TESCO



Tesco

Abstract

This study reports results from Tesco, an Internet-ordering and home-delivery grocers and 2440 of its customers. Tesco follows a different operations strategy as determined by choice of where to fulfill customer orders (from existing stores or from a dedicated DC) and by choice of delivery method (direct to the customer's home/office or indirect via customer pickup or third-party logistics provider). The survey data from customers are used to assess the degree of integration between marketing and operations and the relationship with customer behavioral intentions. The results indicate that eBusiness-, product-, and service-quality, all have a significant direct effect on customer behavioral intentions to purchase again. There is limited support for technology as a moderating factor. Finally, the relationships between the predictor variables and customer behavioral intentions differ across grocers. This supports the idea that grocers utilizing different operational strategies should focus attention on different facets of their business and provides insight as to where efforts should be directed.

Introduction

Groceries are, perhaps, the most universal commodity, thus competition often spurs supermarkets to go to great lengths to develop new technologies and methods of streamlining both their supply chain and their marketing efforts. In theory, the Internet can be used to link customers with grocery stores from their homes and will help integrate the supply chain by closely linking marketing, sales, operations, and logistics. The current study examines online grocery ordering and home delivery as a market, where marketing and operations strategies need to be carefully integrated. We examine four different grocers that have selected distinctly different operations strategies for delivering groceries to the customer's home. We then examine results from a consumer-oriented survey filled out by customers of Tesco to investigate relationships between marketing, operations, and customer satisfaction in this challenging market.

Company Background

Tesco is one of Britain's leading food retailers and has 586 stores though out Great Britain. From 1992 Tesco has grown greatly and has increased its market share from 10.4% to 15.2%. This increse in customers has also given Tesco a large amount of profit.

Tesco has 164,500 shareholders. Tesco's profit is about 505 million pounds after the tax has been deducted; about 50%of this is then distributed to the shareholders as dividends. The rest ruffly 250 million pounds is held back for investment in stores and improving sevices for the customers. The average shareholder holds between one and one thousand shares, but also a large amount of shares are held by banks, pension funds and building sercertys. Tesco's share prices have risen since February 1997 when it was 349p to 586p on the 21st April 1998. The shares have peaked a high price of 603p. With this growth Tesco's is now the largest super market chain.

Successful retail management involves balancing multiple demands and returns across key stakeholders, while mismanaging stakeholder relationships may have enduring negative effects (Whysall, 2000). Thus, prima facie, it seems retailers must manage communications to key stakeholders to ensure supportive, productive relations. Here, analyses are presented of press releases from leading British supermarkets to explore the tenor ...