Theoretical Framework of Tesco
Tesco is a grocery brand founded in 1919 in London and will be considered the organisation subject for this assignment. It began by selling excess war foodstuffs at Wall Street Market in East London (Taqatqa, 2021). The company is now a multinational corporation, expanding its reach beyond London. The main objective of this company is to serve clients with affordable, sustainable, and healthy food (ZXhang et al., 2023). The unique part of this company is that it makes its products and does not source anything from outer suppliers, and this feature has saved the company much money.
The extent to which Tesco has been digitally disrupted
The operations of Tesco have been significantly impacted by technology. As of 2022, the market share stands at 27.3%, much higher than its competitors, Sainsbury and Asda, whose market shares stand at 15.2% and 14.3%, respectively. This market share is accountable for the efficient supply chain that has increased efficiency and minimised costs in the company. Through the well-managed supply chain, Tesco maintains low-priced products that attract and retain customers. A value chain analysis will be considered to assess the extent to which Tesco has been digitally disrupted.
Value Chain Analysis
This analysis breaks down the primary and support activities of Tesco, focusing on the value created at each stage.
Primary Activities
Inbound Logistics
The inbound logistics activity of Tesco demonstrates its overall cost leadership strategy. Tesco utilises data analytics to track products and predict their demand. Tesco works with several partners and suppliers worldwide who grow, manufacture and package its products. Tesco regularly upgrades its ordering patterns and in-store operations to increase the efficiency of inbound logistics.
Operations
Tesco’s operations involve over 4600 physical and online stores, such as Metro and Express, and a supply chain. According to the company, it has spent over £76 million to streamline its operations through the Tesco Digital program, which has been a significant solution for its ERP. Tesco handles shelf stocking and store layouts, creating an engaging and convenient shopping experience. It also fulfills orders by ensuring timely delivery and product availability (Sparks, 2014).
Outbound Logistics
This involves delivering goods to the customers. Customers can order products from the company’s website or use the Click + Collect system to deliver them at a designated collection point (Monte, 2021). These outbound logistics focus on efficient transportation and last-mile delivery to ensure cost-effective and timely distribution.
Marketing and Sales
Tesco uses various marketing strategies such as advertising, leveraging loyalty programs like Club cards, and promotions that drive sales. This marketing utilises data analytics to offer personalised products and targets specific customer segments.
Service
Tesco offers after-sales service to its clients. These include handling customer complaints which enhances a better customer service experience. Tesco allows customers unsatisfied with their products to return within 30 days for replacements or a refund (Azan and Karimah, 2022).
Support Activities
Procurement
This involves sourcing suitable suppliers who can provide the best products at the possible price. Tesco seeks suppliers to help cut costs and add value to its products (Sorogy, 2020). This ensures that the products are high quality and sold at competitive prices. The procurement activities in Tesco ensure a sustainable and ethical sourcing practice.
Technology development
Tesco utilises technology that has enhanced the operational efficiency of the company. For instance, self-checkout is an example of the technological services provided by the company (Jie and Kamsin, 2021). Also, through technology, Tesco has launched cashless payments and data analytics that support operations and enable the company to make informed decisions (Folarin and Hassan, 2015).
Human Resource Management
Tesco has invested in recruiting, selecting, and training workers for a productive workforce (Ajibola, 2022). The company mentors employees through career development programs, which create a motivated and capable workforce.
Infrastructure
This involves planning and general management. Tesco is one of the leading London Stock Exchange that sells shares to support its operations (Moura, 2021).
From this analysis, Tesco’s focus has remained on innovation and customer-centricity.
Tesco ventured into online shopping in the nineties. The company has managed to stabilise the difficult times, especially the Covid-19 crisis, where the company has proven to be effective in terms of virtual shopping. Also, Tesco was the first European grocery to acquire a Clubcard system where buyers would gain points after each transaction which could later be used for purchasing other products (Yawson and Yamoah, 2022). Also, the company offers credits to their customers, which provides a partial payment possibility for those who cannot afford it. Digital disruptions have enabled Tesco to achieve its objectives and provide a unique shopping experience for its clients.
