Submitted to: Presented by:

Prof. Saumitra Samaddar Priyank Pradhan 18BSP4015

Sandeep Kumar 18BSP4016
Akshay Chandiramani 18BSP4087
Jenil Chheda 18BSP4123
Anjali Khulge 18BSP4138
 INTRODUCTION

• Tesco was founded in the year 1919 by Jack Cohen as a grocery stall.
• The company’s first product was Tesco Tea and opened its first store in 1929 in
London
• The name Tesco was a combination of the initials tea supplier TE Stock well and the
first two letters of Cohen's name.

 RPM ACT (The retail price maintenance)

 The company’s driving force: “Pile it high and sell it cheap”
 Check out at Tesco: offered price discounts

Customer centric products and services:

• A loyalty card:
Loyalty cards are a part of ‘loyalty programmers’ which aim to retain customers. These
cards reward customers when they make purchases from the company in the form of
points that accumulate over time. These points can later be redeemed for
cash/gifts/discounts.

• One in front:
Under this scheme, Tesco store personnel ensured that if there was more than one person
at any counter, another counter would be opened for the person second in line. This way,
no customer would have to wait at the check out counters.
• Club card scheme:

Under this scheme, customers become members

by paying a joining fee and providing personal
details such as name, address, date of birth, e-
mail, family members, dietary requirements and
product preferences.

 New pricing policies were introduced in Tesco (1993) by Leahy and introduced the club
card scheme.

 August 2007 : largest retailer in the UK with a market share 31.8% in the UK grocery
market.

• 2009: Tesco’s market share fell to 30.7%

• 2013:29.6%
• 2014:28.7%

The company experienced in Declining the sales in the UK market. (0.6% in 2013 and
2014)
 Retail Industry in South Korea

 South Korea has highly developed retail market with per capita GDP US $ 25977 in 2013

 In 1995 and 1996 foreign retail players help in modernizing the sector regarding size, no. of
retails and regulations of govt.

 In 1997, due to financial crisis Korean people move towards discount retail stores

 Till 2001, domestic retail market in Korea was valued at US $ 97 billion with 70% of
traditional market.

 In 2010 Korean govt. came with new bill to protect small and medium retailers.
 TESCO In South Korea :

 South Korean government eased regulations therefore forming joint venture with
Korean Firms were easy & there was a less restriction.

 In April 1999, Tesco announced its Joint

Venture with Samsung.

 Advantage because of Joint Venturing

with Samsung.

 Because of building the trust in Korea people ,Tesco had came up with its name
called Samsung –Tesco.

 Tesco has advantage of partnership with Samsung which gives an edge over the
other foreign retailers in the country.

 Tesco relied more on local people.

 When its came into the first year of operations , the venture got awards such as KOTRA,
Korea Distribution Grand prize from Korea chamber of commerce & Industry, Customer
Satisfaction Management Grand Prize and the new culture Grand prize .

 In Nov 2001, Tesco launched online shopping service in south Korea called “ E-
Homeplus” in Ansan,Seaoul.

 In 2002, Samsung –Tesco home plus launched its own club card in Korea .the card was
based on popular Tesco Club card in UK.

 In 2004, Tesco launched the TWIST program in South Korea.

 TESCO’s GLOBAL EXPANSION
• 1979 Entered Ireland by acquiring a 51% equity stake in ‘3 guys stores’ but could not sustain its operations in
the country as customers were rejecting the British products that it sold.

• 1980-90 British government introduced new regulations on “out of town” stores, so tesco examined the options
available in the US and European.

•1992 Entered France by acquiring an 85% equity holding in Catteau supermarket . However Tesco failed to
sustain itself in the market due to competition from French retailers.

•1994 Tesco acquired Scottish retailer William low $247 million and in same year, it acquired a 51% stake in
global supermarket in Hungary for $15 million as they found they had a lot opportunities to grow in central and
eastern Europe.

•1995 law was passed in france which prohibited the opening of new large retail stores. Moreover , the company
failed to adapt its product to suit local tastes and lost market share.
Next international venture was in Poland. It entered the country by acquiring Savia sa for $8 million.

Learning from the experience in France, Tesco went in for inexpensive acquisitions with the aim of
establishing a foothold in the market and later expanding into the hypermarket business.

