Political Factors

Since the retailing company operates worldwide, global political factors greatly influence the performance of Tesco. These include, tax rates, acts of legislation and of course, the stability of the country it operates in. Due to ongoing financial instability in the world, many governments encourage retailers to create jobs for the domestic population. As Tesco plays its part in creating employment opportunities, it also, in turn, increases the demand for its products and diversifies its workforce.

Economic Factors

These factors are the main point of concern for Tesco, as they are most likely to leverage costs, demand, profits and prices. Therefore, the company should be aware of any changes in policies, such as changes in taxation or any other factors which could affect the accessibility of finance. It is important to mention that although the business is growing internationally, the company is still quite dependent on the UK market where it has a market share of around 30%.

With that said, internationalization and diversification have been two key strategies pursued by the company over the years, and a major reason for its success. Furthermore, due to decline in disposable income levels and household incomes, Tesco, has shifted most of its focus towards advertising its value brands rather than the more luxurious items.

Social Factors

Due to a variety of social changes, trends indicate that customers in the UK have moved towards bulk shopping and one-stop shopping. Therefore, Tesco has increased the number of non-food items offered for sale. The type of goods and services demanded by consumers is mostly influenced by their beliefs and attitudes which, in turn, are influenced by social conditioning. Because customers are becoming more aware of health issues, due to which their approach towards foods is changing constantly, Tesco is adapting to these changes by accommodating the demand for organic products.

Technological Factors

The advancements in technology have brought various new opportunities for Tesco. Two of the most distinct ones include, firstly, the development and introduction of online shopping with facilities for home delivery. Secondly, self-service checkout points have provided convenience and ease for customers, which in turn have reduced labor costs. Furthermore, Tesco has also invested a significant amount on energy efficiency projects to fulfill its long-term objective to reduce its carbon footprint.

Legislative Factors

Government policies and legislations also directly impact the performance of Tesco. For example, the Food Retailing Commission (FRC) in 2004 suggested a Code of Practice should be introduced which would ban many current practices, such as changing prices without notice or demanding payments from suppliers. To facilitate these policies, Tesco provides its customers price reductions on the fuel they purchase, in accordance to the amount spent on their grocery stores. Also, there are several promotion offers where prices are lowered.

Environmental Factors

With increased pressure on companies to address environmental issues and to adopt ways of operations which what would benefit society, Tesco is clearly committed to reducing its carbon footprint by 50% by 2020. Also, Tesco is minimizing the waste produced in their stores by increasing social conscience in customers.

https://pestleanalysis.com/pestle-analysis-tesco/

PESTLE ANALYSIS OF ALDI

Political Factors:

ALDI, a German discount supermarket chain has stores in over 20 countries. Any conflict between the countries globally would affect the sustainability of the company. But things have turned in ALDI’s favor after Britain set to leave European Union. As the prices of fresh goods will rise after Brexit, the supermarkets will transfer this rise in price to the consumers which will force consumers to shift from them to the discounters like ALDI. But ALDI faced threat from weakening of pound and there was a price war going on between the supermarkets in the UK due to Brexit which had become a major reason of the drop in the profit of ALDI.

Economic Factors:

ALDI took over Co-Op and became Britain’s fifth biggest supermarket by market share.By 2018, ALDI had 7.3% of the UK grocery market. The demand of consumers has shifted towards discounters like ALDI because they now preferred convenience over range. Although ALDI has caused deflationary impact on Australian economy. Increased supermarket discounting has led to reduction in prices of many products which has made it even more difficult for Australia’s Reserve Bank which has been desperately trying to boost inflation for years. Due to increased demand of ALDI, supermarkets like Morrisons has to close stores and lay off workers while Sainsbury and Asda announced a merger. Tesco bought discount wholesaler Booker and launched its own discount chain named Jack.