Critique of Digital Transformation Initiatives Relating to Tesco
Digital technologies have created a competitive advantage for Tesco Company. Considering the Ansoff matrix, it will be possible to critically analyse how these Tesco is using these disruptions to compete.
Market penetration: Tesco has been using digital disruptions to enter and expand in the existing markets. For instance, it focused on strengthening its online presence, improving the e-commerce shopping experience, and increasing customer engagement. Tesco has established a large customer base by maintaining a great share of the online grocery market, driving its organisation growth (Aiello et al., 2020).
Product Development: Through digital disruptions, Tesco has created new products, such as mobile applications that have created a seamless shopping experience, online nutrition, and recipe suggestions (Zhao, 2021). These innovations have allowed Tesco to differentiate its products and respond to changing customer needs.
Market Development: By leveraging digital disruptions, Tesco has explored new market development opportunities (Jelassi et al. 2020). Through the Click + Collect service, the company has expanded its e-retail grocery reaching new geographic markets and offering customers convenient access to its products. By venturing into e-commerce and home delivery services, Tesco has grown its market share and customer base.
Diversification: The digital disruptions have enabled Tesco to establish strategic partnerships, which have helped expand into new business landscapes and diversify its offerings (Caffrey et al. 2020). For instance, Tesco merging with the Booker Group allowed the former to tap into a wholesale food sector, thus accessing new revenue streams and entering adjacent markets (Caplan, 2017).
Artificial intelligence and big data have impacted the operations of this company. These technologies have transformed the company’s operations, with the ICT departments estimated to have spent $2.2 billion in 2022 (Newman et al. 2022). These technologies have transformed the company’s operations, with the ICT departments estimated to have spent $2.2 billion in 2022 (Newman et al. 2022). First, it was the first European grocery to start online shopping, which was possible through technology. In this case, digital technologies have developed and introduced online shopping for Tesco. This online shopping is coupled with facilities for home delivery. The disruptive technologies have also enhanced automated checkout machines for customers to use tills to quickly reduce customer tie and staff expenditure (López et al. 2022). Therefore, the company has been digitally disrupted, providing an exceptional shopping experience to its clients.
By integrating generative AI into its operations, Tesco can predict demand, analyse consumer behaviour and prevent fraudulent activities (Pagani and Champion, 2023). The company uses AI to make informed decisions and source valuable ideas from reports. Additionally, using AI is likely to enhance cutter engagement where Tesco is looking forward to interacting with customers through social media platforms such as WhatsApp for a better experience. Through generative AI, Tesco has been able to understand customer preferences which the company has optimised its supply chains, developed targeted marketing campaigns, and enhanced its inventory management.
Big data has also played a significant role in transforming the operations of Tesco. In this way, big data has cut down light and heat costs in Tesco, where the company has installed regulators in its multiple stores to data warehouse over the internet (Fawcett and Waller, 2014). In addition, big data has improved the value chain of Tesco by acting as a multi-channel approach to obtain future trends in consumer behavior (Jiménez-Zarco et al. 2019). Lastly, these big data analytics has enabled sales estimation at Tesco. By employing data analytics, Tesco can monitor how products are purchased. Digital disruptions transform Tesco, creating a competitive edge, and can now be compared with larger e-commerce organisations such as Amazon.
Assess How Tesco Has Managed These Digital Transformations
Tesco is one of the largest global retail chains that has actively pursued digital transformation in the last few years. The company has managed digital transformations in various ways.
First, Tesco realised the growing significance of online shopping and expanded its ecommerce operations. In this case, it launched its online grocery home delivery service, allowing clients to order groceries and deliver them to their doorstep (Jones, 2001). Additionally, it launched Click & Collect service in 2011, which has popularised its delivery option for ecommerce worldwide, and has enabled customers to order and collect their groceries from selected pickup points.
