Tesco’s Current Performance
Current Performance of Tesco
Last year, Tesco experienced a rise in profits operating in a UK market which most people deemed as uncertain and weak. Despite working in these tough conditions, the company still witnessed a 28% increase in its profits. In 2020, things have changed for many organizations due to the impact of COVID-19, a pandemic that has affected business operations all over the world. In spite of the problems brought by this virus, the company has forecasted a positive impact on its sales in 2020. With many people being under lockdown, the company has predicted increased demand for food and grocery worldwide. Therefore, based on the predictions made by the organization, Tesco hopes to increase its sales by 9.2% by the end of 2020 (Business Wire, 2020). However, despite the increase in demand for goods, Tesco fears that operational difficulties might affect its sales and the profits if a solution to the pandemic is not found soon.
Reasons for Current Performance
Market change is one of the biggest reasons Tesco is experiencing a surge in performance regarding the number of sales it is making during this COVID-19 period. As the coronavirus pandemic pushes further, many people have been left with no option but to change their mode of shopping method to avoid close contact. In the US, for example, only about 3% or 4% of grocery shoppers used online means to shop before the pandemic (Repko, 2020). After the worldwide spread of this model virus, online grocery shopping has surged up to 15% in the US and the same trend is being witnessed in many European nations, including the UK. According to reports, online grocery sales in the UK are likely to increase by a quarter due to the lockdown rules. The changes being witnessed in the market are as a result of the macro-environmental factors because about six months ago no one envisioned the current economic situation (Butler, 2020). Many businesses have suffered during this pandemic, including the supermarkets. However, in terms of financial performance, Tesco has experienced intensive sales through its online platform compared to the previous years despite the pandemic.
While Tesco has witnessed a surge in sales brought about by increased demand mainly from online sales, this has created a whole different change for the organization. The increased demand for online sales means that the organization has had to increase the number of employees who would deliver these goods to the premises of customers. Online sales might appear easy but if customers do not obtain the right goods in the conditions they want them, then this is likely to tarnish the brand’s name. To avoid such issues, Tesco needs to hire more responsible workers who will not deliver goods to customers but also adhere to the lockdown procedures (Sault, 2020). Aside from that, the company needs to assure its clients that it has enough food and grocery in its warehouses to avoid its customers from panicking. This would mean improving the current relations it has with its workers.
Business Wire, B. (2020, June 12). 2020 Analysis on the COVID-19 Impact on Tesco – ResearchAndMarkets.com. Retrieved June 25, 2020, from Business Wire: https://www.businesswire.com/news/home/20200612005381/en/2020-Analysis-COVID-19-Impact-Tesco—ResearchAndMarkets.com
Butler, S. (2020, May 5). UK online grocery sales likely to surge by a quarter amid lockdown. Retrieved June 25, 2020, from The Guardian: https://www.theguardian.com/business/2020/may/05/uk-online-grocery-sales-lockdown-internet-coronavirus
Repko, M. (2020, May 1). As coronavirus pandemic pushes more grocery shoppers online, stores struggle to keep up with demand. Retrieved June 25, 2020, from CNBC: https://www.cnbc.com/2020/05/01/as-coronavirus-pushes-more-grocery-shoppers-online-stores-struggle-with-demand.html
Sault, S. (2020, March 20). 5 things supermarkets want you to know right now. Retrieved June 25, 2020, from World Economic Forum: https://www.weforum.org/agenda/2020/03/supermarkets-grocery-coronavirus-covid19-supply/