Executive Summary
The research will use Tesco Supermarkets as the case study to gain an understanding of the
concept in the modern retail industry. Tesco is a British general merchandize retailer with
various outlets in the UK and with an operating revenue of £56.9bn (in 2019). Tesco has
embraced the service concept through integration in a broad range of areas, including direct
engagement with the consumers, front and back office operations, and use of technology. The
firm has increased the number of consumers facing staff, delivery services (same-day click and
collect), optimization of distributing channel, and increasing staffing ours and training. The
investigation also indicates that the implementation of the service model has been based on
improvement of consumer-product development, Consumer focused ranging, consumer-centric
loyalty scheme, consumer-focused store development, and Social and environmental
sustainability. However, it is important to note that Tesco can improve its service concept
through the use of CRM software to improve the relationship within the organization and boost
feedback.
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Table of Contents
Executive Summary (150) 2
1.0 Introduction 4
2.0 Service Concept of Tesco Supermarkets 4
3.0 Impact of Tesco’s Operations on The Functioning of The Service Concept 5
4.0 Tesco’s Implementation of The Service Concept 7
5.0 Improvement of The Service Concept and Delivery System 8
6.0 Conclusion 8
7.0 Recommendations 8
8.0 Reference List 9
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An Examination of The Implementation of The Service Concept by Tesco Supermarkets
1.0 Introduction
The service concept has gained popularity due to the vital role it plays in the service design and
development. According to Goldstein et al. (2002), the service organization is complex due to
the use of numerous assets, materials, human resources, and processes. The retail sector is a
perfect example of a service organization and demands significant investment to ensure
operational efficiency. Modern supermarkets have encountered numerous challenges over the
last two decades, particularly with the intensification of competition, and globalization, thereby
demanding the implementation of strategic management techniques. Although the concept has
been popularly used in new service literature, Goldstein et al. (2002) indicate that limited
empirical research has been directed towards the service concept itself and its role in service
development and design. For such concerns, this literature will attempt to fill this gap by
exploring the service concept and its integration in the delivery systems. The research will use
Tesco Supermarkets as the case study to gain an understanding of the concept in the modern
retail industry. Tesco is a British general merchandize retailer with various outlets in the UK.
The group company had an operating revenue of £56.9bn in 2019 and had an estimated 450,000
partners/ colleagues (Tesco Plc, 2019).
2.0 Service Concept of Tesco Supermarkets
The service concept can be defined as the manner in which corporations desire their services to
be perceived by the employees, lenders, shareholders, and consumers (Goldstein et al., 2010). It
can also be viewed as the items that offer satisfaction to the consumers. Tesco has invested
significantly in enhancing its service concept in a bid to improve its overall position in the
SERVICE CONCEPT 5
market and attract more consumers. The service process is the product due to the nature of
operations of Tesco Supermarkets. There is direct engagement of consumers in the service
delivery, and the nature of the interaction plays a vital role in consumer retention (Ma et al.,
2010). This underlines the importance of the service concept to the organization. The company
attempts to provide the best services to consumers to satisfy their differentiated and unique needs
and meet the strategic goals of the organization (Ma et al., 2010).
The service process majorly focusses on training, marketing, employee’s welfare, providing
services, methods development and control, scheduling workforce, attention to physical
surroundings, managing growth, development of new products/ items, and control of all the
branches (Ma, Ding, and Hong, 2010). Tesco’s service model is based on front office operations
and back office operations that might require interaction with the consumers through technology,
such as the corporate website and community development processes (Ma et al., 2010). The
direct engagement of the organization with consumers at both ends of the service model demands
an efficient and effective service concept. The participation of the consumers in the service
model occurs in two ways. The first approach is direct engagement of consumers with the retail
staff while shopping, an approach referred as front-office process (Ma et al., 2010). Under this
approach, the consumer has full sensory awareness of the service surroundings. The other aspect
is indirect communication with Tesco via technology from consumer’s homes, a process termed
back-office process.
