Tesco and the organic market

Résumé du document

Tesco is the leading retailer in the United Kingdom, and one of the largest food retailers in the world. It is not limited solely to the food market and has expanded into areas such as electrical goods and clothing. Tesco has its headquarters in Hertfordshire and employs about 318,300 people. The group recorded revenues of £42,641 million for February 2007.

Tesco is not just a retailer; it is also a brand. It has to its name, not only various shops such as Tesco Express, Metro, tesco.com, Tesco Extra, Fresh and Easy, Tesco Homeplus but also Tesco station, Tesco insurance, broadband, mobile and electricity. Tesco adapts and answers its customers' needs by improving its offers especially as regards food. Keeping pace with market trends, Tesco has, over the past few years, developed in yet another direction: the organic market. This report therefore will consider the success of Tesco's organic business in United Kingdom.

Tesco is developing a series of strategies based on the organic market. Firstly, it is attempting to widen the scope of organic food available in the store, including fruit and vegetables, meat, spirit and wines. Furthermore Tesco has expanded the ideology of organically grown substances, developing a range of organic clothing in collaboration with Katharine Hamnett. In this report, we are going to focus on the issues surrounding Tesco's organic food range in United Kingdom.

The UK has the third largest market for organic food in Europe, after Germany and Italy, more than 50% of Europe's organic land is in Italy, Germany, Spain and the United Kingdom. By December 2006, 498,646 hectares of land were managed to organic standards across the United Kingdom. Retail sales of organic products in the United Kingdom were worth approximately £1.6 billion during 2005, an increase of 30% on the previous year. Sales of organic products sold through supermarkets increased by 21% in 2006.

As a starting point, it would be useful to consider the environment of the organic market. Indeed, it may help in understanding why environmental influences are particularly significant for the future of a company and its competitors. So, a PESTEL analysis can be done in order to succeed in the new market.

The market has to take into account the environmental protection laws which are very strict and also the fact that local authorities regulate land planning. Furthermore, the market must take into account the European Union regulations, under which the company is obliged to work only with pre-approved product producers.

Equally, supermarkets have to consider factors such as current rates of inflation and the personal disposal incomes of its customers insofar as these factors directly affect its sales. Moreover, the actor on the market must consider the politico-legal variables. For example, the European Commission has proposed that up to 0.9% GM contamination should be allowed in organic food. So this is a market that has many constraints, but demand is strong and growing body of research proving the benefits of organics; it is a growth market.

Tags: Tesco Organic, retail market in UK, WalMart

Extraits

[...] One of its major strength is in fact the good quality of the communication in the company. It is therefore a functional hierarchical structure. Human resource management Terry Leahy has been Tesco's dynamic and ambitious chief executive (since 1997). He has a strong personality and a strong charisma in society. He joined the company in 1979. He manages the company using an aggressive growth plan. This management is a leadership style. He has even been recognized by the Queen for his services to food retailing. [...]

[...] After analyzing Tesco can take advantage of a new market segment to grow in UK, it is prepared meals organics such as salads and others. For the English eat more abroad than at home almost 633 meals a year in either 1224 external per person per year. As we noted Tesco must not neglect its competitors and remain vigilant (competitive). Tesco must react to a plan of M & S on recycling. For that Tesco should remove plastic bags, it would be the forerunner in UK. [...]

[...] Moreover, the actor on the market must consider the politico-legal variables. For example, the European Commission has proposed that up to GM contamination should be allowed in organic food. So this is a market that has many constraints, but demand is strong and growing body of research proving the benefits of organics, it is a growth market. Equally, they must take into account the research undertaken by the government was the first year that scientific proof of particular health benefits of organic food had a demonstrable impact on the organic market. [...]

[...] However, tesco seeks to reduce its imports of organic products and encourage producers to produce more to reduce the cost of products. "We aim to double the amount of English apples we sell within three years to support British growers and reduce the need for imports." Marketing and sales Tesco proposes in all these fruit and vegetables, the same facing, which allows consumers to quickly locate products organics. Almost all the department is devoted to organic. Tesco has improved its nameplate. [...]

[...] These producers sell both under their own brands or the brand of the association to which they are attached. Tesco however has its own brand and organic Fair-Trade. The distribution channel is in all formats of tesco: Tesco Express, Tesco metro, Fresh & Easy, Tesco extra, and Tesco.com. Therefore consumers are reassured because he knows the source of products, quality and service. The consumer expectations are performed. It can be concluded that tesco has chosen a strategy of diversification with a vertical integration. [...]