Tesco Stores (Malaysia) Background/ History Tesco Stores (Malaysia) Sdn Bhd was incepted on 29 Nov 2001, as a strategic alliance with local conglomerate, Sime Darby Berhad of which the latter holds 30% of total shares. Malaysia was selected as the next market of entry because of its growing economy with political stability, market size & GDP and its ability to grow. The first Tesco store in Malaysia was officially opened in May 2002 in Puchong. The opening of Tesco changed the consumer demand as well as brought new standards in retailing.
This spurred both big and small retailers to be efficient and competitive with the end result of benefiting Malaysian consumers. The second store in Malacca was opened in October 2002, followed by the opening of the Klang Bukit Tinggi store in December 2002, the Mutiara Damansara store in March 2003, Sg Petani store in December 2003, Penang store in November 2004, Ipoh in January and Shah Alam in July 2005. We have also launched Tesco Banting, Tesco Express Selayang, Ipoh & Kuantan in 2005.
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Tesco offers Malaysians a complete one stop shopping for their needs – fresh food to groceries from household needs to apparel. Tesco carries a total of 86,000 lines of products including more than 1,300 Tesco branded items. Tesco was founded in 1924. Over the past 81 years, as the retailing market has changed, the company has grown and developed, responding to new opportunities and pioneering many innovations. The brand name of Tesco first appeared on packets of tea in the 1920s. The first store opened in 1929 in Burnt Oak, Edgware in South East London By the early 1960s, Tesco had become a familiar name.
As well as groceries, the stores sold fresh food, clothing and household goods. The business then prospered and grew. It evolved and changed over the years and is today Britain’s leading food retailer. Marketing Strategy Target market Target market is the focus group of the retail establishments market. Every retail establishment specializes in a different market also known as market specialization. Market specialization is a business term meaning the market segment to which a particular good or service is marketed.
It is mainly defined by age, gender, geography, socio-economic grouping, or any other combination of demographics. It is generally studied and mapped by an organization through lists and reports containing demographic information that may have an effect on the marketing of key products or services. Competitive advantage Location Selection The locations for the tesco stores are mostly isolated stores because the size of the premices is very large. The average store space is about 2,827 square metres. Though there are some of tesco stores which are located in unplanned business districts.
For this assignment we shall look at 4 main tesco stores located in selangor because there are to many stores to go over individually. Tesco Puchong Tesco puchong is an example of a store which is located at an unplanned business district. It is located along a main high way which is the damansara – puchong (LDP) . Although the area across the highway is a planned business district which was planned and developed by IOI Properties , the area which Tesco is located is not a planned business district.
This means there is a low amount of pedestrian traffic and there is no other facilities around the area. One of the reasons why Tesco have managed to open its puchong brance in an unplanned business district is because tesco puchong was open at the time puchong was not a fully developed town. Tesco Kajang The story for tesco kajang is slightly different because it is located in an isolated location this is because kajang town was already fully saturated and cant accommodate a hypermarket in town so Tesco choose to set its store roughly about X km from kajang town .
Nonetheless Tesco kajang is still located along a very important road which is the cheras kajang highway. There are many advantages of having a store which is isolated one of it is the low rental or lease that the store has to pay for the land. This hence leads to the retail establishment being able to provide ample parking and also bigger isles for trolies and so on . The isolated location also provide tesco the freedom in being flexible in the design of the store. Tesco Klang The tesco klang branch is also located at an isolated location.
Eventhough it is located close to the newly developing residentian area called the botanical gardens. This means Tesco klang still have to spend a lot of money on advertising such as flyers and also billboards. Just like the tesco kajang tesco klang is also located along an important road which is the klang banting trunk road. Store Layout The Tesco store layout has been set to make it easier for customers to get attract impulse buying customers. The arrangement on the shelves also has been set so prime product are easier to reach and set at eye level.
The aim of the store layout is so that the customer gets to see the whole store so even if you only needed to buy one product for example eggs you still would have to walk through the electrical and dried stuff section. The map below shows the store lay out for the shah alam tesco branch. The different categories of product are clearly labeled below. The product that most customers come to buy from hypermarket are groceries and as we can see from the store layout plan above , if a person wants to buy a few groceries he or she still has to walk through or past several different departments such as the mens wear section or the shoe section. hile passing through this section there might be a chance that the customer might see something that he likes or needs so this leads to the customer buying more then the initial groceries that he or she wanted to buy. This kind of store plan is not only limited to the shah alam branch all hypermarkets have a similar lay out as the one above. The map below shows the store lay out for the tesco seremban branch. The similarities between both store lay outs will be discussed below. As we can see even in the tesco seremban store the grocery section is locater at the far right from the enterance.
