakfasts

Case study on an award-winning savings initiative to help employees during cost-of-living crisis

MSME Day 2024: Leveraging Power and Resilience of Micro-, Small and Medium-sized Enterprises to Accelerate Sustainable Development and Eradicate Poverty in Times of Multiple Crises

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In its resolution A/RES/71/279, the United Nations General Assembly designated 27 June as “Micro-, Small, and Medium-sized Enterprises Day” to raise public awareness of the tremendous contributions of micro-, small and medium-sized enterprises (MSMEs) to sustainable development. Further, the General Assembly, invited Member States to facilitate the observance of the Day by fostering policy discussions, practitioner workshops, sharing of experiences and business owner testimonials from around the world, to the extent possible, in collaboration with public, private and non-profit organizations.

The 2024 MSME Day offers an opportunity to discuss and exchange ideas on how Key stakeholders, including policy makers, large companies, financial institutions, and the international community can support micro-, small and medium-sized businesses to advance the 2030 Agenda and contribute to achieving the SDGs, including poverty eradication and decent work for all. Moreover, the session will explore ways that MSMEs, a sector that represents over 90 per cent of all businesses globally, can meaningfully contribute innovative solutions to the challenges of our time and drive forward inclusive growth and shared prosperity.

As the sector closest to local communities, MSMEs are essential for creating local jobs, empowering women, youth, persons with disabilities and other groups in vulnerable situations. Commemorating MSME Day is a recognition that this vital sector at the heart of our societies has tremendous potential to unlock critical pathways to accelerate SDG progress across the globe.  

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Monday 24 June 2024 19:54, UK

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Taylor Swift fans have taken to social media to complain at paying hundreds on tickets for her Wembley shows only to end up with a restricted view. 

While the reviews of the show have been glowing, many were less than impressed with ticket sellers failing to say whether certain seats had "restricted" views - which usually makes a ticket a bit cheaper. 

One said...

Another fumed at the blocked view despite the £200 price...

It comes after a fan who saw Swift in Glasgow at the start of the month complained after parting with £680 only to have "a lovely view of a tent"...

Betting tips scrapped on flagship BBC show

BBC Radio 4's Today programme has scrapped its daily horse race betting tips, its host has announced.

Amol Rajan said the "break in tradition" would not affect major race days, with the broadcaster still set to offer tips for the biggest events in the calendar. 

"We will very much continue to cover horse racing, as we do so many other sports, not least through interviews with leading lights in the racing world," Mr Rajan said.

"And we will sometimes continue to broadcast from the big ticket events like the Grand National festival, or Cheltenham Gold Cup week."

Want to earn triple Nectar points?

Sainsbury's is offering the incentive for customers with electric vehicles who choose to charge up with them via their new "Smart Charge" bays. 

From today until 31 August, Sainsbury's customers can collect 3x Nectar points on Smart Charge transactions when they add their Nectar account number before purchase.

To do so, customers need to scan the QR code on the Smart Charge charging unit after they pay and add their Nectar card number on the web page provided. Points will be added to customers' accounts once they have paid.

Getir shareholders back break-up of food delivery group

Investors in Getir, the food delivery group that is abandoning its UK operations, have approved a break-up of the company that will trigger a fresh capital injection of up to $250m (£197.5m).

Sky News has learnt that Getir, which is based in Turkey, held an extraordinary general meeting yesterday at which shareholders backed plans to split it into two independent companies.

Read more of our city editor Mark Kleinman 's exclusive here ... 

Restaurants, cafes and hotels have been told to immediately withdraw meat products dubbed "unsafe" by the Food Standards Agency (FSA).

Hospitality operators in London and South East England were issued the food safety alert for meat supplied by a cutting plant in Swanley, Kent.

"We have alerted Environmental Health, Trading Standards Services and Official Veterinarians to take action to remove meat and meat products manufactured by Block and Cleaver from the market," the FSA said in a statement.

"These products... may not have been produced in accordance with GB food law requirements and therefore may be unsafe."

These products may have incorrect use by dates, are subject to traceability breaches and should not be eaten as they were not prepared in line with food safety and hygiene legislative requirements. 

All of the following products should be withdrawn immediately:

Over the weekend, hundreds of flights from Manchester Airport were cancelled due to a major power cut. 

Passengers flying from Terminals 1 and 2 were told not to go to the airport, while those already inside faced huge delays.

Flights finally started departing this morning, but what are your rights if yours has been cancelled? 

