Tesco confronts budget rivals - Leading retailer reforms to compete against insurgent budget stores


Confronted by the threat of rapidly expanding competition from budget food retailers, Tesco has undertaken reform. The business has been slimmed down, foreign ventures ended and prices lowered to improve competitiveness. However, there are other threats the company must respond to amid declining relevance of the megastore concept on which Tesco built its fortune. Amazon is seeking to supplant Tesco as the leading online grocery store and the merger with Booker, on which the Tesco board has staked much, is under pressure from regulators and shareholders.

Key Highlights

  • Tesco has responded the rising threat of Aldi and Lidl by reforming product ranges and reducing costs. The main aim of the company is now to compete directly on cost grounds to prevent further depletion in market share on a long-term basis.
  • The company is changing how the out-of-town megastore is operated in the face of changing consumer behavior. Along with lower prices, the cost of running that part of the business has been reduced, essential if the company is to avoid further decline in a central part of the business.
  • Tesco has slimmed down the business in order to concentrate on growing the core business. Foreign adventures during the past decade have achieved mixed success, but even the most profitable foreign brands have now been sold off to help the company recapture old fortunes.


  • Examines the impact budget stores have had on UK food retail
  • Looks at the future of the out-of-town megastores
  • Analyses the new threats to Tesco
  • Examines the steps Tesco have taken to compete against budget stores

Reasons To Buy

  • What impact has Lidl and Aldi had on the Tesco model?
  • Can the out-of-town megastore model survive?
  • Can Tesco compete on price against budget stores?
  • Will the slimming down of Tesco work?