Read attached case study and answer the following questions.
1. What are the major innovations that have been introduced to the retail market? How have they affected the competitive dynamics?
2. What is driving the success of international expansion? Whose model is better? Why?
3. Who are the immediate competitors? Who are the impending competitors? What's the difference?
4. Identify the difference between growth through acquisition and organic growth? Which companies are leveraging which growth strategies?
5. How will the impending economic downturn affect the market?
Tesco vs. Sainsbury
1. While innovation in retail has been slow as compared to other sectors such as pharmaceuticals, biotechnology, or other knowledge based services, it is fast catching up. Retail innovations are not like innovations in other sectors and can be easily copied among companies in the same industry. There have been innovations in the way business is done, which can be referred as strategic innovation and extension of own brand through experimentation, referred to as operational innovation. Further, retail innovation can be classified into three categories:
Offer related: These include innovations in product, service, category related, channel, market, etc. For example, Tesco, originally specializing in food diversified into areas such as clothes, consumer electronics, financial services, DVD sales and rentals, internet services, etc. The retailer also entered telecommunications sector, though initially the success was limited. Such innovations are very important to the retail industry as they involve customer interactions and have high impact on growth.
Support related: These are innovations in support related areas like technology, supply chain, systems, etc. In 1990s both Tesco and Sainsbury targeted online distribution channels that promised high growth. As online mode was gaining popularity, these retailers were quick in identifying that non store retailing growth rates were expected to be higher than store growth rates. In another example, Tesco implemented the rewards program to ...
The major innovations that have been introduced to the retail markets are determined. Tesco versus Sainsbury is examined.