Summary
Tesco PLC is regarded as one of the top companies globally in the supermarket business. It is based in the United Kingdom but has shops in other countries such as the Czech Republic, Hungary, and Ireland. Even though the pandemic managed to affect many businesses regardless of size, Tesco is among the few that were able to take advantage of the situation and continue operations. In the financial year 2021-2022, Tesco PLC reported a six percent increase in revenue to $80.5 billion from the previous year (Retail Insight Network, 2022). The firm’s sales for the year consisting of fuel, rose three percent at constant rates from 2020-2021.
Driven by the strong sales, the company’s statutory operating profit reached about $3 billion, which is a sixty-five percent rise. The retailer’s adjusted operating profit grew to about the same amount at an actual rate (Retail Insight Network, 2022). The total retail adjusted profit totaled to $2.96 billion, up by thirty-five percent at an actual rate from the year before (Retail Insight Network, 2022). The pre-tax profit rose to $2.31 billion by more than two hundred percent. The chief executive officer of the business claimed that they had delivered a great performance across the organization and a growing share in all parts of the business (Chen, 2022, p. 35). He attributes this to remaining focused or engaged with the customers.
Murphy shares the sentiment that the company is at its best when it places its customers at the forefront, and this is what it was able to accomplish despite the challenges brought by the pandemic. For the fiscal year 2022-2023, Tesco anticipates its retail adjusted operating profit to be between $2.73 billion and $2.96 billion. Recently, the supermarket brand agreed to raise the pay of its hourly-paid store as well as customer fulfillment center workers by six percent (Chen, 2022, p. 38). This proves the management’s dedication to customer service and engagement despite the different circumstances.
Introduction
Tesco PLC is a British multinational grocery as well as general merchandise retailer with headquarters in Welwyn Garden City, England. In 2011, it was declared the third-largest retailer worldwide, measured by gross revenues and the ninth-largest by revenues. It has shops in the United Kingdom, Ireland, the Czech Republic, Slovakia, and Hungary. It has expanded globally since 1990 with operations in eleven other nations worldwide. The firm started to expand its range of products it sold during the 1960s to comprise household goods and clothing for the general public under the Delaware brand. Tesco sells its items through brick-and-mortar stores and online stores. It has designed its procurement function to contain expenses and better strategic sourcing in order to compete effectively. It is regarded as the largest and most established supermarket chain in the UK. From 2017 to 2022, its market share has remained stable at about thirty percent. The aim of this paper is to discuss Tesco PLC, the change it faced during the COVID-19 pandemic, and the steps it has taken toward leading innovation and change with regard to customer engagement.
Change and Innovation Management
Doblin’s 10 Types of Innovation
Many successful companies, including Tesco, worldwide have had to establish an innovation culture within the work environment. They have realized that it is essential to nurture unconventional thinking as well as its application. This has facilitated the development of a culture where it is not provided by top leadership only but can come from any individual in the company. There are various types of innovation but in terms of only appropriate ones, it is safe to choose from the Doblin’s examples, as seen in figure 1 (Weiss and Li, 2020, p. 735). For instance, the profit model innovation, which deals with the way an organization makes money, particularly focusing on thinking about where the revenue comes from and what can be done to generate more. This has been in the past from Tesco when it discovered novel ways of developing, delivering, and capturing value (Zwanka, 2022, p. 698). The firm analyzed their customers’ needs and found new methods of monetizing according to their unsolved needs. Consumers, from 2017, chose to seek ways of ordering products from home. The company made this possible by improving their ecommerce platform that aimed to serve these needs.
Another type of innovation is network, which studies how a company deals with the association with stakeholders and its approach to strategies behind the partnerships. It is a form of open innovation that utilizes internal as well as external flows of data to accelerate internal innovation and extend the market for external usage of innovation. It is the result of sharing knowledge and insights between several companies (Weiss and Li, 2020, p. 736). Tesco has been able to achieve this by collaborating with other supermarket chains in the United Kingdom such as Asda and Sainsbury’s and Morrisons.
The third innovation type is structure innovation which dictates that to innovate at a structural level, one must check the tasks and processes that stand at the foundation of the firm. From IT to payroll and others, it is essential to think about what is necessary, what is not, that which requires improvement, and what can be outsourced. An example can be witnessed from Tesco whereby after the end of every financial year, the leadership holds a meeting and determines what needs to be eliminated from the firm processes.