Watch: Travel disruption after Manchester Airport power cut

Here's what you need to know

Your flight is covered by UK law if it departs from a UK airport, arrives at a UK airport on a UK or EU airline, or arrives at an EU airport on a UK airline.

Under UK law, if your flight is cancelled, the airline must either give you a refund or book you on an alternative flight - either with them or a rival airline.

It is up to you whether you still want to travel at that time - or reschedule your holiday for a later date.

If another airline is flying "significantly sooner" than yours is able to offer, you may have the right to be booked onto a rival flight, but this has to be negotiated with the company.

What are the airline's policies?

As well as being covered under UK aviation law, each airline has its own cancellation policy for customers.

EasyJet allows customers to either switch to another flight for free, choose a voucher for the full value of the booking, or request a refund.

Ryanair passengers can either claim a full refund or change to an alternative flight, while TUI passengers with cancelled flights should receive a full refund within 14 days - and you may also be entitled to compensation.

British Airways passengers are offered a full refund, while Wizz Air allows passengers to request a refund or rebook onto the next available flight.

If you have booked through a tour operator or travel agent, they will have their own policies.

What if you've booked a package holiday?

If your flight is cancelled, and you've booked a package holiday, you have the same rights as any other passenger, according to trade association ABTA. 

You also have additional rights regarding the rest of your holiday.

Typically, your travel company will contact you in advance to re-arrange your flights. 

But, if you're at the airport when the flight is cancelled, you should contact your travel company to talk through your options, ABTA said. 

If your flight can't be rearranged and your holiday has to be cancelled, or new arrangements are made that result in a significant change to your holiday, then the travel company must offer an alternative holiday if they can. 

If not, they must offer a refund of the full package price, not just the flight part.

Generally, a change of more than 12 hours on a 14-night holiday is considered a significant change. 

Barclays has announced rate reductions across a number of its mortgage deals, with brokers suggesting more lenders could follow suit in the coming days. 

The high street bank said the new rates will be available from tomorrow. 

Here are some of the deals:

• Two-year fixed deal with 90% LTV and no product fee will go from 5.76% to 5.48%
• Two-year fixed deal with 60% LTV and no product fee will be reduced from 5.13% to 4.88%
• Five-year fixed deal with 90% and a £999 product fee will decrease from 4.90% to 4.85%

Broker and director of R3 Mortgages Riz Malik said borrowers should expect further reductions from other high street lender this week thanks to improving market pricing. 

"Barclays is the first lender of the week to improve selected mortgage products but my suspicion is that it won't be the last," he told Newspage. 

Simon Bridgland, director at Release Freedom, said the deals were "sizzling hot" - and he thinks more lenders will follow this week. 

"Things look set to heat up not just in our skies but in mortgage rates, too. Expect more lower fixed rates to continue to appear in the days ahead," he added. 

Justin Moy, managing director at EHF Mortgages, said the positive move was thanks to Barclays passing on swap rate improvements to customers. 

Edit : A couple of hours after Barclays' move, MPowered Mortgages also announced cuts across its product range.

If you're wondering what swap rates are, you can read our explainer here...

Barcelona will ban holiday apartment rentals by 2028 in a drastic move to tackle soaring housing costs. 

Mayor Jaume Collboni said he will scrap the licences of the 10,101 flats currently approved for short-term rentals, and the properties will go on the market for residents to rent or buy. 

"We are confronting what we believe is Barcelona's largest problem," he said.

The boom in short-term rentals in Spain's most visited city has caused rents to rise by 68% and house prices to increase by 28% in the past 10 years, Mr Collboni added. 

While the move aims to help locals, hotels could also stand to benefit.

The opening of new hotels in the city's most popular areas was banned by a far-left party governing Barcelona between 2015 and 2023, but Mr Collboni has signalled he could relax the restriction. 

The move comes after Madrid announced an immediate ban on new holiday rentals in a bid to tackle over-tourism 

The Spanish capital decided to stop granting holiday rental licences temporarily, with the suspension expected to last until 2025.

Similar restrictions have already been enforced across the Canary Islands, Lisbon and Berlin.

Princess Diana's family home has gone on the market for the first time in 22 years - but interested buyers should note it comes with a £10.95m price tag. 

The four-story property in Mayfair, London, has a reception hall, a drawing room, a library, two bedroom suits with walk-in wardrobes and ensuite bathrooms, and private underground parking. 