Moreover, the company has developed mobile applications to provide clients with a more convenient way to shop and access personalised offers. The club card loyalty program has been the foundation of Tesco’s digital transformation. This program allows customer’s access discounts and personalised offers through the app (Azan and Karimah, 2022). Also, by analysing consumer data through data analytics, Tesco has gained insights into customer behaviour and purchasing patterns, enabling them to provide customised products.
The digital disruptions initiatives in Tesco are considered successful. To support this statement, Tesco’s online sales have increased by 77% since 2020, which has been made possible by leveraging technology in its operations (Domański and Łabenda, 2020). Tesco modernised its omnichannel retail operations, which enhanced its digital sales capabilities. For instance, these digital initiatives have paved the way for the creation of self-service checkouts, which has created a competitive edge for Tesco, enabling it to be one of the leading supermarkets in the UK. Additionally, through technological initiatives, Tesco’s website profit has surpassed £ 48 million with an equivalent sales rise (Ahmed and Moosafintavida, 2020). This depicts how the implementation of technology in Tesco has been successful.
With the continued adoption of artificial intelligence, Tesco will likely expand its e-retail operations (Jaheer et al., 2022). Tesco may look forward to improving the functionalities of its mobile applications and websites to enhance user experience and expand its delivery capabilities. Also, data analytics may advance personalisation approaches in the future of Tesco (Mackenzie, 2018), for instance, by continued data analysis on consumer demographics and shopping behaviour. The company will be able to offer advanced targeted ads, personalised recommendations for products, and tailor experiences across the various shopping channels.
From the current digital technology initiatives in Tesco, it can be learned that they have leveraged a customer-centric strategy in the company (Loonam et al. 2018). These initiatives emphasised understanding customer preferences and their shopping behaviour. In this case, organisations can learn the need to prioritise consumer needs when instigating digital initiatives.
Additionally, Tesco demonstrates the significance of agility in the changing market dynamics (Li et al., 2022). Tesco has proactively integrated new technologies into its operations. For this reason, organisations should learn the virtue of embracing change, trying out new technologies that align with their operations, and adapting to growing trends and consumer needs.
Lastly, organisations must invest in data analytics and utilise it as a strategic assist to improve business growth (Gupta et al. 2020). Data analytics has optimised the supply chain and personalised marketing and enabled the company better to understand customer insights (Appelbaum et al. 2017). In this case, this initiative is one of the factors behind Tesco’s success. Through big data analytics, Tesco would harness customer data and gain valuable insights to help make informed business decisions.
Key Technological Factors that May Impact the Future of Work in Tesco
One of the significant technological factors that Tesco should consider engaging in its future operations includes blockchain technology. This technology can enhance transparency, trust, and traceability in Tesco’s supply chain. By leveraging it, TESCO can improve food traceability and quality control, which is essential for its grocery business (Kay, 2022).
Additionally, it is recommendable for Tesco to invest in augmented and virtual reality technologies, which can impact opportunities for improving customer experience (Barhorst et al. 2021). Tesco can utilise AR technologies to navigate its in-store product visualisation. Also, virtual reality technologies can improve online shopping experiences.
Lastly, investing in cybersecurity technologies will be critical for this company to protect consumer data, prevent cyber theft and maintain client trust (Duncan et al., 2022).