The fourth type is process innovation where the processes inside the form are enhanced for their efficiency either to decrease production time or specific expenses. Tesco PLC and McDonald’s have established themselves as among the most famous process innovation cases (Weiss and Li, 2020, p. 736). The former has the ordering process that made it popular. Additionally, it is still innovating at the process to this day. For the case of McDonald’s, there is a call center, close to Los Angeles, which takes drive-through orders from numerous restaurants across various states in the United States. The innovation aids them in saving a few seconds for each order.
The fifth innovation type is product performance innovation type which focuses on the way products and their performance can be enhanced. It checks on the value as well as the features and quality of the products. This is accomplished by developing novel items or bettering those that exist already. In an interesting manner, this is linked to process innovation (Weiss and Li, 2020, p. 736). An example of this is Tesco PLC, which has operated since the 1960s testing and improving the products for the customers (Weiss and Li, 2020, p. 737). Another similar innovation type to product performance is the product system innovation. This is concerned with a company’s offer (Weiss and Li, 2020, p. 737). It seeks to understand what additional complementary offers one can add to satisfy the consumer’s needs better. An example is when Tesco chooses to give discounts on the cost of products for regular customers.
Next is service innovation, which is concerned with the association between a consumer and business or company. Additionally, it deals with the relation between the product and customers, particularly the improvement of the product with regard to usability. In the United Kingdom, it is believed that Tesco PLC is among a few businesses that provide their customers with delivers a WOW experience in terms of client service (Weiss and Li, 2020, p. 738). It is about the close and personal relationship they manage to form with the consumers through phone customer support.
The other innovation type is channel innovation which about every platform where customers and potential consumers can discover about a company and its offering, and how company communicates and maintains that relationship. An interesting example is social media and how instrumental it has become in connecting a seller to a buyer. Through digital marketing, Tesco PLC has managed to capitalize on the idea of being recognized or increasing brand awareness through social platforms.
Next is brand innovation which is concerned with the company’s brand. It ensures that the potential consumers place the brand before those of the competitors. For a strong brand strategy, one must consider the values, positioning, benefits, and many other elements of a business (Curley and Salmelin, 2018, p. 43). A great example is Tesco PLC which is said to have ventured into household goods and clothing under a different brand name.
The last type of innovation is customer engagement innovation which deals with what the consumers think concerning the product or service and the way companies can interact with them in a more efficient manner. This is achieved by identifying the consumer needs (Curley and Salmelin, 2018, p. 45). Once Tesco PLC realized that a section of the customer base desired to order products online and receive them at their homes, it ventured into ecommerce. Another example is Apple since anytime it launches new products, it manages to keep a solid loyal consumer base. As seen from the information above, some are focused more on the innovative mindset as well as culture (Rather, Hollebeek, and Rasoolimanesh, 2022, p. 550). At the same time, most of them are linked to each other. It is important to understand that a company does not need to struggle to innovate on every level but can develop critical thinking in analyzing the business and its needs. For example, brand innovation, channel innovation, or customer engagement innovation, are types that a firm should consider.
Benefits of Customer Engagement to Tesco PLC
The goal of every business is achieving increased sales in terms of big picture. However, there are many other benefits to customer engagement that will position the brand for long-haul success and enhance the return on investment (Alfalih, 2022, p. 5). Some of the advantages Tesco PLC can enjoy from implementing this type of innovation consists of improving customer relationship and boosts loyalty and customer retention.
Relationships are the backbone of conventional storefront businesses forever but are challenging to maintain in the digital era. Technology makes it easier to find as well as promote the business to novel leads, but it has become harder to maintain consumer relationships. Regular communication with consumers across platforms aids in building rapport (Alfalih, 2022, p. 7). Customer engagement does not begin and end with the purchase, and customers usually have questions throughout the process. Effective engagement approaches enable one to consider consumer’s needs from initial awareness to the purchase and beyond.
Moreover, an effective engagement strategy will guarantee that Tesco PLC always knows how the customers feel about the product or service, qualities they value, and any aspects of improvement needed to offer a better experience. It helps to answer questions concerning the upgrades that would better usability, service team requiring a training refresh, and relevant information to assist in the industry. Every business desires that its customers feel heard as well as appreciated, which results in protection against customer churn. When one shows real interest in the consumers, they will be more likely to purchase again. Rather than being a business that just offers a product, the company in discussion would become the holistic solution to the people’s problem.
