Tesco UPL started in London’s East End. It was founded by Jack Cohen as a one man business. He was a son of a tailor and when he started it, he specialized in selling groceries in the markets of London East End. The company started in 1919 and it adapted its brand name Tesco on 1924.
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The brand name was delivered from a combination of the initials of its former supplier T.E. Stockwell (TES) with initials (CO) from his surname. Thus, the misconception that the brand name Tesco originated from a combination of his name Jack and his presumed wife Tessa is wrong, since he has never been married to such a woman.
Tesco started its first store at Burnt Oak, in 1929 and it started trading its shares in London Stock exchange in 1947. It was in 1956 that it started its first self-service store and first supermarket in St Albans and Maldon respectively (Tesco Corporate Profile (2004, para.5).
Tesco has expanded greatly to be the biggest chain of supermarket in United. Internationally, it is placed at position four after Wal-Mart of United States on America, Carrefour of France, and the Home Deport also from the United States of America. Tesco has been successful in opening stores in 14 countries in Europe, North America and Asia.
The company has expanded his line of production from specializing in selling groceries by also stocking consumer goods, financial services and Telecoms that has enabled it generate revenue of £3.41 billion annually(Tesco Corporate Profile (2004, para.7).
Tesco’s expansion over the last three decades comprises of a complete change of its strategy and image. In its early years it used a strategy that was known as ‘pile it high, sells it cheap’.
This strategy was initiated by Jack Cohen and was very effective by then, but latter it was not successful in selling the brand to the middle-class customers, since they had a poor image for the brand. In 1970s, many consultants recommended a change of the names of its store due to their poor, an issue that was never implemented.
They latter changed their strategy that enabled them establish a well consistent growth that facilitated it in 2005 to become the biggest retailer market in United Kingdom with a domestic grocery market share of 29% compared with 16.8% of Wal-Mart who were formerly dominating the market. The company established a strategy that that was aimed at broadening the scope of the business. This was meant to ensure that the company delivers a strong sustainable long-term growth.
This new strategy entailed expanding the domestic markets to offer diversified products such as non-food, telecoms and financial services. This strategy which was initiated in 1997 is the one that ensured the growth and success of the company. This strategy comprises of five elements;
Core UK: Tesco has the biggest domestic market in United Kingdom. Approximately 70% of their growth and profit occurs in UK. It has over 2,200 stores that have enabled to employ more than 285,000 people. Its expansion in UK happens as a result of extending its established store, opening new store and lastly by the strategy of multi-format approach.
Its sale of non-food has greatly boosted the expansion of the company. To sell its products, Tesco has adapted five diverse store formats which are costumed to meet the needs of their customers. They are categorized according to what they stock and size. They include;
Express (up to 3,000 sq ft)
Tesco has more than 960 such stores that sell a range of up 7,000 products to their customers. They are located close to where their customer live and work for convenience while buying. They stock high quality and fresh food stuff, wines and spirit.
Metro (approx. 7,000-15,000 sq ft)
The company has more than 170 metro. The first metro was established in 1992. Metro are aimed at enhancing the conveniences of shopping in towns and city centers. They stock variety of products including sandwiches and ready-meals,
Superstore (approx. 20,000-50,000 sq ft)
Tesco have more than 450 such stores that stock a wide range of products. Nowadays they have diverse products that include non-food products such as books and DVDs
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Extra (approx. 60,000 sq ft and above)
In the United Kingdom, there are over 175 such stores. They stock a wide range of non-food and food products. These products include clothing, health and beauty, electrical equipments and others. The Homeplus is another store that is on trial .They are 10 in numbers and are aimed mostly at stocking on non-food products.
Apart from Tesco designing its stores in various formats to suit its customers, it offers its products in a broadened appeal. Tesco is continually investing to expand their line of production to offer their customers a wide variety of products to choose from. Tesco products enable various people to purchase their different products to supplement their lifestyle. For instance, their nutrition labeling educates their customers on the key information that enable them make an informed decision when buying from their stores.
The recent economic depression had challenged their business greatly and as a result invented 500 more products that will enable various categories of customers to buy various products at a cheaper price without compromising on quality. Tesco stores are designed to appeal all the classes of their customers in reference to their social economic status.
They ensure it by forming a slogan named ‘I’m not aware of any other retailer achieving’ this slogan has enabled Tesco appeal to every segment of UK market.
