Pest of Tesco

PEST (Political; Economic; Social/Cultural/Legal; Technological)

Political environment

With the increase in market concentration in recent years the UK’s leading grocery retailers have come increasingly under the eyes of the Office of Fair Trading (OFT) because of some complaints that these firms are using their dominant power in agricultural markets.

Public disquiet about the effect of out of town superstores on town centres has grown and both current and future planning policies will seriously hamper future development.

Community organisations have since gained momentum consequent to the Competition Commissions ruling and have been lobbying neighbourhoods to boycott supermarkets and large food manufacturers and instead support small independent suppliers, processors and retailers at the expense of large supermarkets like Tesco.

Proposals from the European commission to clamp down on predatory pricing policies to prevent the selling of goods below cost price such as exist within France Germany, Ireland and Spain.

Economic Environment

The UK food retailing market is mature and highly competitive.

The UK market has been affected by negative inflation in the food sector.

The saturation of domestic markets and the desire for growth have fuelled increasing globalisation in retailing through self-start, merger and acquisition and franchising.

Scarce land resources compounded by government legislation on planning restrictions on out of town shopping facilities makes it difficult to expand into these locations

Britain's supermarkets are racing to open small high street stores to cash in on demand for convenience shopping in urban areas.

Social Environment

The over powering proposition of the “everything under one roof” format has been a major factor in the demise of the small independent grocer, butcher and green grocer in recent times thus replacing the high street as the focal point of community life.

With no strong attachments to Local communities, supermarkets readily use job cuts as a safety net to ensure profits.

Declining meal preparation consequent