Tesco Business Model Canvas

Following the divestment of its banking arm, Tesco has inked a significant partnership with Barclays. This collaboration allows Tesco to maintain a presence in offering financial services, such as credit cards and insurance, by leveraging Barclays' established infrastructure and expertise. For instance, Tesco Bank's credit card portfolio, which was part of the sale, now operates under the Barclays umbrella, ensuring continuity for customers.

This strategic alliance enables Tesco to continue providing valuable financial products to its customer base without the overhead of managing a full-fledged bank. It's a move that aligns with the broader trend of retailers partnering with financial institutions to offer tailored financial solutions. In 2023, Tesco's retail operations generated substantial customer engagement, providing a strong foundation for these co-branded financial offerings.

• Strategic Alliance: Partnership with Barclays for continued financial services offerings.
• Customer Continuity: Ensuring customers can still access financial products like credit cards.
• Leveraging Expertise: Utilizing Barclays' established financial infrastructure and knowledge.

Tesco's key partnerships with community and charitable organisations are foundational to its social impact strategy. These collaborations are vital for addressing local needs and reinforcing Tesco's brand reputation.

In 2024, Tesco continued its significant work with food banks across the UK, a partnership that has seen millions of meals donated. For instance, its Food Love initiative, which aims to reduce food waste, directly benefits charities by redistributing surplus food. This not only helps vulnerable populations but also aligns with Tesco's sustainability targets.

Further strengthening community ties, Tesco partners with schools for educational programs focused on healthy eating and sustainability. These initiatives often involve volunteer hours from Tesco staff, contributing to a more engaged and supported local environment. In 2023 alone, Tesco colleagues volunteered over 100,000 hours to various community causes.

• Food Banks: Continued donation of surplus food, contributing to the vital work of organisations like The Trussell Trust.
• Schools: Engagement in educational programmes promoting healthy lifestyles and environmental awareness.
• Local Charities: Support for a diverse range of local causes through fundraising and volunteer efforts by Tesco colleagues.
• Sustainability Initiatives: Collaboration on projects aimed at reducing food waste and promoting circular economy principles within the community.

Tesco's advanced technology and data platforms are central to its operations. Its Clubcard data platform is a significant asset, providing deep insights into customer behaviour. This allows for highly personalized marketing campaigns, driving customer loyalty and sales. For instance, in 2024, Tesco continued to leverage Clubcard data to tailor promotions, with millions of active members contributing to its rich data ecosystem.

Furthermore, AI-powered inventory management systems are crucial for optimizing stock levels and reducing waste. These systems help ensure products are available when and where customers want them, enhancing the in-store and online shopping experience. Tesco's investment in these technologies aims to improve supply chain efficiency and reduce operational costs.

The company's robust e-commerce platforms, including Tesco.com and Tesco Marketplace, are vital for reaching a wider customer base and offering an expanded product selection. These digital channels are continuously being enhanced to provide a seamless user experience, supporting Tesco's growth in online grocery and general merchandise sales. In 2024, online sales continued to be a significant contributor to Tesco's overall revenue.

• Clubcard Data: Millions of active members provide a rich source of customer insights for personalized marketing.
• AI Inventory Management: Systems optimize stock, reduce waste, and improve product availability across channels.
• E-commerce Platforms: Tesco.com and Tesco Marketplace facilitate online sales and expanded product offerings.

Tesco's extensive workforce, encompassing everyone from frontline store staff to its executive leadership, is a cornerstone of its operations. This vast pool of talent brings a wealth of collective knowledge, practical skills, and unwavering dedication, forming a critical asset for the company.

The operational proficiency and commitment to customer service demonstrated by its employees are paramount to Tesco's daily functioning. Furthermore, the strategic vision and leadership provided by senior management are indispensable for steering the company's sustained growth and market position.

• Human Capital: Tesco employed approximately 306,000 people globally as of early 2024, highlighting the scale of its human resource base.
• Expertise: This workforce possesses diverse expertise, ranging from supply chain management and retail operations to digital transformation and marketing, crucial for navigating the complex retail landscape.
• Customer Focus: A significant portion of Tesco's human capital is customer-facing, directly impacting customer satisfaction and loyalty through service delivery.
• Management: Experienced management teams at both operational and strategic levels are vital for decision-making, innovation, and ensuring efficient business processes.

Tesco actively engages with its local communities, a key aspect of its customer relationships. This involvement goes beyond simply selling products; it's about building trust and a sense of shared purpose. For instance, their support for food banks and initiatives promoting healthy eating demonstrate a commitment to societal well-being, resonating positively with customers.

This commitment to social responsibility directly impacts brand perception. By investing in local communities, Tesco fosters goodwill, creating a connection that transcends mere transactions. This proactive approach helps build a loyal customer base that values the company's ethical stance and positive impact.

In 2024, Tesco continued its strong focus on community initiatives. Their Bags of Help scheme, for example, has provided millions of pounds in grants to local projects across the UK. This program empowers customers to vote for local charities and community groups, directly channeling Tesco's resources to where they are most needed and reinforcing positive customer relationships.

• Community Investment: Tesco's Bags of Help scheme has distributed over £100 million to more than 30,000 community projects across the UK since its launch, demonstrating significant local impact.
• Food Bank Support: In 2024, Tesco collected over 20 million meals worth of surplus food for distribution through food banks like FareShare and the Trussell Trust, aiding vulnerable populations.
• Healthy Eating Promotion: Initiatives like the Healthy Start vouchers and in-store promotions for fresh produce aim to encourage healthier choices, building trust by supporting customer well-being.
• Brand Perception: A 2024 survey indicated that 75% of Tesco customers felt more positively about the brand due to its community involvement and social responsibility efforts.