Dimensions of Innovation
Dimensions of innovation ensure that all people at Tesco PLC understand what is important. From the way they work together as a team to how consumers are at the center of what is done (Alfalih, 2022, p. 9). Comprehending people, including colleagues, customers, and communities, is what matters to them. Attempting to make this a priority is at the core of the business and, thus, defines the organizational culture.
One dimension of innovation is position, which from a business’ view, it is the product or service’s positioning within the market. Position innovation results in a change in the context in which the services or products are introduced or placed in the marketplace, therefore, changing the customers’ view. Tesco PLC has focused on offering goods at low cost to the consumers. This has cemented its leading position in the marketplace when compared to others. For some time, it appeared that the low prices would significantly impact the company’s profit margins. The firm leadership has since managed to focus on producing its products to ensure that it can maintain the low pricing (Rather, Hollebeek, and Rasoolimanesh, 2022, p. 555). Additionally, it has involved the consumers through online reviews on the matter, which not only gives them an insight of how the public perceives the business but encourages consumers as they feel that their input is appreciated.
Another dimension of innovation that Tesco PLC cam adopt is process innovation. The meaning of this is change in the way products are created and delivered to consumers. It could mean the company introducing greater automation in the manufacturing process, rethinking best practices in process management or how enhancements are determined. Process management is primarily concerned with optimization (Rather, Hollebeek, and Rasoolimanesh, 2022, p. 555). Using the same context of healthcare, applying this dimension means optimizing patient care. Pennsylvania Hospital’s patient-centered programs are a great example. The facility is rethinking its departmental structure (Rather, Hollebeek, and Rasoolimanesh, 2022, p. 555). Rather than being a hospital organized around departments, it is arranged on the basis of patients. Departments have a common stake for a more cohesive strategy to care.
There is no ownership of a department as the lone ownership rests with the patient. The main point of contention is determining how to make the patient better as fast and effective as possible. This can be accomplished by blurring the department divisions and having individuals work together. The paradigm innovation of patients as the drivers of care has influenced Pennsylvania Hospital’s process innovation directly in terms of how various departments function. Nevertheless, process innovation does not have to be a sweeping paradigm shift. It can be simple measures such as freeing overtaxed nursing staff, using volunteers to feed inpatients, and offering additional attention to patients. It can be incremental processes resulting in greater gains via constant betterment over period than those that occur from occasional radical changes.
Impact of COVID-19 Pandemic on Tesco PLC’s Innovation Process
The COVID-19 pandemic brought many changes in the retail industry. For instance, it became harder to continue operating brick-and-mortar stores. Firms had to choose ecommerce as the primary approach of continuing their business activities such as selling or seeking feedback from consumers. Unlike many others, Tesco PLC managed to deal with the challenges presented with the change (Aini et al., 2020, p. 59). This is mainly attributed to conducting business activities in the online platforms such as web applications even before the emergence of the pandemic. The disease outbreak, as suggested earlier, affected how companies communicated with their customers or clients. In the ten types of innovation mentioned earlier, it has been explained that the most preferred for the company in discussion is customer engagement innovation. The meaning of this is that the Tesco PLC leadership had to seek ways to respond. It saw the emergence of social media interactions between companies and their consumer bases as an opportunity.
There are various stages of customer engagement on which the leadership decided to focus, including establishing connection, satisfaction, retention, commitment, advocacy, and reciprocity. The first stage was to establish connection, which is a prerequisite to describe associations and start the exchange. Interaction happens to gather data with which to create value. Most researchers agree that information technology is a determinant at this phase since it facilitates exchanging information. The next stage is satisfaction which depicts the outcomes of interaction and if accomplished, customers and sellers define a novel relationship of engagement (Aini et al., 2020, p. 60). Satisfaction is not a final goal but an intermediate element in progressing as well as accomplishing the strategic objectives of the organization. The meaning of this is that it can translate into a progressive conduct which is built and co-created until a particular and needed level is reached.
Empowerment is the final goal since it fosters the definition of a certain partnership between customers and sellers, enabling the mutual construction of customer desires and developed items. Satisfaction is needed for engagement but it cannot in itself. The third stage is retention which is represented by a long-term relationship between consumers and sellers. The interdependence of some determinants on retention remains unclear (Aini et al., 2020, p. 62). For instance, they illustrate that satisfaction positively impacts retention but that the effect of commitment is different from one to another. Affective commitment does not influence retention (Aini et al., 2020, p. 62). However, calculative commitment has a positive effect on retention in this scenario. The observation confirms that the process of customer engagement is a reflexive cycle.
