Tesco Versus Sainsbury

1.  Tesco rivals

Tesco UK is surrounded by fierce competitors that are very eager to get more market share in the retail industries. These competitors are having huge capital to engage a long run competition against Tesco. Sainsbury, Asda and Morrison’s are the leading competitors.  In this section, the threat of the two major competitors of Tesco UK; Asda and Sainsbury is focused.

 For Tesco UK, to make its market more sustainable, it has to strategize in the way it is dealing with each of these rivals. The same policy cannot be used to guard against these rivals as each one of them involved different strategies that range from differentiation, addition of value and cost leadership.

1. Tesco versus Sainsbury

Tesco is currently facing   intensified competition burden from oldest food retailing chain in Britain; Sainsbury, which is striving to take lead   and surpass Tesco to become UK’s market leader. Euromonitor (2013) mentions in its report that the UK’s grocery retailers are operating in a very challenging  environment dominated by short-term promotional activities, mainly through coupons but also Sainsbury’s Brand Match and Tesco’s Price Promise programs.

Tesco is focusing more on price reduction and promotions while Sainsbury is emphasizing on the value addition while matching the Tesco’s price. Markus and Christopher (2008) clearly pointed in their study that Tesco uses cost leadership and value addition to retain its customers by focusing more on customers than collaborations to reduce the competition risks form the Sainsbury. This is supported by Tesco statement which univocally points out that Tesco’s success has always been based on trying to understand customers’ needs better than anyone else – and then innovating to make their lives that little bit easier (Tesco, 2013). Tesco had also stressed that creating value for the customers and earning lifetime loyalty form them is at the heart of their core business model (Tesco, 2012).

1. Tesco versus Asda

Tesco and   Asda have a history of long standing market war in decades. For the fact, that Asda is fighting to reposition itself its leading platform that have been ruined by Tesco. Even though Asda was using cost leadership policy by offering lower cost than Tesco and Sainsbury for attracting customer’s attention, Ian Fletcher (2013) reports that  Tesco surpassed Asda from being price leader by offering  a products that are 41p cheaper than Asda.

1. Treat of new Entrants

According to the  IDG (        2013), the economy of UK market is booming as it experienced an increase of  16.3% on 2014  and there is a possibility that this market may attract corporation or individuals with huge capital to invest this market. Moreover, there is a positive future prospect of the UK hypermarkets and it is predicted to worth 73.3bn in year of 2019 as shown by IDG’s Market and channel forecasts of 2014-2019.