Skip to main content
Bite-size Case Study

Tesco: how supply chain strategy supports retail success

Published on January 31, 2019 Originally recorded 2013   10 min
0:03
Tesco will be known to many of you. It is Great Britain's largest retailer and one of the largest in the world. Over the last few decades, it has built a powerful and respected brand, and has in many ways led development of retailer branding. It currently operates multi-format stores in 11 countries, as well as having the largest and most successful online business in grocery retailing. Amongst a number of things that it does, it's had groundbreaking loyalty card or Clubcard customer data analysis. This has allowed it to develop a very sophisticated strategy in terms of developments of stores and it's engagements with customers. However, this picture of Tesco does not reflect what it has always been like in terms of the business. And as the business strategy has developed and changed over the period, so the logistics had to change. And it's that story that I wish to tell here today.
1:00
In order to tell that story, we need to have some basic understanding of how Tesco has developed. The graph here looks at the number of stores and the average store size for Tesco stores in the United Kingdom over the last 60 or so years. There are a number of points that can be made from this graph. The number of stores, for example, fell in 1972 through to 1987. But over that same period, the average store size rose from less than 5,000 square feet to something in the order of 20,000 square feet, a four-fold increase. This is the period of the development of the superstore within Tesco operation. Cookie cutter stores on out-of-town locations built the same specifications and a much smaller number of them. However, the point to be made here is that that transformation from a collection of small stores through to a small number of larger stores implies a very different logistics and delivery strategy. The second point to note, is the complication that occurs towards the right-hand side of the graph. In the 2000s, there have been major developments in terms of what Tesco have been trying to achieve in their retail strategy. In particular, they took over a large number of convenience stores and have subsequently expanded those convenience store chains. If we look at the rise in terms of the number of stores, Tesco now have over 3,000 stores. But over the last six or seven years, the average store size has been falling quite dramatically. And as a result, we now have a very much more complicated pattern of store presence, store size, and thus delivery of products to those stores, through the logistics functions.
Hide

Tesco: how supply chain strategy supports retail success

Embed in course/own notes