Dletemp Temp Turnitintool 760903854 25706 1449864713 21645 1
Dletemp Temp Turnitintool 760903854 25706 1449864713 21645 1
Dletemp Temp Turnitintool 760903854 25706 1449864713 21645 1
TESCO
How the internal structure of the
organisation impacts internal and external
communications and customer experience.
The publication below is an analysis of the supermarket chain
Tesco, and how the organisation delivers customer experience
to its customers. The paper express the link between
customer relationship management and customer life time
value for the organisation, well as recommendations to
improve customer experience.
Introduction
Headquartered in Chestnut, Hertfordshire, Tesco is a Multinational British retailer of
grocery and general merchandise. With 7817 stores across 12 countries, it is the
second largest retailer in the world in terms of revenue. In the UK, it is the market
leader in the grocery sector. On the company website, it claims to serve some 66
shoppers every second.
The organisation is located in 12 countries outside the United Kingdom, including
China, Malaysia and more recently United States. (Tesco annual report, 2009). The
organisation has several subsidiaries including Tesco Bank and Tesco mobile and it
dominates the UK food and grocery market with a market share of approximately
28.4% as seen in figure 1 below. (Mintel)
FIGURE 1, UK grocery marker
share. Mintel, 2015
As a grocery retailer, their product ranges include departments for chilled goods such
as meat, dairy and fresh produce. There is also reserved shelf space for bakery,
canned and packaged goods and alcohol as well as a range of non-food products
such as pet supplies, clothes, medicines and household items.
Below is an overview of Tesco PLC (Tesco PLC Annual Report and Financial
Statements 2015)
Type
Number of locations
Number of employees
Revenue (2015)
Understand customers
Be first to meet their needs
Act responsibly for our communities
grocery sector. Below are a few as defined by the 2009 report by the office of
national statistics.
Sic
Definition
code
47290
47210
47220
47230
47710
47250
47260
47750
A report by the Institute of Grocery Distribution concluded that the UK grocery market
is worth 177.5 billion in the year leading up to March 31st 2015, an increase of
1.7% from 2014. Food and grocery expenditure accounts for 53p in every 1 of UK
retail sales.
There will always be a demand for food and grocery as they are part of our
psychological needs according to Maslows hierarchy (Maslow, 1943).
IDG has predicted the UK grocery market to increase in value by 13.0% to 200.6bn
in 2020. The expected increase in population means the market will benefiting from
an additional 2.2 million consumers in the next five years; as illustrated in Figure 3
below.
This increasing demand has caused the players in the market including Tesco to
become a multi-channel retailer. Tesco was the first grocer in the grocery market to
provide online deliveries as well as click and collect. The organisation has also
invested 65 million in a data centre strategy to drive online growth.
Mike McNamara, then CIO said in a keynote at Oracle OpenWorld in San Francisco
that Retail 2020 will be radically different from what we know today, Increasing
numbers of people are riding the digital wave its force is unstoppable. If you let it
crash over you, it will wipe you out. (2013).
introduced by then CEO Terry Leahy and customer science agency Dunnhumby, as
a trial in 1994. After findings were presented, Chairman Lord McLaurin said in a
statement "What scares me about this is that you know more about my customers
after three months than I know after 30 years. As of November 2015, the
organisation boasts 38 million club card holders according to the company website.
To obtain a club card, customers must sign up using personal information such as
Full name, address and email address. Every time a club card is used, information is
stored against the account such as items purchased, where it was purchased, price
paid and the quantity. (Cellan-Jones, 2007) Information of shopping behaviour is
kept for up to two years.
Dunnhumby then analyses the data to figure out the purchase patterns for the
household. According to the company website, Dunnhumby uncovers valuable
insights: what customers want, where they want it, and how much theyre willing to
pay for it.
This then benefits the customers shopping experience as the organisation is aware
of their shopping patterns. Promotional offers and rewards are then personalised
making the customer feels more valued; and making the shopping experience better.
Matt Atkinson, chief marketing officer at Tesco, said in a statement addressing
Tescos multi-channel approach to customer experience that prices will become
increasingly personalised, with more targeted promotions, while physical stores will
become very finely tuned to tend to local taste and needs, this is mass
customisation.
Customer experience is important to the organisation instore as well as online.
In December 2012, page views on the company website exceeded visits from a
computer for the first time ever. By the end of 2013, the organisation launched a club
card mobile application that allowed the vouchers received to seamlessly integrate
with the mobile app, so that at the point of sale, promotions will be instantly
recognised (Computer weekly, 2013)
Matt Atkinson, chief marketing officer at Tesco said in a statement Weve seen the
emergence of a seamless, blended world of physical and digital and we enable the
customer to move between those two worlds.
Customer experience is a very important factor for the organisation as they aim to
be the champion for customers in the 2015 annual report.
decoration
30 to spend in Goldsmiths jewellers
, with 10 worth of vouchers
10 to spend in Pizza express with 2.50 worth of vouchers
20 to spend in spa finder wellness 365 with 10 worth of vouchers
FIGURE 4, Loyalty
ladder. Kotler, 2011
All the benefits the customers receive from having this loyalty card encourages a
repeat purchase, thus elevating the customers from a customer to a client; as seen
in figure 4. (Kotler, 2011)
Dunnhumby stated on their company website that by personalising the experience
of the shopper, in and out of store, online and off, before, during and after, earning a
lifetime of loyalty
CLTV is a very significant factor in the success of the organisation. Tesco was the
second largest grocery retailer in the UK before the inception of the club card
system. Research shows that it is more cost effective to retain a customer as
opposed to gaining new ones.
HR and Marketing Practice
Tesco have successfully integrated human resources into the overall strategic
direction of the business. Training and development is a crucial aspect of the growth
of any organisation. It makes employees more productive, effective and gives them
the tools required to deliver a good customer experience. Before training and
development occurs, the employees are required to identify their strengths and
weaknesses; which are then logged in a personal development file. The managers
are then tasked with finding the appropriate solutions. Tesco uses training methods
such as shadowing, coaching and mentoring. Development programs are designed
to help the employees extend their abilities focusing on both leadership behaviours
and operating skills. (Winterman, 2013)
Within the organisation, training and development occurs in various tiers of the
organisation.
Training and development helps create long term proficiencies; meaning employees
become more positive, productive and valuable to the organisation. Tesco's brand
image also benefits as customers are more confident in the competence and
knowledge of the employees. (Aguinis and Kraiger, 2009)
The organisation needs to maintain its training and development schemes to keep
the employees more efficient; thus improving customer experience.
Communication with customers is very important to market oriented organisations. It
maintains on the company website that No one tries harder for customers. Tesco
does a lot to improve its Customer touch point on various different platforms
including print and TV.
All these platforms are somewhat out dated to a modern audience. The organisation
has a social media presence however it more dedicated to their mobile network.
Social media is equally as beneficial in the grocery market. Research shows that
26% of customers would post a negative comment on social media if they have a
bad experience with a company (Mintel, 2015)
Tesco being more active on social media would be a great way to improve customer
experience because the customers can contact the organisation directly in seconds
and vice versa. Being more active on social media is a a very beneficial marketing
practice for a market oriented organisation, it is a very direct communication channel
to their consumers.
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