The Success Of Tesco Express Is Threat For Uk S Local Convenient Shop Marketing Essay

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"Tesco Express" is a small format of Tesco PLc. And the Tesco Plc. is the solitary British international grocery and merchandise retail chain. It is the biggest British retailer by the sales and lion market share in UK. Tesco is not only a giant in UK but also Tesco is the third largest international retailer based on the revenue. Tesco has controlling financial strength in retail and able to run an extensive range of business all over the world. It is very simple to say that where Tesco is there is threat for others. Tesco Plc. has launched the Tesco Express since 2000 and the 1000th Tesco Express site opened in July 2009. Tesco Express is supporting the Government and the community by giving huge jobs and cheap price shopping assurance to the local people and also supporting the environment by their various activities.

There are couple of supermarket chain also runs their small format shops around the UK but the Tesco Express success is better than any other supermarket chain like Waitrose or Marks & Spencer's Simply Food layout. Tesco Express is endlessly opening their shop on the high street of a neighborhood area where the local convenient shops also exists and doing their trade since long. Some farmers as well as local producer and suppliers are also depending on the local convenient shops. At the present competition market the smaller retailers loosing their strength to compete with the monster chain.

Customers are always after for fresh, good quality and reasonable price where they can go for everyday or weekly top up shopping. In this case, the local convenient shop can not fulfill the requirement of the customer. On the other hand, The Tesco Express (new format convenient shop of Tesco Plc.) is the perfect place where the customer can save their money and time and their everyday grocery requirements. As a result, customers do not prefer to move their way to a local convenient shop at the presence of Tesco Express.

This research topic provides an industry based examination, focused on Tesco Express and its success and the causes of threat for local convenient shop of different area in London.

Thesis Advisor: Mr. Mark Worrall


Chapter 1: Introduction:

In United Kingdom the Supermarket chains are more and more spreading out their variety of goods and services they offer to their customers, at the same time infringing on market sectors traditionally served by other, smaller retailers. The supermarket chain express format shops are growing threat to self-governing convenience store operators, pharmacists and even restaurants. Therefore, some of the major supermarket chains have been looking at takeovers of other chains for the expansion. This coexists with the return of supermarkets to the neighborhood and the growth of their convenience-store brands, such as Tesco Express and Sainsbury's Local.

Tesco express is a great convenient shop where we can shop for weekly tops up such as milk, bread and butter as well as some ready meals and household products. Tesco Express does not stock as much variety of products as Tesco and Tesco extras. However, for customer this is a good thing where they can spend less money. Tesco express is a great way in which anybody can pick up their products without the hassle of going to a huge supermarket and struggling to find the odd one or two items they are after. Even though it is a Tesco express, they can still spend their club card points in the express, which is another way to help for the customer and the community. On all of customer experiences with shopping at local Tesco express, the staffs has always been friendly and willing to help if there is a product unable to find.

Supermarkets are gradually becoming a 'one-stop shop' for consumers, they offering not only an increasingly wide choice of food products but also huge non-food items and a bulk figure of additional services.

1.1 History and Success of Tesco Express:

Tesco has founded in 1919 by Jack Cohen in UK. He has started his business to sell surplus groceries from a stall in the East End of London [1]. Tesco is the British international grocery and general merchandising retail chain [1]. Tesco is the biggest British retailer by together global top sales and UK market share and its annual profit over and above three billion pound, and Tesco is the third leading international retailer based on the revenue, after Wal-Mart and Carrefour[1]. Tesco's core rationale and principles define the way they do trade, how they take care of their customers, their people, each other and their suppliers []. They help to define Tesco's responsibilities to the communities where Tosco's business operates and create the culture and environment in which their business strategy continues to deliver strong results. Tesco's philosophy of "Every Little Helps" underpins these wide-ranging responsibilities.

Tesco Plc is also doing other business in United Kingdom such as Tesco finance, communication like tesco mobile, tesco clothing, gasoline and tesco insurance etc. In food retail sector Tesco Express is the rapid growing format of Tesco Plc, opening at least 50 - 60 stores every a year. Currently it meets customer demand for longer trading hours. Tesco Express stores are neighborhood convenience shop, stocks mainly food with and special needs on higher-margin products for everyday essentials. The annual sales are over £ 3 billion. The Tesco Express has become 'one-stop shop'. They were found in busy city centre districts, small shopping precincts in residential areas, small towns and on Esso petrol station forecourts. The 1000th Tesco Express site opened in July 2009. Tesco have now started building Tesco Express stores with no staff tills, only having 'Self-Service' tills in which the customer scans all their own shopping and packs it [ ].

Tesco Express also gives a huge percent of support to the UK economy. It is contributing to the local community and Tesco is committed to protecting our environment by doing what we can to reduce our impact. Tesco has effective Environment Policy like waste management and recycling, committed to reducing its energy consumption and emissions of greenhouse gasses responsible for climate change, recycling and repackaging, disposal of used products, plastic bag schemes [ ].

Supermarket giant Tesco set a new record of pre-tax profits of £3.13billion for the 53 weeks to February 28 as it also revealed worldwide sales hit more than £1billion a week for the first time. The UK's biggest supermarket rang up £54.3billion in annual revenue, excluding VAT, up 13.4% year-on-year, while its record profit haul marked growth of 8.8% on a 52-week basis. (The Press and Journal, by Holly Williams)

1.2: Concept of Local Convenient Shops in UK:

A local convenience store is a small size shop where sells items like candy, soft drinks, ice-cream, lottery tickets, cigarettes and tobacco products, magazines and newspapers along with a selected of ready food and also some groceries. There has some stores are part of gas stations are also sell motor oil, coolent fluid, windshield and washer fluid. Toiletries and other hygiene products may stocked, and some of these stores are also offer wire transfer and money orders services or wine and sprite products. They are mainly located beside busy roads, in populated urban neighborhoods, at near railway stations or other transportation centre. In some places convenience stores have longer shopping hours and some are open fot 24 hours.

1.3: Types of Convenient shop:

The most common type of foods are offered in convenience shops are breakfast sandwiches and someother breakfast food. They are now are now sell fresh French bread throughout the United Kingdom . A freezing prebaked bread allows easy shipment and baking in-store. Some of the shops have a delicatessen counter, also offering custom-made and sandwiches. Other stores have racks offering fresh delivered or baked doughnuts from local doughnut suppliers. Some stores have provided self-service microwave oven for heatup purchased food inside the store.

1.4: Differences from supermarkets

A larger or newer convenience stores have a broad range of items, the selection is still limited compared to supermarket chain, and most of the convenient stores have only 1 or 2 choices are available. Prices in a convenience store are higher than any supermarket, mass merchandise store, or auto supply store. Most of the profit margin from these stores comes from beer, liquor, and cigarettes, but sales are generally lower. Most convenience stores have longer shopping hours, some being open 24 hours.

1.5: Local Convenient shops are on Threat by Tesco Express:

In this current retail competition market in the United Kingdom the small retailers are struggling to survive at presence of Tesco Express which is small formet of Tesco Plc. We also can say that the Tesco Express is a new style neighborhood convenience shop. The size of an express store nearly same size of a local convenient shop or could be little bigger than regular convenient shop. Tesco is a strong and reliable brand name in food retail sector. It has a good loyalty by its value price, availability, service and its quality and longer shopping hour. On the other side, a local convenient shop cannot offer a wide range of fresh products and luxury goods than the big-name neighborhood store. They cannot maintain the quality and does not able to sell on cometitative price and good customer service. As a result customers are loosing their shopping interest at local convenient shop. So, the day by day their sales are going down and cannot afford to run the business anymore.