Social Factors:

Currently ALDI is among the highest paying supermarkets in UK after giving a pay rise to its 3000 staff members. High wages will lead to better standard of living of the people. They will be able to afford more facilities like proper healthcare and better food thus benefitting the society. ALDI aims at teaching 1.2 million children in UK to heat healthy food by its Get Set to Eat Fresh Initiative. ALDI believes in giving its customers a satisfactory feeling of paying less than they thought for a trolley full of goods. The awareness of saving money makes the experience at ALDI pleasurable. The rise of ALDI in the supermarket shows that people believe that there is no shame rather there is satisfaction in shopping at a discount supermarket. It provides a very basic store layout with no fancy lights and big spacious rooms. It believes in providing the goods at the lowest possible price to its customers with adding any cost of these extravaganza. It is known for its flash sale. It includes items like Ski poles and cycling equipment for only a short period of time to add quirkiness and to be different from their competitors.

Technological Factors:

Being a global supermarket chain, ALDI needs to be updated with the technology in order to enhance its customer base. Customers are expecting convenience from them rather than staying in a long queue only to buy a few products. It has provided its customers with an ecommerce platform which is designed to serve both online and store customers. It will attract them for ALDI’s proposition of quality, simplicity and value. Usage of internet via social media platforms like Facebook, Twitter allows it to interact to its customers and inform them about various offers which will be available. They have invested in insulated panels and roof mounted system to enhance their storage and office space. Another major technological initiative taken by the company is the feature of contactless payment.

Legal Factors:

ALDI has faced copyright issues on its brand campaign “Like Brands. Only Cheaper”. It has been a runaway success but it displayed non ALDI products and compared it with the ALDI products. The jurisdiction does not allow comparative advertising in print which became a problem for the company as a result of which company had to stop it flagship advertisement. This could be a loss for the company as customers get connected to the brand on the basis of the advertisement. The company is also facing legal action from small businesses over knock off products. If they win the suit, then it will have an impact on the type of products that is labeled as its own by the ALDI. ALDI has to see on these cases in order to maintain its brand image and to retain customer’s loyalty.

Environmental Factors:

ALDI has been purchasing their stock from local producers and farmers in order to ensure their sustainable development. It has plans to convert all its private labeling packaging to recyclable, reusable or compostable by 2025. It will be even attracting more environment friendly customers along with saving the environment. They have been charging their customers for the bags, encouraging them to bring their own. They are currently working on reducing the waste created due to home delivery packaging.

https://www.mbaskool.com/pestle-analysis/companies/18039-aldi.html

WAITROSE PESTLE ANALYSIS

https://15106199blog.wordpress.com/2016/12/09/pest-analysis-of-waitrose-supermarket/

ASDA’S PSTLE ANALYSIS

Political factors

National, and international regulations and directives concerning employment, legislation, consumer rights, taxes etc. impact on Asda like any other organisation. Likewise, war and instability also impact on organisations’ decision-making. Consequently, organisations monitor political environment constantly.

Asda benefits from a relatively stable political environment in the UK. However, Brexit has created a lot of uncertainty. Asda like any other organisations must think of future-proof supply chain in response to Brexit. It is worth noting that the recent deal between the UK and the EU has been a source of hope for both parties and many organisations.

Economic factors

Asda needs to consider economic factors such as pay level, cost of credit, competitive pressures, labour supply & demand, energy prices etc. These economic factors impact on the pricing strategies of the company significantly. Likewise, due to economic lockdown in 2020, many people lost their jobs and therefore, reduced their shopping activities.

Social factors

Social changes e.g. ageing population, celebrity following, and healthy lifestyle are important for Asda. Understanding social factors helps it introduce new products/services in the market. It also helps the company develop its segmentation strategies.

The demand for organic, vegetarian, and vegan food is growing very fast. The demand for certain ethnic foods is also high in the UK and many other countries where Asda operates. It is worth noting that Asda sells a huge number of products that cater to a good number of ethnic groups.

Technological factors

Technology is the next issue to discuss in the PESTEL analysis of Asda. As the use of technology is ever growing, superfast broadband and mobile apps along with click & collect delivery services are extremely important for Asda. All big supermarkets are constantly working on how best to make use of technology in their favour.

Environmental factors

Green economy, pollution, carbon footprint, hazardous waste, organic foods are important for Asda. As people are now-a-days very aware of the impact organisations have on the environment, there is a significant amount of pressure on all companies to operate in an environmentally friendly manner. Therefore, Asda must demonstrate that it is an environmentally friendly company.