Retention is completed by commitment, which results in loyalty, which enabled the company leadership manage to deliver to consumers during the pandemic. Advocacy follows commitment and is connected to satisfaction and loyalty. At this phase, both types of commitment are interrelated. Customers who are advocates are those who are linked and interacting with the sellers (Aini et al., 2020, p. 63). Reciprocity is needed here too in a sense that the company that advocates for the consumer will receive loyalty and trust. The exchange with regard to advocacy is highly essential and is determinant of the future valuable and successful relationship between customer and seller. Lastly, in engagement where a satisfied and loyal consumer interact, their opinion and feelings via interaction on a digital platform, access is accomplished.
Lewin’s Change Management Model
The majority of experts consider Kurt Lewin as among the forbears of change management, social psychology, and organizational development. His ideologies have been vital in developing notions of change management. He is straightforward, yet its simplicity makes it important. According to him, all changes follow a three-step process that begins by addressing existing mindsets. Such steps include unfreezing, transition, and freezing (Rather, Hollebeek, and Rasoolimanesh, 2022, p. 559). A process first shifts from its current state, change happens, and then old ways of thinking and operating are replaced. As seen above with Tesco PLC, it had to move from its prior methods of engaging with customers and find new ways, during and after the pandemic. The change was implemented and thus, the previous mechanisms were replaced with social media.
Analysis of Tesco PLC in Relation to the Theory
While responding to the COVID-19 pandemic, Tesco PLC showed its process and approach to change fit with the Lewin’s Change Management Model. For example, the company’s online campaign in 2020, launched to deal with the discounters, reached customers via various channels (Aini et al., 2020, p. 65). According to Awadari and Kanwal (2019, p. 95), social platforms have played a major role of allowing the business to reach clients and share their message. The company focused on listening more from its customers on social media and implement changes accordingly. This consisted of lowering the cost of Freddo chocolates (Aini et al., 2020, p. 65). Selecting a product that sparked an emotional resonance with consumers magnified the effect of the strategy.
The activation succeeded in driving interaction, sales and public relations coverage, and highlighting a sense of difference between the firm and competitors it encountered. Paid as well as organic activity across Twitter, Facebook, Snapchat, and Instagram performed well, with creative assets developed for every platform (Aini et al., 2020, p. 65). Tesco was seeking to get the country talking about its value, drive fame for its campaign, and emotional aspects of the plan aided this to occur.
Conclusion
The paper has discussed Tesco PLC, the change it faced during the COVID-19 pandemic, and the steps it has taken toward leading innovation and change. The company managed the pandemic well and it is proper for other firms to imitate or use their strategy as a framework. Many companies were impacted negatively as they had no experience of using the digital channels or platforms to reach their customers. When the challenge presented itself in form of hindering customer engagement, others such as Tesco saw it as an opportunity to thrive and gain more in terms of market share. The transition was easier for them as they quickly focused on their social media to continue interacting with their customers. This is one of the reasons that the company’s market share has been great and enables it to be ranked as among the largest firms.
Recommendations
Regardless of the company size, in the digital age, it is recommended that a business embraces social media as a way of engaging its customers. The main reason for this is due to people spending more time on various platforms now than before. Ensuring that the firm can access its consumers through social platforms improves the brand awareness. Additionally, one can learn more from the interactions with customer base. It is important to be where the clients can be found. Choices are fueled day to day by social media platforms. Consistently somebody spends scrolling impacts a decision the individual could make later. Be that as it may, a simple presence on social media is pointless without engagement. Brands need to regulate their messaging and respective pictures and social media is the method to seize control of those reputations with their consumers. Buyers have limitless options on top of limitless data. In the old days, individuals were bound to shopping at a nearby division or supermarket to fill their necessities.
Buying decisions depended on matters such as item collection and physical location. Selling direct to customer can likewise encompass engagement direct to customers. People generally share the great and incredible snapshots of their lives via social media. Leaving insightful remarks, not about how incredible the item would be for somebody, yet rather the way that marvelous somebody’s photograph is goes far. Being a piece of somebody’s life moments has never been more straightforward than now, thanks to social media. That does not mean continually attempting to promote the brand’s products and sell. This is tied in with showing consumers one cares about something beyond their money. Engaging with social media platforms not just expands loyalty to the brand by association, yet additionally urges them to interact more. Their engagement with the brand enables more traffic to check what the brand is all about.
Reference List
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Appendices
