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Tesco Final

Tesco Final

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Published by: api-3746231 on Oct 15, 2008
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03/18/2014

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HISTORY
In the year 1920s, Tesco's founder Sir Jack Cohen had already begun to set up highstreet grocery stores in and around London. The Tesco name was used for the firsttime in 1929 in Edgeware, London. The name was drawn from the initials of thecompany's tea supplier (T.E.Stockwell), and Cohen's own name. In 1932, Tescowas formally established as a private limited company. During the rest of thedecade, the company continued to grow, adding more than 100 stores, mainly inLondon. After visiting the US in 1935 to study its self-service supermarkets,Cohen developed Tesco's "pile it high and sell it cheap" format. This format became the core of Tesco's retail philosophy for many years to come.Tesco continued to grow after World War II. The retail chain appealed to price-conscious working class customers. After the war, the company was listed on theLondon Stock Exchange as Tesco Stores (Holdings). By 1950, Tesco was alreadyoperating 20 self-service stores. During the 1950s and the 1960s, Tesco grew primarily through acquisitions. It acquired 70 Williamsons stores in 1957, 200Harrow Stores in 1959, 212 Irwins outlets in 1960, 97 Charles Phillips stores in1964, and the Victor Value chain of discount stores in 1968 (sold in 1986). By the1960s, Tesco had become a chain of over 800 stores.During the 1970s, Tesco's customers began to look for quality and choice, but Tescofailed to satisfy their needs. In fact, in the early 1980s, Tesco looked like windingup. Consumers had a negative image of Tesco, which competed almostexclusively on price. Poorly maintained stores and an inadequate assortment of  poor quality items reinforced this general perception.1
 
Tesco plc is an UK-based international grocery and general merchandising retailchain. It is the largest British retailer by both global sales and domestic market share,is the world's third-largest grocery retailer, and is the fourth-largest retailer behindWal-Mart of the United States, Carrefour of France, and The Home Depot of theUnited States.Tesco now controls just over 30% of the grocerymarket in the UK, approximate to the combinedmarket share of its closest rivals, Asda andSainsbury's. In 2007, the supermarket chainannounced over £2.5 billion in profits.Originally specializing in food, it has diversifiedinto areas such as discount clothes, consumer electronics, consumer financial services, sellingand renting DVDs, compact discs and musicdownloads, Internet service consumer telecoms, budget software. They are now entering into thehousing market, with a self-advertising websitecalled Tesco Property Market.
Formation
Tesco was founded, as a one-man business, by Jack in London's East End. He camefrom a modest background, being the son of a Polish tailor. He began selling groceriesin Well Street market, Hackney, in 1919 after World War 1. The £30 demobilisationmoney he received after serving in the First World War was spent on purchasinggoods for that first stall. At this time rations and supplies were low, so he would buydamaged goods from other businesses and resell them at reasonable prices.The Tesco brand first appeared in 1924. The name came about after Jack bought alarge shipment of tea from
T.E. Stockwell 
. He made new labels by using the first threeletters of the supplier's name (TES) forming the word "TESCO".2
 
The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex. Tescofloated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited.The first self service store opened in St Albans in 1947, and the first supermarket inMaldon in 1956
.
Strategy
"We have continued to make strong progress with all four parts of our strategy - astrong UK core business, non-food, retailing services and international - by keepingour focus on trying to improve what we do for customers:
making their shopping trip as easy as possible
constantly seeking to reduce our prices to help them spend less
offering the convenience of either large or small stores
 bringing simplicity and value to complicated markets"[Source:Tesco Preliminary Results 2004/5]
Management and strategy changes
The founder, Jack , was an enthusiastic advocate of trading stamps as an inducementfor shoppers to patronize his stores: he signed up to Green Shield Stamps in 1963, and became one of the company’s largest clients.In 1973 Jack resigned and was replaced as Chairman by his son-in-law Leslie Porter.Porter and managing director Ian MacLaurin abandoned the "pile it high sell it cheap" philosophy of Cohen which had left the company "stagnating" and with a "badimage". In 1977 Tesco launched "Operation Checkout" which saw it abandon GreenShield stamps in favour of cutting prices and centralized buying for all of its stores.The result was a rise in market share of 4% in two months.
Corporate strategy
1.An "inclusive offer". This phrase is used by Tesco to describe its aspiration toappeal to upper, medium and low income customers in the same stores. According to3

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