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MARKETING MANAGEMENT
Devanathan
Libin Paul
Santana Pravin
K. Suriya
Undrakonda Haribabu
ANALYSIS OF
TESCO’S VIRTUAL STORE:
FROM SOUTH KOREA
TO
THE UNITED KINGDOM
TESCO PLC Era Begins
 Tesco - Founded in 1919 in London’s East End group of market stalls.
 Owner- Jack Cohen
 First own brand was tea, which was bought from T.E Stockwell
 Jack Cohen + T.E Stockwell =
 Tesco “The superstore” in 1968.
Owner- Jack Cohen
TESCO PLC NOW
 Sir Terry Leahy (CEO of Tesco)
 4811 stores all over the globe
 No of employees 4,72,000
 It has stores in 14 countries Asia and Europe
 Third largest retailer in the world measured by profits
 Second-largest retailer in the world measured by revenues.
Sir Terry Leahy
(CEO of Tesco)
Tesco in U.K.
 In 1990’s
Tesco- A significant player in U.K retailing
(2% in 1993 to 5.3% in 1994).
 In 2010
2545 stores across the country.
 Between 2001 and 2011
Sales and profit doubled in U.K($71.9 billion and $4 billion resp.)
Stores
Extra
(191)
Home
Plus
(13)
Metro
(185)
Express
(1188)
Superstore
(460)
One Stop
(513)
Tesco Online Retailing In The UK
 World’s first ever online shopping transaction in 1984.
 In 2000, Tesco launched its online grocery retailing through Tesco.com
 Became third most visited retail website in the UK.
 The site had 3.4 million users by the end of 2009.
Online site of TESCO
Online site of TESCO
Online site of TESCO
Tesco Went International
 In 1995 Tesco went international and being the first external market.
 In 2010 Tesco had entered 5 other countries in Europe.
&
 6 countries in Asia.
HUNGARY
Tesco: World’s 3rd Largest Retailer
So what happened to Tesco in..??????
Tesco in South Korea
 In 1999, TESCO entered the South Korea market under the home plus
brand.
 Became the second largest South Korean retailer.
Video no 1
Virtual stores in South Korea
Virtual stores in South Korea
Here comes the Case
Whether starting a VIRTUAL STORE similar to that of
SOUTH KOREA will be successful in UNTIED KINGDOM
Issues Of The Case
 Already the company called Ocado has an app for buying things
 Ocado is in 20 different platforms with 1 lakh registered users and 4000 daily orders.
1
 Smart phone penetration is less in United Kingdom (66% in 2015) than South Korea
(83% in 2015).
2
Smartphone penetration United
Kingdom
South Korea
2010 20% 18%
2011 30% 45%
2012 36.8% 60%
2013 45.5% 73%
2014 50% 81%
2015 66% 83%
 Cost of monthly transport ticket is more in UK ($178) as compared to South Korea ($42).
 London underground system is the world’s oldest and some stations showed their age.
There is a complexity in Wi-Fi signals in the underground.
3
4
 Companies like O2, Vodafone, EE and Three are planning to provide network
in the underground but it is their long term goals.
5
 During a survey conducted among the people of UK,
1. 71% of them wishes to see, touch fresh products before buying.
2. 57% of them prefer not to buy fresh food online.
3. And 49% of them chose to buy the food based what looks good in store.
6
7
35
36
16
13
Consumer Use Of The Online Channel
For Grocery Shopping , July 2011
 36% - purchases groceries through online.
 35% - do not foresee doing grocery shopping online in next 2 year.
 16 % - No longer want to use online shopping.
 13 % would like to use online shopping.
 30% of the total monthly grocery budget spent online is less than 10% as July 2011.
 53% of people say that if they get top up on their shopping wallet at supermarket,
they prefer to buy everything from there.
 Population density is 5206 people/km2 in London and 16000 people/km2 in Seoul
10
9
8
How is a virtual store different from online shopping and how is it similar to
online shopping?
 Online shopping will only give the virtual shopping experience on the other hand,
virtual stores launched by the Tesco at South Korea was a market diffusion of virtual
and traditional shopping.
 The virtual shelves on the subways and train stations gave the feel of actually
standing inside the Tesco store itself.
 Besides consumers won’t have to go to any website in their computers or laptops
but just open their smart phone app (Tesco's app) and directly start shopping.
