Abstract
Tesco is the leading retailer in the United Kingdom, and one of the largest food retailers in the world. It is not limited solely to the food market and has expanded into areas such as electrical goods and clothing. Tesco has its headquarters in Hertfordshire and employs about 318,300 people. The group recorded revenues of £42,641 million for February 2007.
Tesco is not just a retailer; it is also a brand. It has to its name, not only various shops such as Tesco Express, Metro, tesco.com, Tesco Extra, Fresh and Easy, Tesco Homeplus but also Tesco station, Tesco insurance, broadband, mobile and electricity. Tesco adapts and answers its customers' needs by improving its offers especially as regards food. Keeping pace with market trends, Tesco has, over the past few years, developed in yet another direction: the organic market. This report therefore will consider the success of Tesco's organic business in United Kingdom.
Tesco is developing a series of strategies based on the organic market. Firstly, it is attempting to widen the scope of organic food available in the store, including fruit and vegetables, meat, spirit and wines. Furthermore Tesco has expanded the ideology of organically grown substances, developing a range of organic clothing in collaboration with Katharine Hamnett. In this report, we are going to focus on the issues surrounding Tesco's organic food range in United Kingdom.
The UK has the third largest market for organic food in Europe, after Germany and Italy, more than 50% of Europe's organic land is in Italy, Germany, Spain and the United Kingdom. By December 2006, 498,646 hectares of land were managed to organic standards across the United Kingdom. Retail sales of organic products in the United Kingdom were worth approximately £1.6 billion during 2005, an increase of 30% on the previous year. Sales of organic products sold through supermarkets increased by 21% in 2006.
As a starting point, it would be useful to consider the environment of the organic market. Indeed, it may help in understanding why environmental influences are particularly significant for the future of a company and its competitors. So, a PESTEL analysis can be done in order to succeed in the new market.
The market has to take into account the environmental protection laws which are very strict and also the fact that local authorities regulate land planning. Furthermore, the market must take into account the European Union regulations, under which the company is obliged to work only with pre-approved product producers.
Equally, supermarkets have to consider factors such as current rates of inflation and the personal disposal incomes of its customers insofar as these factors directly affect its sales. Moreover, the actor on the market must consider the politico-legal variables. For example, the European Commission has proposed that up to 0.9% GM contamination should be allowed in organic food. So this is a market that has many constraints, but demand is strong and growing body of research proving the benefits of organics; it is a growth market.
Tags: Tesco Organic, retail market in UK, WalMart
