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Coordinates: 51°42′18.89″N 0°1′36.37″W / 51.7052472°N 0.0267694°W / 51.7052472; -0.0267694
Tesco plc is a British-based international grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share with profits exceeding £3 billion. Currently the third largest global retailer based on revenue, behind Wal-Mart and France's Carrefour. Originally specialising in food and drink, it has diversified into areas such as clothing, consumer electronics, financial services, telecoms; home, health and car insurance; dental plans, retailing and renting DVDs, CDs, music downloads, Internet services, and software.
History
Formation
Jack Cohen founded Tesco in 1919 when he began to sell surplus groceries from a stall in the East End of London. The Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from T.E. Stockwell . He made new labels using the first three letters of the supplier's name (TES), and the first two letters of his surname (CO), forming the word "TESCO". The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex. Tesco floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited . The first self service store opened in St Albans in 1951 (still operational in 2008 as a Metro), and the first supermarket in Maldon in 1956.
During the 1950s and the 1960s Tesco grew organically, but also through acquisitions until it owned more than 800 stores. The company purchased 70 Williamsons stores (1957), 200 Harrow Stores outlets (1959), 212 Irwins stores (1960), 97 Charles Phillips stores (1964) and the Victor Value chain (1968) (sold to Bejam in 1986).
Management and strategy changes
Founder Jack Cohen was an enthusiastic advocate of trading stamps as an inducement for shoppers to patronise his stores. He signed up with Green Shield Stamps in 1963, and became one of the company's largest clients.
In 1973 Jack Cohen 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 "bad image". In 1977 Tesco launched "Operation Checkout" with the abandonment of Green Shield stamps, price reductions and centralised buying for all stores. The result was a rise in market share of 4% in two months.
1980s
In May 1987 Tesco completed its hostile takeover of the Hillards chain of 40 supermarkets in the North of England for £220 million.
1990s
In 1994, the company took over the supermarket chain William Low, successfully fighting off Sainsbury's for control of the Dundee-based firm which operated 57 stores. This paved the way for Tesco to expand its presence in Scotland, which was weaker than in England. In 2006 Inverness was branded as "Tescotown", because well over 50p in every £1 spent on food is believed to be spent in its three Tesco stores.
Tesco introduced a loyalty card, branded 'Clubcard', in 1995 and later an Internet shopping service. As of November 2006 Tesco was the only food retailer to make online shopping profitable. In 1996, the typeface of the logo was changed to the current version with stripe reflections underneath. Terry Leahy assumed the role of chief executive on 21 February 1997, the announcement having been made on 21 November 1995.
On 21 March 1997 Tesco announced the purchase of the retail arm of Associated British Foods which consisted of the Quinnsworth, Stewarts and Crazy Prices chains in the Republic of Ireland and Northern Ireland, as well as associated businesses for £640 million. The deal was approved by the European Commission on 6 May 1997. This acquisition gave it both a major presence in the Republic of Ireland, and a larger presence in Northern Ireland than Sainsbury's which had begun its move into the province in 1995.
In 1997, Tesco Stores Limited and Esso (part of Exxonmobil) forged a business alliance that included several petrol filling stations on lease from Esso, where Tesco would operate the store under the Express format. In turn, Esso would operate the forecourts and sell their fuel via the Tesco store. Ten years later, over 600 Tesco/Esso stores can now be found across the United Kingdom.
2000s
In July 2001 it became involved in internet grocery retailing in the USA when it obtained a 35% stake in GroceryWorks. In 2002 Tesco purchased 13 HIT hypermarkets in Poland. It also made a major move into the UK convenience store market with its purchase of T & S Stores, owner of 870 convenience stores in the One Stop, Dillons and Day & Nite chains in the UK.
In October 2003 it launched a UK telecoms division, comprising mobile and home phone services, to complement its existing Internet service provider business. In June 2003 Tesco purchased the C Two-Network in Japan. It also acquired a majority stake in Turkish supermarket chain Kipa. In January 2004 Tesco acquired Adminstore, owner of 45 Cullens, Europa, and Harts convenience stores, in and around London. In August 2004, it also launched a broadband service. In Thailand Tesco Lotus was a joint venture of the Charoen Pokphand Group and Tesco but facing criticism over the growth of hypermarkets. CP Group sold its Tesco Lotus shares in 2003. In late 2005 Tesco acquired the 21 remaining Safeway/BP stores after Morrisons dissolved the Safeway/BP partnership. In mid 2006 Tesco purchased an 80% stake in Casino's Leader Price supermarkets in Poland. They will be rebranded into small Tesco stores.
On 14 July 2007, fourteen Tesco stores across the UK were temporarily closed after a 'bomb scare' and a criminal investigation launched after threats were made. A 'suspect device' was found in one store on 16 July 2007 causing the store and surrounding area to be sealed off while the Army Explosive Ordnance Disposal unit disposed of the package.
In 2007, Tesco joined forces with O2 in Ireland to form Tesco Mobile, using the 089 prefix. Tesco owns 50% of the network, with O2 owning the remainder. Tesco has not built its own network in Ireland, but uses the O2 infrastructure already in place, similar to the arrangement in the UK. By doing this, Tesco has saved money and already has 99.6% population network coverage and 95% geographical coverage. In 2007 Tesco was placed under investigation by the UK Office of Fair Trading (OFT) for acting as part of a cartel of five supermarkets (Safeway, Tesco, Asda, Morrisons and Sainsburys) and a number of dairy companies to fix the price of milk, butter and cheese. In December 2007 Asda, Sainsburys and the former Safeway admitted that they acted covertly against the interests of consumers while publicly claiming that they were supporting 5,000 farmers recovering from the foot-and-mouth crisis. They were fined a total of £116 million. Tesco, which maintains that it was not a part of the cartel, is still under investigation by the OFT.
A two-part television ad campaign celebrating Christmas with the Spice Girls aired in 2007. They have reportedly been paid £5 million (US$10 million).
In April 2009, Tesco announced that it had created a super tomato that "doesn't leak". The tomato is grown in Holland and is meant to be a better tomato for sandwiches since, being less juicy, they won't make sandwiches as soggy as regular tomatoes do.
Corporate strategy
According to Citigroup retail analyst David McCarthy, " pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market". One plank of this strategy has been Tesco's use of its own-brand products, including the upmarket "Finest", mid-range Tesco brand and low-price "Value" encompassing several product categories such as food, beverage, home, clothing, Tesco Mobile and financial services.
Beginning in 1997 when Terry Leahy took over as CEO, Tesco began marketing itself using the phrase "The Tesco Way" to describe the company's core purposes, values, principles, and goals This phrase became the standard marketing speak for Tesco as it expanded domestically and internationally under Leahy's leadership, implying a shift by the company to focus on people, both customers and employees.
In order to protect its brand image, and given its expansion
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