PESTEL analysis of Tesco
This detailed PESTEL analysis of Tesco aims to explore some of the political, economic, social, technological, environmental, and legal factors that affect Tesco today. Tesco is the market leader in the UK supermarket industry. It is in fact, one of the largest and leading retailers in the world.
Political factors affecting Tesco
Tesco is a British retailer that operates in a number of countries e.g. Ireland, Hungary, Poland, Slovakia, Malaysia, China, Czech Republic, and others. Tesco’s home market is the UK where political environment is stable though Brexit has created a lot of uncertainty. Like the home market, all of its overseas markets are politically stable as well. Therefore, it can be said that Tesco is operating in the political environments that are mostly conducive to business. Likewise, Tesco has proved over the years that it is capable to respond to the current and future legislation, and adjust its business and marketing polices accordingly.
Economic factors affecting Tesco
As the global economies have been severely affected by Covid-19, it is expected that many people’s earnings are likely to go down, and many may lose their jobs. This may result in less spending by customers or switching to cheaper brands. This may severely affect the operations and profits of Tesco. Likewise, high labour cost, particularly in the UK and Ireland, costs Tesco millions of pounds every year.
Social factors affecting Tesco
Tesco has taken a number of initiatives in recent years in response to social changes and demands. For example, due to high demands, it sells branded halal meat to Muslim customers or have independent meat counters in some stores in the UK. Likewise, it sells both branded and own-label halal meat in Malaysia and Thailand (Tesco, 2020).
Tesco sells some branded kosher products in the UK for Jewish customers. Like the rising demands for specific types of meat/chicken, demands for vegetarian and vegan foods and drinks are also rising very high in the European markets that offer Tesco good opportunities for further growth.
Technological factors affecting Tesco
Tesco has benefited greatly from technological advancements over the years. For instance, it introduced ‘Clubcard’ in 1995. This loyalty card has been a big force behind the success of the company. Millions of people use it both in the UK and many other countries where Tesco operates. Likewise, Tesco’s self-service checkout points provide customers with convenience and help the company reduce costs.
Environmental factors affecting Tesco
Companies in the UK, the EU, and in fact, many countries around the world are facing enormous pressure from governments to address environmental issues. This pressure is not from governments only, but also from the public who are concerned about the environment. To respond to this pressure, Tesco has taken a number of initiatives. For instance, it vowed to remove one billion pieces of plastic packaging by end of 2020 (Weston, 2019).
Legal factors affecting Tesco
Government policies and legislation impact on Tesco directly. For instance, Davis (2018) reports that UK and EU competition law prohibit anti-competitive activities and therefore, Tesco cannot just simply merge with, or purchase another supermarket of its size in the UK as the country’s competition watchdog (The Competition and Markets Authority, CMA) can block such moves.
Tesco cannot pay any employee less than the minimum wages set by the government. Likewise, it cannot sell alcohol to underage customers. It should be mentioned that Tesco was sued and fined in the past for misleading customers.
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Last update: 12 May 2020
Davis, A. (2018) Competition law – the basics, available at: https://www.pinsentmasons.com/out-law/guides/competition-law—the-basics ( 10 May 2020)
Tesco (2020) available at: https://www.tescoplc.com/sustainability/downloads/religious-slaughter-policy/ (accessed 08 May 2020)
Weston, P. (2019) Tesco vows to remove one billion pieces of plastic packaging by end of 2020, available at: https://www.independent.co.uk/environment/tesco-plastic-packaging-waste-bags-environment-trays-lids-a9180691.html (accessed 10 May 2020)
Photo credit: Pixabay
Author: M Rahman
M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He is a graduate of Leeds Metropolitan University and London South Bank University.