Case Study

Tesco: Keeping the hard discounters at bay?

10 pages
April 2008
Reference: IMD-5-0737

This case can be used with Nestlé: The Growing Retail Role Of Hard Discounters Like Aldi (IMD-5-0736) and Nestlé: Leveraging The Hard Discounter Channel (IMD-5-0738) or independently.The case describes some of the major strategic and tactical moves that Tesco made between the early 1990s and 2005. Tesco is widely recognized as one of the most sophisticated and successful retailers in the world. During the 15-year period covered by the case it became the dominant grocery retailer in the UK and the largest retailer overall accounting for over 13% of all retail sales in the United Kingdom. It was very successful during this period in containing both Asda (acquired by Wal-Mart in 1999) and three of the major European hard discounters. The hard discounters had a combined market share of less than 5%, more than 15 years after the first one entered the UK market. The issue posed at the end of the case was whether Tesco would continue to hold the hard discounters at bay, as they stepped up their efforts to penetrate the UK market.

Learning Objective

The case describes some of the strategy and tactics Tesco used to try to contain the threat posed by strong, low cost competitors. Students and participants have an opportunity to identify some of the major moves and discuss their effectiveness. It becomes clear in the discussion that Tesco has responded in a very sophisticated way to its low cost competitors. This leads to a discussion about whether Tesco can continue to succeed as the hard discounters redouble their efforts and learn from some of their early mis-steps.

Retail, Competitive Strategy, Marketing Strategy, Information Technology, Loyalty Program, Branding
United Kingdom
Published Sources
© 2008
Available Languages
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