Tesco's commitment to consistent value and quality is paramount. They aim to deliver competitive prices and high-quality products across their entire range, building a strong foundation of customer trust and satisfaction. This reliable performance reinforces their value proposition, fostering long-term customer loyalty.

• Competitive Pricing: Tesco consistently strives to offer prices that are competitive within the grocery market. For instance, in their 2023-2024 fiscal year, Tesco highlighted its focus on price competitiveness, particularly on essential items.
• Product Quality: Maintaining high standards for product quality is a core tenet. This includes everything from fresh produce to own-brand packaged goods, ensuring customers receive reliable and good-quality items.
• Customer Trust: The ongoing delivery of these elements builds significant customer trust. This trust is a key driver for repeat business and positive word-of-mouth referrals.
• Long-Term Loyalty: By consistently meeting and exceeding expectations in terms of value and quality, Tesco encourages customers to remain loyal, choosing Tesco over competitors for their regular shopping needs.

Tesco actively caters to online and digitally savvy shoppers who value convenience. This segment increasingly prefers home delivery and seamless digital interactions. In 2024, Tesco continued to invest heavily in its e-commerce capabilities, aiming to capture a larger share of this expanding market.

Tesco's strategy for this customer segment is built around its robust online platform and user-friendly mobile app. These digital channels facilitate easy browsing, purchasing, and delivery scheduling. The company also broadened its online marketplace to include a wider array of non-food items, further enhancing its appeal to digitally inclined consumers.

• E-commerce Growth: In the fiscal year ending February 2024, Tesco reported a significant increase in online sales, demonstrating the continued strength of its digital offerings.
• Mobile App Engagement: The Tesco Grocery & Rewards app remains a key touchpoint, with millions of active users regularly engaging for shopping and loyalty program benefits.
• Delivery Network: Tesco operates a vast network of fulfillment centers and uses its existing store infrastructure to support rapid and reliable online order fulfillment across the UK.
• Digital Marketplace Expansion: The expansion of its online marketplace for non-food items, including electronics and home goods, aims to position Tesco as a one-stop shop for digitally savvy consumers.

Tesco understands that not all shoppers are solely driven by the lowest price. A significant portion of their customer base actively seeks out premium and high-quality goods, and Tesco effectively serves this need. Their Tesco Finest range, for instance, is specifically designed to appeal to these discerning consumers who prioritize superior taste, traceable product origins, and an overall more elevated shopping experience. This demonstrates Tesco's commitment to catering to a spectrum of preferences within its customer segments.

This premium segment values more than just the product itself; they appreciate the story behind it. For example, Tesco Finest often highlights specific regional sourcing for its meats, cheeses, and produce, appealing to consumers interested in provenance and artisanal quality. In 2024, the premium grocery market continued to show resilience, with consumers willing to spend more on perceived quality, a trend that Tesco's Finest range is well-positioned to capitalize on. This focus on quality and curated selection ensures that Tesco remains a destination for a broader range of shoppers, not just those solely focused on budget-friendly options.

• Premium Product Appeal: Tesco Finest range offers high-quality goods.
• Value Proposition: Caters to customers seeking superior taste and specific origins.
• Curated Experience: Provides a more refined shopping journey within Tesco.
• Market Relevance: Addresses the growing demand for premium groceries, a trend observed in 2024.

Tesco generates revenue from selling fuel at its numerous petrol stations, which are frequently situated alongside its supermarkets. This stream is a dependable income source, though its value can shift with the broader fuel market prices.

In the fiscal year ending February 2024, Tesco's fuel sales contributed significantly to its overall revenue. For instance, during the first half of fiscal year 2024/25, Tesco reported strong fuel volumes, benefiting from competitive pricing and strategic promotions.

• Fuel Sales Revenue: Revenue is primarily generated from the sale of petrol and diesel at Tesco's extensive network of forecourts.
• Market Price Sensitivity: While a consistent earner, fuel sales revenue is directly influenced by global oil prices and domestic fuel duty rates.
• Volume and Customer Loyalty: Tesco leverages its large customer base and Clubcard loyalty program to drive fuel volumes, often offering discounts linked to grocery purchases.
• Strategic Location: The co-location of petrol stations with supermarkets enhances convenience for shoppers, driving incremental sales for both fuel and in-store products.

Tesco's financial services, even after divesting its banking arm, continue to be a source of income. The company generates revenue through its Money Services division, which offers various financial products and services to its customer base. For instance, in the fiscal year ending February 2024, Tesco Bank reported a pre-tax profit of £115 million, showcasing the ongoing profitability of its financial operations, albeit under a new ownership structure.

Beyond its direct financial offerings, Tesco leverages strategic partnerships within the financial sector. These collaborations allow Tesco to earn revenue by providing access to its extensive customer network for financial product distribution. This approach capitalizes on Tesco's brand trust and vast reach to create value in the financial services ecosystem.

Emerging revenue streams are also critical to Tesco's strategy. Transcend Retail Solutions, a new venture, provides e-commerce technology and services to other retailers. This diversification into B2B technology solutions aims to tap into the growing demand for digital retail infrastructure. While specific revenue figures for Transcend are still developing, its establishment signals Tesco's commitment to exploring new avenues for growth beyond its core retail operations.

• Money Services: Continues to generate revenue through a range of financial products and services offered to Tesco customers.
• Strategic Partnerships: Leverages its customer base and brand trust to earn income from collaborations with financial institutions.
• Transcend Retail Solutions: An emerging venture providing e-commerce technology to other retailers, representing a new B2B revenue stream.