Conclusion
Tesco, a big grocery store, is the largest food retailer in the UK that has been digitally disrupted. Big data analytics and artificial intelligence are this company’s primary digital disruptions. These digital disruptions have boosted the company’s performance, creating efficiency in general merchandise shopping. Additionally, organisations can learn several things from integrating digital disruptions in Tesco. For instance, Tesco has utilised its technologies to respond to consumer needs and changing preferences. In this case, organisations should learn to be customer-centric. Also, organisations should learn to invest in technology, just like Tesco. Using data analytics tools would help them understand customer insights and monitor their shopping behaviour, which would help create products tailored to their trending preferences. The digital disruptions have changed the perception of Tesco and can now be compared with larger organisations such as Amazon. However, it is recommendable that Tesco invests in other technologies to improve its future operations. These include blockchain technology, cybersecurity, and augmented and virtual realities. These technologies will likely create a seamless shopping experience for customers in this company.
References
Ahmed, J.M. and Moosafintavida, S., 2020. Why Nabors Industries (NBR) Acquired Tesco Corporation (TESO) in an all-stock transaction: A case study. International Journal of Applied Science and Engineering, 8(2), pp.133-140.
Aiello, L.M., Quercia, D., Schifanella, R. and Del Prete, L., 2020. Tesco Grocery 1.0, a large-scale dataset of grocery purchases in London. Scientific data, 7(1), p.57.
Ajibola, E.B., 2022. An investigation into talent management in the Irish retail sector: a case of Tesco, Aldi and Super Valu (Doctoral dissertation, Dublin, National College of Ireland).
Appelbaum, D., Kogan, A., Vasarhelyi, M. and Yan, Z., 2017. Impact of business analytics and enterprise systems on managerial accounting. International journal of accounting information systems, 25, pp.29-44.
Azan, M.E.M. and Karimah, W.N., 2022. The Relationship between Customer Loyalty Program and Customer Retention at Tesco. Research in Management of Technology and Business, 3(2), pp.174-184.
Azan, M.E.M. and Karimah, W.N., 2022. The Relationship between Customer Loyalty Program and Customer Retention at Tesco. Research in Management of Technology and Business, 3(2), pp.174-184.
Barhorst, J.B., McLean, G., Shah, E. and Mack, R., 2021. Blending the real world and the virtual world: Exploring the role of flow in augmented reality experiences. Journal of Business Research, 122, pp.423-436.
Caffrey, E., Brady, L., Flynn, S., Higgins, J., McKenna, E.M., Newman, J. and Nolan, P., 2020. FoodCloud: Stimulating Kindness Towards Making the World a Fairer Place-One Step at a Time. International Review of Entrepreneurship, 18(2).
Caplan, P., 2017. Win‐win?: Food poverty, food aid and food surplus in the UK today. Anthropology Today, 33(3), pp.17-22.
Domański, R. and Łabenda, M., 2020. Omnichannel of private label grocery products in the Polish market’s Tesco and Carrefour retail chains. Ekonomski Vjesnik/Econviews-Review of Contemporary Business, Entrepreneurship and Economic Issues, 33(1), pp.191-202.
Duncan, S., Carneiro, R., Braley, J., Hersh, M., Ramsey, F. and Murch, R., 2022. Cybersecurity: Beyond ransomware: Securing the digital food chain. Food Australia, 74(1), pp.36-40.
Fawcett, S.E. and Waller, M.A., 2014. Supply chain game changers—mega, nano, and virtual trends—and forces that impede supply chain design (i.e., building a winning team). Journal of Business Logistics, 35(3), pp.157-164.
Folarin, T.O. and Hassan, Z., 2015. Effects of technology on customer retention: A study on Tesco Malaysia. International Journal of Accounting and Business Management, 4(2), p.16.
Gupta, S., Drave, VA, Dwivedi, Y.K., Baabdullah, A.M. and Ismagilova, E., 2020. Achieving superior organisational performance via big data predictive analytics: A dynamic capability view. Industrial Marketing Management, 90, pp.581-592.
Jaheer Mukthar, K.P., Sivasubramanian, K., Ramirez Asis, E.H. and Guerra-Munoz, M.E., 2022. Redesigning and Reinvention of Retail Industry Through Artificial Intelligence (AI). In Future of Organizations and Work After the 4th Industrial Revolution: The Role of Artificial Intelligence, Big Data, Automation, and Robotics (pp. 41-56). Cham: Springer International Publishing.
