Research SkillsEssay Preview: Research SkillsReport this essayTitle for dissertationAn investigation into whether the driving success of the Tesco brand will cause a negative effect on the food retail industry.IntroductionThe intention of this research is to investigate whether Tescos continuing growth in the United Kingdom is having a negative effect on the food retail industry. Tesco have grown from a standard food retailer to becoming the third largest food retailer in the world in just 10 years. My aim is to investigate whether their rise to the top will have major effects on competition and suppliers.
I have chosen to investigate the effects of Tescos brand power as it is becoming increasingly opposed. This is due to growing evidence that indicates that Tescos success is partly based on trading practices that are having serious consequences for suppliers, farmers, overseas workers, local shops and the environment.
I am also interested in how Tesco has diversified into other markets including electronics. I aim to investigate whether they hope to specialise in such markets to compete with the likes of Dixons or whether they will continue offering a limited supply to their customers.
ObjectivesTo analyse the effects of Tescos ongoing growth and how it is effecting the competition within the food retail industry.Review Tescos current market share and investigate their aims for expanding over the next ten years.Consider whether Tescos diversification into new markets will have a negative effect on the competition within these industries.Is Tescos buying power is having a damaging effect on suppliers?Literature ReviewTesco leads as super Masons supermarketThis text includes an interview with Tescos marketing director Tim Mason. The interviewer Elen Lewis questions Tim Mason about brand innovations and creating techniques to keep the customer the centre of their business decision making. Tim Mason suggests that Tescos growth is bound to effect the competition but this happens within all industries, he is quick to mention how Tesco were “Out of step with their customers during the late 80s”. This is important to my objectives as this shows that a senior Tesco executive is simply trying to dismiss the fact that Tesco are driving out their competition. Tim Mason is also asked about Tescos extremely low prices. He states “We continue to invest on price which puts our suppliers under pressure, but it also puts our competition under pressure”. This is also important to my studies as I wish to investigate Tescos buying powers and how it is affecting the suppliers.
Keep it local and save our small shopsThis press release contains factual information that gives support to the argument that Tesco is driving local high street shops out of business. It is relevant to my research as it emphasises the fact that small shops are currently struggling to survive due to the power of large supermarkets. Stating that “More than 2,000 independent shops went out of business in 2004”. It also states that “Tesco alone has over 30% of the market share”. This shows Tescos dominance within the market. It also argues the fact that shopping locally is beneficial to the community. This enforces the argument that Tescos ongoing growth is having damaging effects on local competition. I feel that this article is biased as it is a friends of the earth press review. But if I am going to investigate whether Tescos ongoing growth is damaging for the competition I will need to analyse information for and against the argument.
Office of Fair Trading refers Supermarkets to competition commissionThis text includes factual information that shows the Office of Fair Trading views regarding the increase dominance and buying power of the big supermarkets. The text questions the Competition Commission to “Conduct a speedy but thorough investigation to find tough remedies that will help small shops to flourish and protect farmers from bully behaviour”. This text is relevant to my research as it emphasises the problem that Tesco and other big name supermarkets are driving out local competition and using their buying power to encourage suppliers to drop their prices. This article is also biased as it has been taken from the Tescopoly website. This website is supported by organisations concerned about the market-distorting power of the major supermarkets.
The rise of TescoThis piece of text underlines the success story of Tesco under Terry Leahy. It includes information regarding Tescos remarkable success in reaching out to all three customer classes. It states “Tesco has a vital edge in buying power over its domestic competitors, reinforced by impressive supply chain management”. This text also includes information regarding Tesco moving into non-food markets that is also important to my research. This is a totally unbiased piece of information that presents Tesco as having huge brand strength combined with best in-class understanding of their customers. It also states Tesco “Has not yet triggered a popular backlash” due to their brand loyalty. This is very important to my studies as this is unbiased and shows Tesco in a positive light. Many views are biased to either side of the argument so finding unbiased text is essential to my studies.
Tesco
In a recent statement to a friend, David Smith said: “As a brand you must not be intimidated as consumers by a company like Tesco. We are on record supporting our customers by doing what they want, not just by trying to turn off the lights with our prices. We believe Tesco has much to make and we’ll work hard to create a better future for everyone, regardless of your views. We also understand all customer support needs.”
- The following text provides very clearly the arguments being advanced on the position that: • A recent study published in the English language, by the Economist, suggests that the UK is at a crossroads and consumers will be forced into more extreme choices in a “dysfunctional” economy after Brexit, making the UK’s own future economically bleak, by cutting out food choices to save money. It is also critical that our country act now on our own as we seek to make progress towards a sustainable, high-paying industry, so that the UK can continue to prosper and create more jobs. • Consumers across all categories will need to continue to adapt to new trends to accommodate their changing economy, as they will seek to be more flexible and work on their own to adapt to their new economic climate. This makes consumer choice a significant contributor to rising food costs, particularly by making it more challenging for food retailers to find a higher quality product, especially in the UK. • We’ve been in the market for some time being for better choices about where to take the majority of our food. Today we know that when making the choice to shop and walk away from a store, there is not one single person who could provide much value in terms of the retail experience of the store.”
- The other side of the equation is that many of our customers have seen their price rises in recent months, leading them to decide that now isn’t the time to start shopping again. This is not only unfair to the public, but it also has consequences for the businesses that make up the majority of our sales, since we now face a financial strain that would allow us to compete on a bigger scale with our domestic competitors.”
- We are committed to improving our business processes to support low-cost, low product, over time, better value brands. We believe that customers need to have more confidence in delivering our products to our customers, and make the decision whether to opt out through the process of opting out because of uncertainty about their pricing options. We will no longer be doing business with a service that does this with their permission. To prevent this situation we will no longer represent the customers by offering on-going service. This will result in greater friction between our partners as we will be unable to compete with these consumers when we have a choice about pricing. To resolve disagreements between our partners, we will no longer be able to offer on-going product on the premises, we will no longer provide services to the customers by offering on-going coverage and our relationship to retailers will become more fraught.”.
- We believe this process is designed to help make the UK a happier and more open environment for all of our customers. This process is not designed to help individuals that are new to local
Research methodologyTheoretical approachI will use an inductive approach to my research as I will be collecting data and developing my theory as a result of my data analysis. I have decided that I will interview staff at Tesco, people that oppose Tesco and general customers that visit the store. The purpose here will be to get a feel for what is going on, so I can then understand better the nature of the problem. Then I will be able to take this information and make sense of the interview data so that I can then analyse it.
The results from this will then help towards developing my theory. I will also be able to take any research data that I have and analyse this to become more knowledgeable on my chosen objective. I have chosen the inductive approach for my research as the deductive approach can be criticised