State the problem, or opportunity
The main aspect that needs to be considered in this study is with regard to the competitive aspects in the business of Tesco food retail outlet, especially its ongoing price war with American food retail major, Wal-Mart. These two food majors are rivals for top slot in food industry in the United Kingdom.
Another issue which is to be discussed is the fact that the unbridled growth of Wal-Mart has reached a certain stage where, perhaps, the group is not able to check and exercise control over its own growth trends, thus placing it in a favorable position for being targeted for anti-trust regulations in the United Kingdom. “Tesco is at the centre of the Competition Commission’s investigation into the UK supermarket sector, given its market share of 32 per cent, streets ahead of its closest rival Asda which commands less than 17 per cent.” (Fildes).
List alternatives or solutions for the problem or ways by which these opportunities could be realized?
The price war and competition between the US food retailers, Wal-Mart and Tesco is proverbial and most industry watchers are aware of it. While Wal-Mart’s main strength has been its low pricing which is able to attract even small buyers, the Club Card scheme initiated by Tesco has been a roaring success and underpins the success of its business, since it provides extreme benefit value which could be encashed, or discounted by the consumers or clients who visit the stores. Although initially, Club card proved to be unsuccessful in the context of Tesco, later it turned out to be the trump card for the business and was able to generate lots of business inroads for Tesco, especially during the recessionary phase in the U.K economy. Since Tesco devised ways and means by which they could counter Wal-Mart’s price advantages, by offering, on a one-to-one basis, the price benefit advantages that Wal-Mart offered, the struggle for leadership and supremacy in the U.K retail trade between the two giant business houses, Wal-Mart and Tesco has greatly intensified. While Wal-Mart passed on advantages of large scale trading through lower prices to customers, Tesco used discount schemes and other attractions to woo the customers in order to retain their loyalty towards the Tesco brand.
Analyze alternatives – Pros and cons
Finally, it could be concluded that the intense competitive elements that are part of the U.K retail market, needs to be addressed in terms of how they could benefit the ultimate customer. Speaking of Tesco, although Club card discount scheme has been well-accepted and appreciated by the public, the amount of spending done by consumers to qualify for the scheme is also a major cause of concern. The Club Card discount scheme was started in 1995 by the marketing-department of Tesco. Today, nearly 80% of Tesco customers are participants in the Club card scheme. How this would augur in later years, is definitely a matter of concern, especially with competitive elements in business becoming stronger in course of time. It could be observed that price wars between these two majors could create anti-trust situations and prove to be detrimental for business, since there is a strong probability of a large chunk of the consumer retail food market being monopolized by both Tesco and Wal-Mart.
Record solution or recommendation
Competitive elements in the business could be slowed down and kept under check if the Government decides to set up its own fair prices shops or distribute through its own marketing channels. This could not only be staples, but also food items that consumers need to purchase regularly. Price monitoring forms a major constituent of retail trading and it is the government that needs to exercise due control over retailers in the best interests of the public.
Fildes, Nic. Tesco Rejects Competition Concerns as Profit Keep Soaring. The Independent. 2007. Web.