If you're worried about the stairs inside such a tall house, don't be -  it also comes with a lift connecting all levels. 

The top floor is a self-contained suite, with a bedroom, sitting room, terrace, dressing room and bathroom. 

There's also two bedrooms on the lower ground floor, accompanied by two bathrooms, another dressing room and a kitchen. 

The house is where Princess Diana was first introduced to the al Fayed family at a lunch party in 1996. 

Her stepmother, Raine Spencer, had encouraged her to get to know the family, including Dodi al Fayed, who she had a brief relationship with until they died in a car crash in Paris in 1997. 

Mrs Spencer was at 24 Farm Street when she was told about Diana's death. 

Since the early 2000s, the house has belonged to the founders of Pyms Gallery in Mayfair, Alan and Mary Hobart. 

But after Mr Hobart's death in 2021 and Mrs Hobart's death earlier this year, it is now being sold on the instructions of their executors. 

"With its aristocratic and royal connections, we anticipate significant interest in this house from discerning buyers around the world. It is a trophy home with an illustrious history," said Danish Arif, head of Mayfair sales at estate agents Chestertons.

By James Sillars , business news reporter  

Let's start the new week by looking at the prospects for oil prices.

They're up by around 14% since 4 June - by 3% since last week alone - and standing at levels last seen in April.

It has left Brent crude at $85 a barrel.

If sustained, this level could prompt small rises at the fuel pumps in the coming weeks. 

The outlook for Brent is currently coloured by a multitude of factors.

In support is the wealth of global hostilities, such as the war in Ukraine and the conflict between Israel and Hamas. 

Worries about demand, particularly in China, are providing some kind of check.

We'll have a clearer idea of the path for oil later this week, with analysts noting that it could go either way.

The FTSE 100 is starting the week on the back foot after a 0.4% decline on Friday.

It is trading at 8,234 - down three points.

Some of the negative sentiment has been linked to continuing worries about a delayed US interest rate cut and the snap parliamentary election in France.

The latest polls give the National Rally party of Marine Le Pen a clear lead ahead of the first round of voting on Sunday.

Upwards pressure on the FTSE is coming from consumer-facing stocks amid evidence that spending is picking up after a spring dominated by foul weather.

Typical first-time buyers are paying around £400 more per month for their mortgage than five years ago, Rightmove has found. 

The average mortgage payment for those who have just stepped on the property ladder has risen by 61% since 2019, from £667 to £1,075 per month. 

The property website calculated the monthly amount based on first-time buyers having a 20% deposit, a 25-year mortgage term and five-year fixed deal at an average rate, which by its calculation is currently about 5.04%.

Asking prices for a typical first home, with two bedrooms or fewer, has also increased to £227,757 - 19% more than 2019. 

The North West had seen the biggest jump at 33% since 2019, while London has seen the smallest percentage rise of just 6%, Rightmove found. 

"As rates have increased over the last five years, the amount that a typical first-time buyer is paying each month on a mortgage has outstripped the pace of earning growth," said Tim Bannister, Rightmove's property expert. 

"Some first-time buyers are looking at extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale so that they need to borrow less." 

Our Money team reporter Katie Williams  explored this issue last week. You can read her piece below...

Amazon is planning a major revamp of its loss-making Alexa - but the new tech could come with a monthly fee. 

Dubbed "Remarkable Alexa", according to insider sources, the updated device would use conversational artificial intelligence technology.

The tech upgrade would mean the speaker could order you a takeaway from Uber Eats, write an email and perform other more complex tasks. 

It could also eliminate the need to repeatedly say "Alexa" during a conversation, offering more personalisation, the sources told Reuters. 

But a more powerful Alexa could mean people will have to pay a $5 (£3) monthly fee to access it. 

The sources said there was currently no plan to introduce the service as part of the Prime membership, which customers already have to pay for. 

Amazon's chief executive, Andy Jassy, has taken a personal interest in seeing Alexa revamped, promising a more "intelligent and capable" device to shareholders back in April. 

An update may also be critical for Amazon to keep up with rivals such as Google, Microsoft and OpenAI, which have all seen a positive reaction from their recently released AI chatbots. 

However, the sources cautioned the plans for Alexa, including price and release date, could be altered or cancelled altogether.

That wouldn't be unusual. Amazon has been plagued by false starts in developing AI. 

The company had reportedly been working on several devices last year, such as Alexa-enabled home energy consumption trackers and a carbon monoxide detector, which still haven't come to market.

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