 It was very time effective and interactive than the online shopping.
1
Contd.
 Purchasing groceries over the virtual store is the new method of bringing the offline
store to your door steps via online selling, whereas the online shopping in not an
existing or functioning offline stores.
 Limited option is the drawback for these virtual stores. Whereas in online shopping
customers have many options on the hand.
1
v/s
Virtual store succeeded in South Korea. But isn't UK a different
market? Will virtual stores succeed given these differences?
 Virtual stores in UK can succeed only when the differences are addressed clearly,
differences like the purchasing power of the people, population density, and salary per
month, smart phone users, network accessibility, and even the people’s mentality towards
the virtual store.
2
+ =
Taking the South Korean model as a baseline, what aspects should
Lumbergh change to adapt this model to the UK market?
 Lumbergh must concentrate on meeting the monthly grocery needs of the people.
 Focus on what products should be placed on the display panels in the virtual stores.
 Aware of the food consumption style of the people of UK as the taste of the people
differs from country to country.
 Pricing will be the major issue because cost of the product includes the transporting
charge as well.
 Transportation charge in UK is quite high when compared to South Korea.
 To be competitive the price must be as low as it is in the normal grocery stores.
3
What are the determinants of virtual store location/placement
and the choice of products to be sold?
 Determinants of virtual store location/ placement
1. Number of passenger traffic and journeys
2. Accessibility to Wi-Fi.
3. Cost of monthly transport ticket.
4. Average salary of the inhabitants.
4
Contd.
 Determinants of the choice of the products.
 There are many stores available in UK. Out of which the percentage of selling area is more for
the food and non food line (from electrical equipment cookware, health and beauty) and the
superstores( non food ranges such as the DVDs and books, cafes, home shopping and petrol
filling stations) having 42% each.
 Its better not to include food items because many people disagree to buy fresh food without
touching as per the survey.
4
Will people change from their traditional way of
shopping groceries to shopping on virtual stores?
 Owing to the success they achieved in Korea, if the company has a clear idea about
where to place the virtual store by considering all those limitations and if they sell
products at a lower cost than the online stores, there is a possibility of success as
like Korea.
5
Do you think virtual store can be set up in
UK?
 Virtual stores can be setup in UK if the exact location is found and it also
depends on the necessity of people and the company should thrive to meet
the customer need as they did in Korea.
6
If TESCO decides on setting up virtual stores
in UK, where should it be located?
 Virtual store can be located in train stations because it is being used well with
1.3 billion journeys in the year 2011.
7
Whether this virtual store can be used as an
advertising and promotion tool for the entire chain?
 Yes, virtual stores can be used as an advertising and promotional tool for entire
chain by collecting certain amount as fee from the brands being promoted or
being advertised.
 By this way even if the concept of virtual store fails in UK, the company would
have gained a considerable amount as revenue.
8
If TESCO decides to set up virtual stores in airports and
railway stations, where should they exactly locate it in
respective places?
 If TESCO decides to setup the virtual stores in railway stations and airports,
they might choose waiting halls of railway stations and platforms.
 If there are no waiting halls at the arrival of international terminals and in
both departure and arrival of domestic terminals.
 In these places they should be placed in such a way that everyone notices it.
9
What kind of products should the company
has to include in the virtual store?
 Since the birth rate of UK is 813200 per year, there will be consistent demand for
baby napkins and other infant materials.
 The aged peoples is about 20% (Approx.) & 60% of population are working, so office
items can also be included.
 Owing to the increased percentage of the selling area, the food and non food line
(from electrical equipment cookware, health and beauty) and the superstores( non
food ranges such as the DVDs and books, cafes, home shopping and petrol filling
stations) can be considered
10
If TESCO start virtual stores in UK, should they focus on offering more
convenient food that requires minimal preparation?
 Yes, since 60% of the total population is working community, they will prefer foods
that require less preparation which will be more convenient for them.
11
Conclusion
 Tesco recognizes the need to focus on innovation in order to grow as a business. This is
more important than ever, as the company predicts that the way customers shop and
pay for their purchases will change more in the next three years than in the last
twenty years. Tesco is striving to be at the forefront of that change.
 Innovation at the company is driven by customers and technology.
 On the whole, this is not about moving customers from one channel to another. This is
bringing in incremental new business.
