Tesco: Losing Ground in the UK - Case Analysis

Abstract

This paper is an analysis of the case study “TESCO– LOSING GROUND IN THE UK?” written by Perepu (2013). The analysis is about why, Tesco, after dominating the UK retailing for about 25 years, is losing market share? Although the UK and global economic recession created a negative impact on the retail industry, Tesco’s competitors are doing well in relative terms. To reverse the situation, the newly appointed CEO, Philip Clarke, came up with a turnaround strategy. However, Tesco is still fighting against the problem. Hence, many shareholders and commentators are worried about its future. To understand the situation, the case examined the background of the UK retail industry. Specifically, the study analyzed the structure and competition landscape of the sector and the changes in customer characteristics and behavior.  The study then analyzed the strategy of Tesco in general and the turnaround strategies in particular in order to identify the strengths and weaknesses of Tesco. As a result, the study came up with the conclusion that the turnaround strategy of the organization has failed. The analysis further explored Tesco’s rival Sainsbury’s strategic responses on how Sainsbury managed the changing dynamics. In addition, the study reviewed how successful turnaround strategies have effectively been managed. Capitalizing on these lessons, the report recommended that rather than perusing reactive strategies, first, Tesco should admit that there is a problem of strategic concern. Then the organization should reconnect with its customers to identify the root causes and devise strategic priorities. Finally, Tesco should reengineer its structure, systems and HRM accordingly.

Keywords: UK retail industry, Turnaround strategies, International retailing, Case analysis