The shortest route to the grocery section from the enterance is by using the lane alaong the check out counter but the planners of this layout know that the check out counter are usually busy with coustomers lining up to pay so new customers would rarely use this route because of the congestion another reason why customers do not use this route to get to the grocery section is because if they were to walk through this way they would be walking against the flow of ‘traffic’ and going against the flow pushing a large trolly could be a difficult task.
This leads to the customer choosing the long route through all the other section/departments. Customer services •Free carpark •Surau •Free Wheel Chair Service •Free Drinking Water •Trolleys Available •No Hassle 7 Days Return Policy •Cashier Counter •ATM Service •Big Appliances Delivery •Baby Changing Room •Food Court •Gift Voucher •BonusLink On The Spot Redemption •Pos Malaysia •Free Wheel Chair Service •Money Changer •Baby Changing Room •Car Wash Promotional Practices Tesco 2 by Abdul Haydor, May 3, 2007
Before we can make any recommendations for Tesco, we have to understand and establish Tesco’s core business activity. A core business activity is the one which is the most important for the business and usually generates the largest amount of income; Tesco’s core business activity is selling grocery on a wide scale as it is a supermarket. Two things a business can do to inflate their business are to: choose to diversify their core business activity or they may just choose to do the opposite, and specialize in what they’re good at. Diversification.
Extending the number and types of activities undertaken by the business. This can help to spread the risk because, if one area of the business is struggling, the other areas may still be profitable. This means the business as a whole, is not a risk. Specialization. Reducing the number and types of activities undertaken by the business, usually because some are making a loss or because the costs of a particular activity are too high. An example of a business which has diversified its commerce is Boots; it has now introduced Wellbeing services (such as reflexology, aromatherapy, dentistry etc. , it has opened its business to men and provides successful services for me. Thus, Boots recommendation to diversify its service and products has not only introduced a wider target market but it has also enabled them to increase profits. An example of a business which has specialized its commerce is EasyJet. EasyJet’s owner has expanded his empire with EasyCar, to provide car rentals; easyMoney; to provide loans and credit cards, easy. com; a free email service etc.
However, EasyJet’s owner’s success has not been verified so it’s impossible to distinguish the success of diversifying its products. Tesco is ever expanding its business in order to keep up the competition to a very high level, so therefore, it is vital that Tesco invest in new services and products so that customer’s demands are met. A Tesco customer is one of the most imperative stakeholders of Tesco. Customers are stakeholders because they have an interest in a business and also because the actions of customers can directly affect a business.
As mentioned earlier, Tesco have two choices of recommendations, either diversifying their commerce or to specialize in their current business; we’ve established that diversifying a business core activity has no risk in terms of a whole business, however, we’ve also learn that specializing a business is due of loss of profits in commerce so therefore businesses need to reduce their types of activity. Clearly Tesco is in no need to specialize, cut down, on their core business activities as they are financially sky high.
We need to look at how Tesco can introduce an innovative type of business activity that will be favored by customers and other stakeholders. Currently Tesco has an electronic range of goods and services that they offer, but one thing they lack is affordable laptops. So far, Dell and PC World are the leading retailers of affordable laptops. Tesco needs to buy quality laptops at a competitive price to maximize sales and increase productivity. The target market that Tesco aims at is vital in maximising sales and productivity. Tesco can’t aim affordable laptops at middle-class customers s these people will have enough money to buy sophisticated laptops at expensive prices. So, the target market is working class customers as they are more in need of affordable laptops with good quality assurance. We now need to differentiate the target market to ensure the right brand and specifications of laptops are available. Some customers prefer branded laptops like Sony, Toshiba, Advent etc. whilst others just prefer quality goods at competitive rates – it is vital Tesco gets these demands right. Before any changes can be incurred, Tesco needs to have a small goal based on sales, productivity, reducing costs etc.
Tesco will hope to make their new and improved stocks to have maximum sales otherwise they will lose a bit off profit. Now we need to look at the scale of recommendation, will it be just one local store of Tesco to see popularity of goods or will it be on a national scale where their goods are available by the majority of the public. The good thing about choosing to do the recommendation of business activity on a small scale is that you can easily see if the commerce is successful and you can clear stocks quite easily, however, because the stocks are not bought in large bulks, the profits of selling goods is unlikely to be excellent.
The good thing about choosing to do the recommendation of business activity on a small scale is that you can buy large bulks at competitive prices and make good profits. The other positive things are that the goods are likely to have maximized sales and productivity and eventually the costs of business activity will be covered. One flaw of recommending this business activity is that it will be in direct competition against Dell, PC World and even eBay.
These businesses can also too easily reduce their prices and the competition will soon inevitably will become unbearable. Therefore, to give Tesco’s an edge over the competitors, they can make this recommendation of business activity last for a limited period thus making this recommendation seem exclusive, this results in a massive increase in impulse buys leaving stocks sold out. As a result, competition against rivals and critics are solved and Tesco generates a massive profit in a short period of time leaving them to discuss further ventures of business activities.