What Strategies Did Tesco Use to Be More Successful Than Sainsbury?

What strategies did Tesco use to be more successful than Sainsbury?

Throughout the 1980's and the first half of the 1990's, Sainsburys was the market leader and the dominant force behind grocery retailing in Great Britain. However, in 1995 Tesco accelerated past them to become the number one in this country with 17% of the market share and the gap between these two major players has widened every year since as Tesco has continued to increase share and Sainsburys had drifted downwards.

With regards to customer bargining power Tesco was the first to introduce the club card. Sainsbury's dismissed the card as a gimmick but were soon to lose out on sales to Tesco and in the latter part of 1995. Offering points on purchases using the card and giving a small rebate to loyal shoppers. Dismissing the initiative as nothing new, Sainsbury did not realize that Tesco was capturing valuable information with every swipe of the card and building a powerful database of customers, which it gained through card membership information.

The card provided Tesco with vital customer information such as what products they were and were not buying, where they were spending their time in the store, and where they were not, as measured by spending. Customers received vouchers for items they liked to buy and offers to explore parts of the store that they had not yet seen. Different lifestyle magazines were created for different customers, and high-value customers got calls from the manager of the store, valet parking when they came to shop, and other special privileges.

In 1996 Tesco created a student card and another card for mothers, with offers suited to their needs. Tesco then added a travel service through a partnership with Lunn Poly, giving discounts off high-street prices. It also combined its card with Visa through the Royal Bank of Scotland, and offered discounts on DIY goods through well-known home improvement chain B&Q. In 1997 it added a full range of financial services, and the Tesco Direct service. Adding value was mandatory to these functional items so, for example, expectant mothers were given priority parking outside the store, changing facilities, and personal shopping assistants to help them. In 1998, after the U.K.'s deregulation of utilities, Tesco began to offer electricity and telecommunications products and services. Also in that year, clothing was added to the range through Next. By this time, Tesco had identified 108 customer market segments. This year, 2000, a joint undertaking with General Motors allows customers to buy cars from Tesco.

With regards to suppliers for example Kettleby Foods, the bargaining power of Tesco is extremely high given that almost