Tesco

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Tesco

  • 1. MARKETING MANAGEMENT Devanathan Libin Paul Santana Pravin K. Suriya Undrakonda Haribabu ANALYSIS OF TESCO’S VIRTUAL STORE: FROM SOUTH KOREA TO THE UNITED KINGDOM
  • 2. TESCO PLC Era Begins  Tesco - Founded in 1919 in London’s East End group of market stalls.  Owner- Jack Cohen  First own brand was tea, which was bought from T.E Stockwell  Jack Cohen + T.E Stockwell =  Tesco “The superstore” in 1968. Owner- Jack Cohen
  • 3. TESCO PLC NOW  Sir Terry Leahy (CEO of Tesco)  4811 stores all over the globe  No of employees 4,72,000  It has stores in 14 countries Asia and Europe  Third largest retailer in the world measured by profits  Second-largest retailer in the world measured by revenues. Sir Terry Leahy (CEO of Tesco)
  • 4. Tesco in U.K.  In 1990’s Tesco- A significant player in U.K retailing (2% in 1993 to 5.3% in 1994).  In 2010 2545 stores across the country.  Between 2001 and 2011 Sales and profit doubled in U.K($71.9 billion and $4 billion resp.) Stores Extra (191) Home Plus (13) Metro (185) Express (1188) Superstore (460) One Stop (513)
  • 5. Tesco Online Retailing In The UK  World’s first ever online shopping transaction in 1984.  In 2000, Tesco launched its online grocery retailing through Tesco.com  Became third most visited retail website in the UK.  The site had 3.4 million users by the end of 2009.
  • 9. Tesco Went International  In 1995 Tesco went international and being the first external market.  In 2010 Tesco had entered 5 other countries in Europe. &  6 countries in Asia. HUNGARY
  • 10. Tesco: World’s 3rd Largest Retailer
  • 11. So what happened to Tesco in..??????
  • 12. Tesco in South Korea  In 1999, TESCO entered the South Korea market under the home plus brand.  Became the second largest South Korean retailer. Video no 1
  • 13. Virtual stores in South Korea
  • 14. Virtual stores in South Korea
  • 15. Here comes the Case Whether starting a VIRTUAL STORE similar to that of SOUTH KOREA will be successful in UNTIED KINGDOM
  • 16. Issues Of The Case  Already the company called Ocado has an app for buying things  Ocado is in 20 different platforms with 1 lakh registered users and 4000 daily orders. 1
  • 17.  Smart phone penetration is less in United Kingdom (66% in 2015) than South Korea (83% in 2015). 2 Smartphone penetration United Kingdom South Korea 2010 20% 18% 2011 30% 45% 2012 36.8% 60% 2013 45.5% 73% 2014 50% 81% 2015 66% 83%
  • 18.  Cost of monthly transport ticket is more in UK ($178) as compared to South Korea ($42).  London underground system is the world’s oldest and some stations showed their age. There is a complexity in Wi-Fi signals in the underground. 3 4
  • 19.  Companies like O2, Vodafone, EE and Three are planning to provide network in the underground but it is their long term goals. 5
  • 20.  During a survey conducted among the people of UK, 1. 71% of them wishes to see, touch fresh products before buying. 2. 57% of them prefer not to buy fresh food online. 3. And 49% of them chose to buy the food based what looks good in store. 6
  • 21. 7 35 36 16 13 Consumer Use Of The Online Channel For Grocery Shopping , July 2011  36% - purchases groceries through online.  35% - do not foresee doing grocery shopping online in next 2 year.  16 % - No longer want to use online shopping.  13 % would like to use online shopping.
  • 22.  30% of the total monthly grocery budget spent online is less than 10% as July 2011.  53% of people say that if they get top up on their shopping wallet at supermarket, they prefer to buy everything from there.  Population density is 5206 people/km2 in London and 16000 people/km2 in Seoul 10 9 8
  • 23.
