Tesco SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Popularity of multichannel retailing: As the future of retailing is expected to be dominated by multichannel retailing, retailers should devise appropriate strategies by taking in to account the advantages, motivations and challenges of a multichannel retailing strategy. Despite the widespread closure of brick and mortar stores after the rise in popularity of online retail, offline retailing still plays a key role in the broader sales strategy of retail firms. There is a growing trend of retailers having multiple customer touch points due to the changing decision making methods of customers. A report by BigCommerce says that 25% of baby boomers shop on Facebook whereas only 11.8% of Gen Z uses Facebook for shopping. Millennials prefer to use Instagram and Snapchat to discover things they want to buy. This means retailers have to integrate all channels like social media, websites and offline stores into a single multichannel retailing strategy to attract customers and engage them throughout the buying process. Tesco has a good mix of offline stores and online retail options. The firm’s social media engagement is also a good case study on customer engagement using social media. Tesco was able to finally fulfill its 1993 slogan of “every little helps” in the age of social media, thereby reducing customer dissatisfaction and sarcastic usage of the slogan. The firm was able to help customers decide what gifts to buy on occasions like Valentine’s Day, Father’s day and Christmas. These occasions also had people looking for cooking recipes, which were provided by Tesco through social media. These moments of helpfulness improved the brand image of the company. The firm also used ClubCard data for audience segmentation into people who had been exposed to their Facebook content and those who had not. Through this technique they found that their Valentine’s Day sales rose by 101%.

2. Artificial intelligence in retail: A study by IBM covered 1900 retail and consumer product companies in 23 countries to find out ways in which AI can help the retail sector. The study showed 6 ways in which retailers were planning to use AI: supply chain planning, demand forecasting, customer intelligence, marketing, advertising & campaign management, store operations, and pricing & promotion. Tesco has trialed an AI system that eliminates the need for human cashiers in the stores. The system calculates when an item is picked up from the shelf and taken out of the store, and then automatically debits the money from the account. This would be a great way of eliminating check out queues and making the shopping experience quicker and hassle free for customers.

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Threat

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Reducing dependency on plastic: BBC’s Blue Planet documentary has made many people aware about the harmful effects of plastic on marine life. This has made customers avoid plastic, and retailers have had to follow suit and make the appropriate changes to phase out plastic usage. 71.4% of food & grocery customers and 64.2% of clothing & footwear customers consider the environmental impact of their purchases. Tesco has taken steps to reduce dependency on plastic. The company has set a 2025 target to make all packing completely recyclable. Tesco follows the 4Rs strategy when it comes to plastic packaging which are: "Remove where we can, Reduce where we can't, Reuse more, and Recycle what's left." They have removed over 1.6 billion pieces of plastic since launching their 4Rs strategy in 2019. Soft plastic recycling facilities have been installed in their UK and Ireland stores, as well as a UK partnership with Loop to provide more sustainable packaging options.

The remaining section under “Environmental” is available only in the 'Complete Report' on purchase.