3.0 Impact of Tesco’s Operations on The Functioning of The Service Concept
Tesco has introduced different strategies geared towards improving consumer offer while still
developing long-term sustainable shareholder value. The organization improved its consumer
delivery approach through the introduction of extra customer service desks and changing the
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trading hours of the organization (Rigby, 2016). This was meant to reduce the average time spent
within the supermarkets, enhance consumer engagement, and allow consumers to shop for more
hours. Equally important, Rigby (2016) indicates that Tesco employed 3,000 consumer-facing
workers in 2016 to improve the overall shopping and consumer experience. These techniques
were meant to improve the competitiveness of the outlet by enhancing consumer experiencing,
thereby increasing consumer retention. In addition to this, one of the failures of the organization
was the broad range of operations, thereby affecting service delivery. In response to this, Tesco
vowed to focus on its core business, thereby selling Dobbies, Harris + Hoole businesses, and
Giraffe businesses. Moreover, the entity agreed the sale of Euphoria (Rigby, 2016).
Rigby (2016) indicates that the organization sought to reduce operating costs by £1.5 billion.
This would be achieved through optimization of the supply chain network and making it more
responsive and efficient while also simplifying the store operating model. Furthermore, the entity
has improved service delivery through introduction of services such as same-day click and
collect, an approach that has become popular among shoppers. Furthermore, the optimization of
the distribution model and service delivery has enhanced the availability of services and the
product and services range is more compelling (Rigby, 2016). For instance, the entity has
introduced new fresh food brands which are performing well above expectation, thereby
enhancing the organization’s value proposition and increasing consumer loyalty. Furthermore,
the organization is sharing the plans in place with the consumers to improve the working
relationship with all stakeholders while creating long-term and sustainable value for the
stakeholders (Rigby, 2016).
The strategies implemented by Tesco has helped boost the service concept by putting more
emphasis on consumer service rather that engaging in price war like other supermarkets (Steers,
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2012). The firm improved the staff hours and also invested in training and development of the
employees to boost service delivery and overall consumer experience. Furthermore, the approach
has seen an improvement in the expertise of the employees, particularly those handling fresh
food, and enhancing the quality of services through the knowledge-based delivery model (Steers,
2012). Rollason (2014) concurs with the above claims and reveals that service delivery has been
enhanced through investment in social consumer service through investment in technology and
communication through social media. This reflects the organization’s commitment to the service
concept through social consumer service and engagement.
4.0 Tesco’s Implementation of The Service Concept
Tesco has successfully implemented the service concept through improved consumer-focused
culture. Initially, Tesco was experiencing difficulties in the highly competitive market, but the
implementation of a consumer-oriented approach has helped transition the organization and lead
to its current success (Garlick, 2017). One approach used to implement the service concept is
through introduction of consumer-focused product development, thereby creating value and
boosting its reputation. The second strategy was consumer-focused ranging for the target
ethnicity and nationality in the catchment using Clubcard data using local ranging (Garlick,
2017). The third approach is consumer-focused store development by communicating with
customers before construction of stores, thereby getting invaluable insight. The other approach is
the consumer-centric loyalty scheme by awarding the loyal consumers (Garlick, 2017). In
addition to these techniques, Garlick (2017) indicates that the organization has invested
significantly towards enhancing sustainability through engagement with the community and the
environment. The organization unraveled the ‘Our Little Helps Plan’ program in 2017 to help
pull together efforts with the key stakeholders and refocus the activities on the social and
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environmental challenges that are most important to the consumers and the organization (Tesco,
2019). Also, the firm has used consumer feedback to provide sustainable and healthy products
for the consumers (Tesco, 2019). This approach has significantly improved Tesco’s response to
the service concept and boost the overall performance of the entity. The operations model of
Tesco is depicted in Figure 1 in the appendix.
5.0 Improvement of The Service Concept and Delivery System
Although Tesco has been successful in the implementation of service concept, the entity can still
improve its service delivery through the integration of the concept of customer relationship
management. This approach can allow the organization to optimize its direct relationship with
the consumers and other stakeholders, including markers (Soliman, 2011). Soliman (2011)
indicates that this approach has been proven effective in the keeping the existing consumers as
well as developing a long-term relationship with consumers as opposed to the consumer-oriented
transaction approach. Almgren (2014) concurs with the above claims and indicates that there are
various CRM platforms available for use by different organizations, including the CRM
software. The software is an important tool in providing vital insights about the consumers,
thereby improving their understanding of the needs and wants consumers. Furthermore, this is an
interactive tool that enhances coordination of all stakeholders, including employees, consumers,
suppliers, and others. Also, the CRM can help improve feedback from the consumers and other
stakeholders. This model will help improve the service concept for Tesco. The example of the
CRM system is illustrated in Figure 2 in the appendix.