  • 24. How is a virtual store different from online shopping and how is it similar to online shopping?  Online shopping will only give the virtual shopping experience on the other hand, virtual stores launched by the Tesco at South Korea was a market diffusion of virtual and traditional shopping.  The virtual shelves on the subways and train stations gave the feel of actually standing inside the Tesco store itself.  Besides consumers won’t have to go to any website in their computers or laptops but just open their smart phone app (Tesco's app) and directly start shopping.  It was very time effective and interactive than the online shopping. 1
  • 25. Contd.  Purchasing groceries over the virtual store is the new method of bringing the offline store to your door steps via online selling, whereas the online shopping in not an existing or functioning offline stores.  Limited option is the drawback for these virtual stores. Whereas in online shopping customers have many options on the hand. 1 v/s
  • 26. Virtual store succeeded in South Korea. But isn't UK a different market? Will virtual stores succeed given these differences?  Virtual stores in UK can succeed only when the differences are addressed clearly, differences like the purchasing power of the people, population density, and salary per month, smart phone users, network accessibility, and even the people’s mentality towards the virtual store. 2 + =
  • 27. Taking the South Korean model as a baseline, what aspects should Lumbergh change to adapt this model to the UK market?  Lumbergh must concentrate on meeting the monthly grocery needs of the people.  Focus on what products should be placed on the display panels in the virtual stores.  Aware of the food consumption style of the people of UK as the taste of the people differs from country to country.  Pricing will be the major issue because cost of the product includes the transporting charge as well.  Transportation charge in UK is quite high when compared to South Korea.  To be competitive the price must be as low as it is in the normal grocery stores. 3
  • 28. What are the determinants of virtual store location/placement and the choice of products to be sold?  Determinants of virtual store location/ placement 1. Number of passenger traffic and journeys 2. Accessibility to Wi-Fi. 3. Cost of monthly transport ticket. 4. Average salary of the inhabitants. 4
  • 29. Contd.  Determinants of the choice of the products.  There are many stores available in UK. Out of which the percentage of selling area is more for the food and non food line (from electrical equipment cookware, health and beauty) and the superstores( non food ranges such as the DVDs and books, cafes, home shopping and petrol filling stations) having 42% each.  Its better not to include food items because many people disagree to buy fresh food without touching as per the survey. 4
  • 30. Will people change from their traditional way of shopping groceries to shopping on virtual stores?  Owing to the success they achieved in Korea, if the company has a clear idea about where to place the virtual store by considering all those limitations and if they sell products at a lower cost than the online stores, there is a possibility of success as like Korea. 5
  • 31. Do you think virtual store can be set up in UK?  Virtual stores can be setup in UK if the exact location is found and it also depends on the necessity of people and the company should thrive to meet the customer need as they did in Korea. 6
  • 32. If TESCO decides on setting up virtual stores in UK, where should it be located?  Virtual store can be located in train stations because it is being used well with 1.3 billion journeys in the year 2011. 7
  • 33. Whether this virtual store can be used as an advertising and promotion tool for the entire chain?  Yes, virtual stores can be used as an advertising and promotional tool for entire chain by collecting certain amount as fee from the brands being promoted or being advertised.  By this way even if the concept of virtual store fails in UK, the company would have gained a considerable amount as revenue. 8
  • 34. If TESCO decides to set up virtual stores in airports and railway stations, where should they exactly locate it in respective places?  If TESCO decides to setup the virtual stores in railway stations and airports, they might choose waiting halls of railway stations and platforms.  If there are no waiting halls at the arrival of international terminals and in both departure and arrival of domestic terminals.  In these places they should be placed in such a way that everyone notices it. 9
  • 35. What kind of products should the company has to include in the virtual store?  Since the birth rate of UK is 813200 per year, there will be consistent demand for baby napkins and other infant materials.  The aged peoples is about 20% (Approx.) & 60% of population are working, so office items can also be included.  Owing to the increased percentage of the selling area, the food and non food line (from electrical equipment cookware, health and beauty) and the superstores( non food ranges such as the DVDs and books, cafes, home shopping and petrol filling stations) can be considered 10
  • 36. If TESCO start virtual stores in UK, should they focus on offering more convenient food that requires minimal preparation?  Yes, since 60% of the total population is working community, they will prefer foods that require less preparation which will be more convenient for them. 11
  • 37. Conclusion  Tesco recognizes the need to focus on innovation in order to grow as a business. This is more important than ever, as the company predicts that the way customers shop and pay for their purchases will change more in the next three years than in the last twenty years. Tesco is striving to be at the forefront of that change.  Innovation at the company is driven by customers and technology.  On the whole, this is not about moving customers from one channel to another. This is bringing in incremental new business.