These competitors spend lavishly on advertising and other marketing techniques. Tesco has a number of powerful competitors in the UK. Rivalry amongst Tesco’s existing competitors It is therefore easy to argue that the threat of substitute products and services for Tesco is mostly irrelevant. Likewise, it also sells fresh milk, condensed milk, and powder milk. For example, it sells both butter and margarine. It also sells substitutes of the majority of the products. Tesco offers its customers a wide range of products. Threat of substitute products/services affecting Tesco Likewise, would-be competitors may not have enough money, access to distribution networks, and expertise to explore the supermarket industry in the UK either. Tesco does not need to worry about any new entrants as it enjoys economies of scale and has its own core competencies. The threat of new entrants coming into the UK supermarket industry is very low particularly because of the capital requirements. Some people have accused it of behaving like ‘mafia’ for its tactics to squeeze suppliers (Poulter, 2o16). However, it should be mentioned that Tesco has been accused of bullying suppliers over price cuts. Tesco negotiates very hard with the suppliers to increase its profit margins. However, these suppliers cannot exert any significant power on Tesco as there are so many of them out there. Tesco works with 2,500 suppliers in the UK, and many more thousands abroad. This requires Tesco to keep its prices low that impacts on the profit margins.īargaining power of the suppliers of Tesco However, some analysists argue that the bargaining power of the grocery customers is high in the UK as now-a-days they are many competing retailers (notably Aldi, Lidl, and Poundland) vying for the same customers, and compared to Tesco, some of them are cheap as well. This makes the industry attractive for Tesco. The bargaining power of the buyers in the UK is low as they are not organised, and it is unlikely that they can be better off if they switched to competitors such as Asda and Sainsbury’s. Tesco serves millions of customers every week, in its stores and online (Tesco, 2020). Tesco is the market leader in the UK and operates in a number of countries.īargaining power of the buyers/customers of Tesco competitive rivalry, supplier power, buyer power, threat of substitutes, and threat of new entrants on Tesco which operates in the supermarket industry. It aims to examine the impact of the five forces i.e. This is a detailed Porter’s five forces analysis of Tesco.
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