Legal factors

Asda must abide by the rules and regulations of the countries in which it operates, as any breach may result in punitive actions by relevant authorities. For example, it cannot pay any employee less than the minimum wage in the UK. Likewise, it cannot dismiss an employee unfairly. Should it happen, the employee concerned can take it to an employment tribunal. It should be mentioned that Asda was fined £300,000 for food safety breaches at its north London home delivery depot.

https://howandwhat.net/pestel-analysis-of-asda/

SAINSBURY PESTLE ANALYSIS

Political Factor

In 2016, the United Kingdom voted to leave the European Union. This move, dubbed “Brexit”, is yet to take place; however, it could have serious consequences for Sainsbury’s, among other English supermarket chains. Leaving the European Union could make it much more difficult for supermarkets to affordably import products from abroad. While an increase in the cost of foreign products would likely be passed onto the end consumer, this move means Sainsbury’s will have to push hard to ensure customers continue spending as much as possible, in order to maximize profits.

Economic Factor

Over the last few years, fuel prices (for both diesel and petrol) have risen slowly but surely. A diminishing supply of fossil fuels and the possibility of an environmentally-minded fuel tax could cause the prices of fuel to rise more significantly. Ultimately, high fuel prices make it more expensive to transport goods into and around the country. Supermarkets like Sainsbury’s will have to account for these increased costs. This may manifest in the form of lower profit margins or higher price tags for the consumer; in either case, this is likely to decrease overall profitability.

Another Economic concern for Sainsbury’s is that of rising salary expectations. Like most supermarkets, Sainsbury’s employs a large number of workers to perform simple tasks such as stocking shelves or manning the checkout. If Sainsbury’s is expected to pay these employees more than ever before, this will seriously increase their expenses, thus reducing overall profit. As mentioned previously, this may be counteracted by an increase in the end price of products, but this would be likely to decrease sales volumes (and thus profitability, indirectly).

Sociocultural Factor

The 21st century has shown a clear Sociocultural trend towards healthy eating. Unhealthy “junk” food is no longer in fashion, while body-conscious salads, shakes, and snacks are taking over. This trend towards making healthier dietary changes is an extremely important one to track for supermarket chains like Sainsbury’s, since adapting to consumers’ demands is absolutely imperative to long term success.

Consumers are also increasingly conscious of where their food has come from, hence the fairtrade movement. This social initiative involves paying extra for food and drink so that farmers can be guaranteed a fairer price for their produce. The fairtrade movement is particularly popular in the context of both coffee and chocolate, but has a widespread reach.

Technological Factor

Technological advancements in analytics, such as the use of Big Data and Artificial Intelligence principles, are allowing companies around the world to learn more about their operations. In the case of supermarkets such as Sainsbury’s, advancements in analytics might be used to build highly accurate models that describe how much of a given product is expected to sell (preventing waste) and at what price (maximizing profits). The development and implementation of these techniques are sure to improve the profitability of Sainsbury’s.

Like most other UK supermarkets, Sainsbury’s offers online shopping options. More so than ever, customers want to order their groceries from the comfort of home. The advent of eCommerce and its usage in the food industry are still in early days; it will be interesting to see how supermarkets get the most out of this growing technology.

Environmental Factor

Supermarket chains are responsible for a large carbon footprint. Whether it’s transporting goods from one side of the country to the other or keeping huge supermarkets and warehouses lit up around the clock, Sainsbury’s surely creates its fair share of carbon dioxide. As environmental concerns mount, companies around the world will be expected to reduce their carbon footprint. Sainsbury’s will need to identify new ways to become more environmentally-friendly and seriously consider how they can minimize the ecological damage caused by their operations.

In addition to creating a large carbon footprint, you can be sure that supermarket chains such as Sainsbury’s pay a great contribution to the plastic waste crisis. By packing produce into single-use plastics, supermarkets introduce more Environmental strain than they can handle. Sainsbury’s will need to look for ways to tackle plastic waste, such as offering incentives to customers who buy foodstuffs loose and bring their own containers and bags.

https://pestleanalysis.com/pestle-analysis-of-sainsburys/

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