Tesco Environmental Influences

Introduction I have been asked to undertake a strategic environmental analysis of the UK's grocery retail. The industry will be analysed in the context of the macro environment, consisting of political laws, economic regulations, social customs/trends and technological standards (PEST Analysis). But in order to cover all the important factors that may effect the environment of any business, I will be using a larger and more effective anagram of the PEST analysis, which is LE PEST C (legal, ecological, political, economical, social, technological and competition.) The grocery retiling industry is very much an oligopoly, with four major players controlling the market. These are Tesco's with 20.6% share of the market, Sainsbury' s 14.5%, Asda 11.2%, Safeway 9.1% and Summerfield's with 5%. All combined together control 60.4% of the market. The rest of the markets are the local convenience and discount stores. LE PEST C Analysis of the Grocery Retailing Industry in the UK: Legal/Political factors- Planning restrictions on out-of-town developments may hamper expansion of the larger firms in this particular industry, but they could respond to this by using ‘land banks' and extending existing stores. But by doing this they will come under increased pressure to help cut down pollution within the area of trading. Smaller retailers are affected by a much heavier burden in terms of new employee legislation, of which is making employment itself a more complicated process. The introduction of the minimum wage will raise costs within the organisation. The introduction of the new payroll taxes introduced in 2003 could make UK consumers worse off monetary wise, of which could have a negative impact on consumer spending. This could heighten price competition wars, which will continue to feed down from the major grocery chains to the rest of the market, with many independent retailers finding it difficult to compete. Competition laws imply that an organisation can only hold a maximum