Jelassi, T., Martínez-López, F.J., Jelassi, T. and Martínez-López, F.J., 2020. Exploiting opportunities of new market spaces in e-business. Strategies for e-Business: Concepts and Cases on Value Creation and Digital Business Transformation, pp.205-228.
Jie, N.X. and Kamsin, I.F.B., 2021, September. Self-Checkout Service with RFID Technology in Supermarket. In 3rd International Conference on Integrated Intelligent Computing Communication & Security (ICIIC 2021) (pp. 495-502). Atlantis Press.
Jiménez-Zarco, A.I., Rospigliosi, A., Martínez-Ruiz, M.P. and Izquierdo-Yusta, A., 2019. Marketing 4.0: Enhancing consumer-brand engagement through extensive data analysis. In Web Services: Concepts, Methodologies, Tools, and Applications (pp. 2172-2195). IGI Global.
Jones, D.T., 2001. Tesco. Com: delivering home shopping. International Commerce Review: ECR Journal, 1(1), p.37.
Kay, L., 2022. Four years into transforming our food system: reflecting on the WWF Tesco partnership.
Li, C., Khan, A., Ahmad, H. and Shahzad, M., 2022. Business analytics competencies in stabilising firms’ agility and digital innovation amid COVID-19. Journal of Innovation & Knowledge, 7(4), p.100246.
Loonam, J., Eaves, S., Kumar, V. and Parry, G., 2018. Towards digital transformation: Lessons learned from traditional organisations. Strategic Change, 27(2), pp.101-109.
López, T., Riedler, T., Köhnen, H. and Fütterer, M., 2022. Digital value chain restructuring and labor process transformations in the fast‐fashion sector: Evidence from the value chains of Zara & H&M. Global Networks, 22(4), pp.684-700.
Mackenzie, A., 2018. Personalisation and probabilities: Impersonal propensities in online grocery shopping. Big Data & Society, 5(1), p.2053951718778310.
Monte, A., 2021. A study of value chain reconfiguration processes under Covid-19 pressures: the case of Tesco PLC in the United Kingdom.
Moura, M.B.L.D., 2021. Equity Research in Food & Retail Industry-TESCO PLC (Doctoral dissertation, Instituto Superior de Economia e Gestão).
Newman, J., Mintrom, M. and O’Neill, D., 2022. Digital technologies, artificial intelligence, and bureaucratic transformation. Futures, 136, p.102886.
Pagani, M. and Champion, R. eds., 2023. Artificial Intelligence for Business Creativity. Taylor & Francis.
Sorogy, M., 2020. Project Risk and Procurement Management-Procurement. Available at SSRN.
Sparks, L., 2014. 07 Tesco’s supply chain management. Logistics and retail management: Emerging issues and new challenges in the retail supply chain, p.149.
Taqatqa, A., 2021. 5 Tesco. Business Management Case Studies: Pran-RFL, Netflix, Mc Donalds, Google, Tesco, Apple, COCA COLA, PSA Group, Mercedes, Tesla, Toyota, Beximco, KFC, LBC Lao Brewery Company, p.97.
Yawson, D.E. and Yamoah, F.A., 2022. The TESCO Club Card Loyalty Programme: The Gold Standard. In Contemporary Retail Marketing in Emerging Economies: The Case of Ghana’s Supermarket Chains (pp. 77-87). Cham: Springer International Publishing.
Zhao, C., 2021. Research on Cost Management of E-commerce Enterprises Based on Value Chain——Taking Suning Tesco as an Example.
ZXhang, Y.X., Haxo, Y.M. and Mat, YX, 2023. Analysing Tesco PLC Stock: A Comprehensive Evaluation of Growth Potential and Investment Opportunities. AC Investment Research Journal, 220(44).
write