6.0 Conclusion
SERVICE CONCEPT 9
To sum up, the concept of service concept is vital for organizations to help develop consumer-
centric techniques that can boost the overall satisfaction of the customers. Tesco has invested
significantly in enhancing its service model through the increase in the number of employees and
service centers. Furthermore, the entity has worked towards improving employee training and
competence to improve the handling of fresh foods. Moreover, Tesco has increased its focus on
its core business to improve its responsiveness to consumer needs, such as introduction of the
same-day click collect approach. The implementation of the service model has been based on
improvement of consumer-product development, Consumer focused ranging, consumer-centric
loyalty scheme, consumer-focused store development, and Social and environmental
sustainability. Notably, the organization can improve its service concept through the use of CRM
systems. This has proven to be a successful approach in keeping existing consumers and
developing long-term relationship. The CRM software can be employed to improve the
relationship within the organization and boost feedback.
7.0 Recommendations
I propose a different study that will make use of primary data provided by senior employees of
Tesco Supermarket and some consumers. The current research utilizes information and data
available on secondary sources, including libraries, websites, and company reports. However,
this information is not sufficient to draw reliable and valid conclusions. The engagement with the
senior staff and consumers will help gain a better insight of the actual state of affairs of the
organization, thereby improving the accuracy and credibility of findings. Additionally, some data
related to the service concept may not be published, and thus direct engagement with the
employee and consumers can help fill this void.
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8.0 Reference List
Almgren, K 2014, "Which CRM System Suit an Organization Needs? A Comprehensive
Literature Survey of Customer Relationship Management Systems," International
Journal of Humanities and Social Science, Vol. 4, No. 11, pp. 24-28.
Garlick, J 2017, Tesco, Put customers first, like Tesco. It works, The Grocer, available from
https://www.thegrocer.co.uk/tesco/put-customers-first-like-tesco-it-works-
/556072.article, accessed January 1, 2020.
Goldstein, SM, Johnston, R, Duffy, J and Rao, J 2002, "The service concept: the missing link in
service design research?" Journal of Operations Management, Vol. 20, pp. 121–134.
Ma, Y, Ding, J and Hong, W 2010, “Delivering Customer Value Based on Service Process: The
Example of Tesco.com,” International Business Research, Vol. 3, No. 2, pp. 131-135.
Rigby, C 2016, Tesco sets out improvements to customer experience as it unveils first-half
figures, Internet Retailing, available from https://internetretailing.net/strategy-and-
innovation/strategy-and-innovation/tesco-sets-out-improvements-to-customer-
experience-as-it-unveils-first-half-figures-14136, accessed January 1, 2020.
Rollason, H 2014, How Tesco Leads the Way in Social Customer Service, Conversocial,
available from https://www.conversocial.com/blog/how-tesco-leads-the-way-in-social-
customer-service, accessed January 1, 2020.
Soliman, HS 2011, “Customer Relationship Management and Its Relationship to the Marketing
Performance," International Journal of Business and Social Science, Vol. 2, No. 10, pp.
166-182.
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Steers, N 2012, Tesco targets customer service to win supermarket war, Sift Limited, available
from https://www.mycustomer.com/service/management/tesco-targets-customer-service-
to-win-supermarket-war, accessed January 1, 2020.
Tesco, 2019, Little Helps Plan: Progress Update 2018/ 19, TESCO PLC, available from
https://www.tescoplc.com/sustainability, accessed January 1, 2020.
Tesco Plc, 2019, PLC/ About, TESCO PLC, available from https://www.tescoplc.com/about/key-
facts/, accessed January 1, 2020.
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9.0 Appendix
Appendix 1
Service Concept
Consumer-focused
product development
consumer-focused store
development
Social and environmental
sustainability
Consumer focused ranging
consumer-centric loyalty
scheme
Figure 1: Operations service concept for Tesco Supermarket
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Appendix 2
Figure 2 : CRM System