In the business environment, the manner and the feature of the processes in which the entrepreneurs conduct their businesses results in the classification of the retailers into different categories and sub-categories. To begin with, a supermarket dealer concentrates on trade with food and beverages goods. In their scope, they capitalize in the trade with the consumer goods that they stalk in their shelves for customers’ self-service. (Jones, & Simmons, 1990
Secondly, we have the ware house retailers. These retailers are often located in the business parks where the rent and other overhead costs are considerably low (Jones, & Simmons, 1997). Thirdly, we have the E-tailers who conduct their businesses online. This type of retailers offers varied categories of commodities over a wide range of geographical region. Finally, there are discount retailers. This type of retailers sells products from various suppliers at discounted prices by the re-vending end of line.
Categories of Retail Outlets
The form of retail outlets helps categorize the retail trade into the various categories and sub-categories. This classification is based on the basis of ownership of the retail for instance, individual, corporate chains or contract modes. In addition, the classical level of the services and commodities offered results in a new category of the retails. Furthermore, retails can also be classified with regard to their merchandise (Harvard Business School, 2008). With regard to the ownership, we have certain retails as the supermarkets which may be owned by either individuals, or corporate. The contractual system involves multiple stores that deal with similar services and share a common point of management thus a preference by the customer due to the existence of multiple outlets which they are familiar with. The retails in this category include the e-tails and the supermarkets.
Besides this, we have a category of retail based on the level of service they offer. These services include the self service, limited services among others. Included in this category is the supermarket which offers self service. This mode of classification is diverse in the sense that it encompasses both the manner of operation of services offered. For instance, a supermarket offer self service and located in a region dictated by the proximity of the enterprise to its prospective client. Additionally, limited services are offered in some retail businesses includes the sellers of secondhand apparels by the discounted retailers. Full services include the majority of the departmental stores and specialty retailers. Amidst all the challenges, there are some stringent factors that affect the retail industry, these includes:
Economic Fluctuations and Social Disharmony
Among the biggest retailers in the world is the French Carrefour, and the world’s biggest retailer is the Walmart supermarket. According to the intercontinental grocery market expert; IGD, the UK’s biggest retail is likely to win the fair deal from its counterpart Carrefour of French to rank position two in the world retail markets. This retail is known the Tesco supermarket. With the expansion of the world market, the growth of this retail outlet is expected to rise especially the China and India despite the economic uncertainties (Oldfield, 2000).
Furthermore, the current economic conditions have resulted in lower public incomes. Consequently, this has resulted in the reduction of the demands for the luxuries and other non-basic items. As a result, this has minimized the level of profits and capital base besides accumulating bad debts and family insurance claims. In order to maintain the price levels in the highly competitive economic conditions the retailers has been forced to narrow down the prices thus resulting in lower profit margin.
In the recent past, growth in the ICT has immensely challenged the operations of the Tesco. Indeed, the growth in internet and e-tail usage in shopping has led to the establishment of a marketing website, ‘www.tesco.com.’ through which the retail has been able to segment a wide scope of its client scattered throughout the world. To minimize the carbon use, the retailer has played a significant role by investing closer to a hundred million dollars in the ‘Sustainable Technology Funds.’ Due to the changing persistently changing technology in the world, the consumer behaviors have been extremely dynamic hence necessitating the constant analysis of the market in different segments in order to maintain the influx of clients. This has resulted in high operational cost thus constricting the profits (Panos & John, 2001).
Political and Legal Influence
The political climate has not spared the retailer. There has been extensive sourcing from the Far East as a result of the exporting restrictions on edible products. Indeed, low margin paced products have ended up in negative extremities in the field. There has been both direct and indirect government influence. Heavy taxation has resulted in high cost of all material from the retailer. Indeed, the current level of VAT which stands at 20% has resulted in its products becoming increasingly expensive in the global market. To boost the performance of their staffs, Tesco undertakes training of its staffs in order to maximize their output in the long-run. However, doing this has been very expensive in the short-run since it has to pay a significant proportion of money in sending its staffs for such training. This has further constricted the level of profit margin.
Environmental Issues that Affects TESCO
The waste management has been an initiative by the Tesco retailers though it has led to the increased level of investment on the physical non-trade assets. Between 2006 and 2007, TESCO successfully reduced its carbon emission by 4.7%. This was achieved after a careful study on the refrigeration that resulted in the emission of carbon and the successive installation of a new technology to replace the former refrigeration machines and methods (Hillary, 2001). In line with this the overhead costs of the maintenance of the carbon and other waste free trading environment has compelled the retailer to work hand in hand with other agencies for the reduction of the wastes. For instance, the retailer works in line with the United Nations Environmental Programme (UNEP).Furthermore, in the year 2007 the retailer committed 25 billion dollars to the financing of the ‘Sustainable Consumption Institute’ in the Manchester University.
TESCO is overwhelmingly, disturbed by the wastes resulting from its packaging strategies and is set to reduce. Consequently, the retailer has resolved to reusable movable trays to replace the packaging cupboard. The overall effect of these measures is an increasing level of financial outlay that the retailer invests in the waste management program.
Tesco has been facing a stiff competition over the years despite its immense size of the share of the market. TESCO operates under a very competitive environment with the incorporation of the local firms like ASDA and Sainsbury. Indeed, the firm faces stiff competition in the ICT sector. In the music arena, this is further worsened by the illegal down loads of music thus constricting the saturated market in the music industry. This therefore leaves little share of the market left for the TESCO agents where other minor firms like the Virgin and the Apple remains to compete with it.
The TESCO’s Market Segmentation
According to the ‘West Street Journal’, TESCO has chosen a specific line of conducting business particularly, the sale of grocery. In specific, the firm specializes in trade on food products but currently focused to diversify in non-food products in order to win a large share of the market. Consequently, the firm offers a wide range of products to fit in virtually all the geographical locations, age and the population. In addition, the Retailer is capable of offering low prices of her products due to his sole leadership in the price leadership.
To analyze the market and maintain the consumers’ influx, the retailer undertakes constant study of the market situation and the trends in the consumer behaviors with regard to the changing technology. Through the intensive analysis of the market, TESCO has been in a position to tap the huge populace and the world grocery market despite the tough competition in both local and international settings.
Retail Mixing Strategy
In the current world of technological advancement, TESCO has not been left behind. Indeed, the firm has incorporated the online shopping where her customer buys commodities online throughout the entire spectrum of the world market. Henceforth, the retailer uses the best means of relaying the products to the clients. In addition, TESCO has established chain of stores in most parts of the world where variety of products is offered ranging from the food stuffs to electronics and other consumer goods. This has enhanced the performance of the firm as well as the acuity to the global environment.
Besides this, TESCO has had extensive product promotion strategies. Among them is the recent rebranding of all digital entertainment into blink boxes. This has boosted the sales of its products in the world market and beefed up its domination in the UK, grocery market to about 30%. This has resulted from the declined output as a result of increased competition in Britain with the incoming firms such as discount rivals and up markets.