Introduction

First I will start with brief introduction of the firm I am writing about. Tesco is the largest food retailer in UK, operating around 2,318 stores worldwide. Tesco operates around 1,878 stores throughout the UK, and also operates stores in the rest of Europe and Asia. Tesco.com is a wholly-owned subsidiary offering a complete online service, including tescodirect.com and tesco.net. The company also offers a range of both online and offline personal finance services. Tesco is headquartered in Hertfordshire, UK. For the year ended February 2004 Tesco PLC achieved revenues that totaled £33,557 million, an increase of 18.7% against the previous year’s revenues that were £28,280 million. (5)

History

This part I have divided into three main fraction: Grows; Marketing/management strategy and competition during each particular period of time. Competition is included here for the reason that I am strongly persuaded that it is the main driving force for any business.

Pre 1980

Grows

The Tesco brand first appeared in 1924. Name was formed by using the first three letters of the supplier’s name (TES), and the first two letters of a brand creator surname ((CO) Jack Cohen), forming the word “TESCO”. 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). (3)

Marketing strategy

Tesco introduced the new superstore concept for Britain. After a few years from appearance (1968) superstore became very popular for it’s vide range of products at competitive price. In 1974 company introduced its first gas station which had lower price for petrol but was adjacent to Tesco superstore. (1)

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

Grows

1995

Tesco overtook Sainsbury and became UK largest supermarket. In the 90s international expansion began: France (1992) Hungary (1994) Poland (1995) Czech Republic (1996) Slovakia (1996) Republic of Ireland (1997) Thailand (1998) South Korea (1999). Entering foreign markets in the first half of 90s was made mainly by purchasing already existing stores or joining the local retail leader. For example first stores in the Czech Republic were opened by buying US corporation Kmart’s operations in the country and converting them into Tesco stores. In 1997 expansion to Asia market began from acquiring 13 shops from CP Group in Thailand and formed Tesco Lotus. In 1999 by joining with Samsung entrance to South Korea market was achieved. (3)(1)

Marketing strategy

Tesco introduced a loyalty card, branded ‘Club card’, in 1995. This card was giving discount but what is more important it gave an opportunity to keep a hand on a pulse of customers need and to collect all necessary data for future planning’s. New goals were set: Expansion to foreign market, developing of a nonfood products selling. Tesco’s main advertising slogan appeared “Every little helps”. Its advertisements in print and on television mainly consist of product shots (or an appropriate image, such as a car when advertising petrol) against a white background, with a price or appropriate text, e.g. “Tesco Value”, superimposed on a red circle. (1) On television, voiceovers are provided by recognizable actors and presenters, such as James Nesbitt, Jane Horrocks, Terry Wogan, Ray Winstone, Neil Morrissey, Martin Clunes, David Jason and Kathy Burke among others. In international expansion Tesco took to attention difference in tastes between different regions. While entering Central Europe market Tesco was instilling western standards of shopping by introducing large number of hypermarkets. (2) Also very big attention was devoted to customers’ needs usually it was represent in product line. In Czech Republic for example Tesco concentrated on providing Czech products in retail shops. In China, the locals preferred to buy live fish, turtles, meat and other popular products such as instant noodles, unlike in European countries. Tesco had to provide these in its hypermarkets to draw the Chinese customers. Similarly in Thailand, the customers spent a huge proportion of their income on fresh foods. To adapt to the shopping habits of the Thai customers, Tesco developed a fresh market hall – an area adjacent to the main store, wherein 14 local vendors sold a range of fresh fruits, vegetables, meat, ready-to-eat products and other local food products. This area was designed to provide the Thai customers with traditional and local atmosphere.

Competition

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. Tesco’s nonfood marked faced a huge competition level in GB from such giants like ASDA and Marks&Spenser. At the beginning of entrance to the Hungarian market main competition was represented by small family-run stores, which served immediate customer needs. The strategy against it was introducing more than 1000 its own label products at 20% cheaper price than branded ones. Later Auchan (Fr), Metro (gr) and Cora (Fr) entered Hungarian market and became the main competition.