1997 Tesco re-entered to Ireland by acquiring the Irish food retail operations of associated British food plc.
With the $630 million acquisition, Tesco become the largest food retailer in Ireland

1999 Tesco then entered South Korea in march by forming a 51% joint venture with Samsung invested $80 million
and another $30 million to increase its equity stake to 81%
 ENTRY STRATEGIES

• They initially failed as they entered in the market

•Joint Venture
• Inexpensive acquisition/Acquisitions
•Mergers
-- Refer page 8,9 & 10 from the case study
1. Differentiation, Localization & Customization:

Stores were modified to resemble departmental stores which were spacious

and clean

o Tesco’s stores in Korea did not resemble its stores in U.K or other
European locations.

o Its success was attributed to its ability to localize its product and stores to
appeal to the South Korean consumers

o Ambience, atmosphere in the stores was lively and resembled an open air
market, Shop assistants dressed in traditional Korean attire

2. Convenience & ease in reach:

o South korean consumers did not prefer to travel long distance to shop, as
they shop frequently. They want their stores to be close (In a survey 49%
expressed that it is a priority)

o Tesco chose inner city areas to open its stores though the rents are high.

o All the stores are accessible to public transport

3. Availability of wide range of products:

o Stores provide wide range of products including clothes, kitchen appliances,

home appliances, toys, books and other household goods

o Tesco always stocked and delivered wide range of fresh products

o Similar to centralized distribution model, Tesco distribution centre distributes

sorting stores, products to the outlets.

4. Customer engagement & Value added services:

o Customers were offered the facility of having their cars serviced while
they did their shopping
o There was also a play area for children and toddlers.
oTesco offers training courses for children and housewifes
oThey included training on using internet, teaching foreign languages,
cookery classes etc
“ Providing these services bring more benefits than the cost. They attract customers to stores ”
5. Assistance & Help desks:

o Despite of incurring high costs for the company.

Tesco employed more sales executives and help
desks at stores in order to serve customer queries.

6. B2B relationship:

o To ensure a continuous supply they maintained a

healthy relationship with the suppliers

o They conducted yearly surveys to understand the

suppliers view about the company

o Sourcing of products, mostly done locally from local

suppliers and manufacturers

o Tesco didn’t import the product or materials directly,

the obtained the products from local suppliers who
imported globally
7. Innovations, Technological implementations and analytical
mapping:

o RFID chips (Radio Frequency Identification) are attached to the

shopping trolleys to track customer movements.

o With the help of RFID chips they used to track the customer buying
patterns, customers purchase sequence and they used to analyze that
patterns and arrange their products in the shelfes based on customer
profiles, taste and sequence.

Virtual Super market & Homeplus Application

o Tesco, arranged the billboard on a wall in the station , on that
billboard, the images of products and their QR codes were pasted
which resemble shelves in the supermarket

o Customer need to download Homeplus application  Scan the

QR  Select the product  choose quantity  Order place to
customer address.

( If customer place order before 1:00 pm, the items will be

delivered the same evening)
CHANGES IN OPERATING ENVIRONMENT

• Retail market development bill

• Restrictions by government on
trading

• Selling rights remained with

local merchants

• Global recession
 EXIT STRATEGIES

o They adopted liquidation as the

strategy to exit from South Korea.

o Tesco decided to sell its South

Korean venture.

o Money was used to redeem bonds

,debts and purchase lease for UK
stores.
Tesco sell its South Korean stores to Asian private equity firm MBK Partners for $6.4
billion (£4.2 billion)
 Reviews & Views
o Analyst view, Tesco’s exit from the USA and China
in 2013, showed that the company was not
interested in spending time on sorting out problems in
international markets; instead it preferred to choose
the easier way out by withdrawing from these
countries

o Tesco’s view, the divestment of TESCO’s operations in S.K fitted with its
strategic priority ‘to protect and strengthen balance sheet in U.K market and
reduce business debt levels.

o Experts view, the exit of major Multi national retailer like TESCO from S.K and
the new law to protect local small retailers would make South Korea unattractive
for investments and could impact the country in long run.

o Shoppers/Consumers view, “I understand that traditional marketers are

having hard time. But they didn't made any ease to shop there. Its not about
policies ordering closure on Sundays, Its about having better products,
cheaper prices and easier parking.
 for your
Patience & Cooperation