Picard's Pest and Porter's Analysis. the Pontetial of a French Company Expanding Into the Uk.

Only available on StudyMode
  • Download(s) : 477
  • Published : July 25, 2011
Open Document
Text Preview
CONTENTS PAGE

1. EXECUTIVE SUMMARY 2
2. INTRODUCTION 2
2.1 Picard overview 4

2.2 Picard´s corporate strategy 5

2.3 SWOT analysis 6

3. PEST ANALYSIS 6
4. PORTER´S FIVE FORCES Analysis of entering the UK Market 7 5. CONCLUSION 11
6. BIBLIOGRAPHY 12
7. APPENDICES 13

1. EXECUTIVE SUMMARY

The aim of this report is to analyse Picard´s market performance as well as challenges in its operating market using the PEST analysis tool, in order to identify if the company has prospects of entering and succeeding in the UK based on Porter´s five forces model.

Picard is a French frozen food retailer focusing exclusively on its own brand product lines. The company has grown to be France´s leading frozen food specialist capturing 20% market share with a network of over 800 stores, and it is also the largest specialised network of frozen food in Italy. Picard also offers a leading home delivery service from internet and telephone orders, including in other countries such as Spain, Luxemburg and Belgium.

The retailer´s overall strategy is characterised as a premium proposition with a vision of convenience, quality and innovation, firmly positioning itself on the high end of the market. Picard currently aims to continue opening approximately 50 new stores per year given its successful and consistent performance, allowing the company to potentially expand further overseas.

Using the PEST analysis tool it was identified that Picard´s major challenges in its operating market are the increased competition with other retailers in the convenience sector, the extent to which the products are adapted for each country, the frozen food quality perception and association to a premium offering, and the lack of a loyalty card scheme.

It was identified in this research that the level of competition in the UK frozen food sector was intermediate given Picard´s differentiated premium frozen food advantage against competitors such as Iceland and Tesco, however there are several barriers to enter the market owing to powerful large supermarket chains, building a challenge to establish a brand name in the UK. In addition to this supermarkets are increasingly developing their own label range and investing further in the convenience format.

On the other hand Picard´s vertically integrated supply chain and close geographical location to the current distribution network is considered a significant advantage. Furthermore UK consumers are the one of the largest frozen food buyers globally and Picard has a leading home delivery channel already established in 6 countries from online and telephone orders. It is therefore concluded that the UK is an attractive proposition for Picard.

2. INTRODUCTION

In these straitened economic times, frozen food is a sector that is growing as consumers recognise two main factors. Firstly it offers value for money, and secondly it helps to reduce food waste. The UK frozen food market is worth around £5.1 billion a year and accounts for 8% of the UK Grocery Industry (Kantar Worldpanel, 2010). Although in 2010 the market remained flat, it has shown 11.3% value growth between 2007-2010, with indication that the market will continue to grow this year.

[pic]

Souce: Kantar Worldpanel, September 2010

Convenience is driving the frozen market sales globally as consumers are looking for healthy and less time-consuming meals (Seth and Randall, 2011). Private label is performing extremely well, consistently increasing its share creating a challenge for major brands in the current market. Additionally as recession kicked in the UK, the frozen food chain Iceland reported double-digit sales growth while another supermarket seeing incredible growth in the freezer aisles today is Waitrose, revealing two contrasting retailers market positioning.

Chart 1: Manufacturer´s frozen market share

[pic]

Source: Kantar Worldpanel. Data to 12th June 2011

Chart 2: Retailer frozen market...
tracking img