Tesco Clubcard is a global leading loyalty card scheme that has information that enable Tesco understands its customer better and give them an opportunity to appreciate their customer for shopping with them. Tesco possess more than 8 million distinct coupons. Each clubcard mailing designed to reflect the type of bid suitable for any of their customer. The company has more than 15 million active cardholders.
Tesco is the biggest private employer in UK with a workforce of more than 285,000. The company offers its customers packages of pay and benefit like children care vouchers or Save As you Earn. This is a scheme for saving that enables their customer to purchase shares at a discounted rate (Tesco PLC, 2010 Para. 6).).
In summary, Tesco has used the strategy of diversification to become among the leading firms globally.
The ability of the firm to succeed in selling its own-brand to its customers has helped the company make sufficient profit as this strategy ensures that a company retains a higher percentage of the overall profit. Thus, the company has enough resources at its disposal to expand to other places locally and also globally.
Another strategy adapted by Tesco is core UK business. This involves stocking of grocery in its home market. This retailing is characterized by very strategic moves that entails opening large scale store in areas that other competing firms have shunned to explore. This strategy gives Tesco the advantage of being the first entrant thus; concentrating on establishing a strong brand in those areas such that other competing firms cannot be able to match its performance when they venture in these areas latter on.
Non-food businesses-Apart from being successful in its grocery business, Tesco has also diversified its operations to include non-food products such as cloths, electronics, health and beauty products among others. This new diversification has ensured high revenues and especially in Ireland where it records very high revenues due to the sale of CDs. Retailing services;-Tesco has also expanded its operations to offer services such as personal finance.
It has succeeded in the retailing services by entering in joints with other main players in the sector. This has strengthened its brand and expanded its customer base. Other competing firms in UK have also adapted this strategy, but Tesco have implemented it more strategically a move that has ensured this venture very profitable (Tesco PLC, 2010 Para. 8).
For example, Tesco clients enjoy banking services from Tesco Bank which was initially a joint venture between Tesco and the Royal Banking of Scotland. It gives its customers offers on various products such as loan, credit cards among others. This new service ventures helps the firm record very high profits that assist the firm to venture in new services or areas. Tesco is also engaged in the cell phone industry.
It cells various home phones, mobile phone and broadband business to various consumers across the globe. It has liaised with successful experts of existing telecom operators.International-Tesco started to expand outside UK in early 1994, and in 2005 it was successful to globalize approximately 20% of its operations mainly in central Europe and Far East (Tesco PLC, 2010 Para. 10).
Tesco Social Responsibilities
Buying and selling their products responsibly: Tesco have thousands of suppliers globally. They prefer their suppliers to be innovative and dynamic. To ensure it, they spend approximately £800m of their turn over in United Kingdom for local sourcing. Tesco verify where their products originate from and also ensure they are produced in accordance to their standards.
To achieve a very competent workforce that will be dynamic and very effective, Tesco has trained more than 400 suppliers in China, India, Bangladesh, Spain and United Kingdom on how to enhance labor Standards to realize a workforce that is self motivated and very competent (Tesco Corporate Social Responsibilities, 2010, Para.2).
Protecting the Environment: Tesco is committed in ensuring that its activities have very little negative impact on environmental. It achieves this by leasing with its supplies and encouraging them to ensure they use environmental friendly production methods to minimize pollution. Tesco has a vision to reduce its carbon emission to zero by 2050 by adapting the following strategies. Reducing carbon emission in all the new stores they will erect and the existing ones by 2020(Tesco Corporate Social Responsibilities, 2010, Para.3).
Creating good jobs and careers:-Tesco employees are more than 285,000. Thus, Tesco expansion is an assurance that it will continue to give people more employment opportunities that assure them of a daily source of income for themselves and their families (Tesco Corporate Social Responsibilities, 2010, Para.3).
Assisting customers make healthy choices:-Tesco products are labeled accordingly to assist various customers make informed decisions, while buying from their stores. They encourage their customers to purchase and eat more vegetables and fruits. It is done by offering discounts and promotions on such products.
They occasionally take direct roles to ensure that their customers get healthy. They encourage people to lead active lifestyles. Healthy lifestyle helps one to balance the energy they consume to the one they expend. Some of the strategies it has adapted to make sure people live healthy lifestyles is by supporting aerobics and soccer tournaments for its customers (Tesco Corporate Social Responsibilities, 2010, Para.4).
Tesco capitalizes on the power of strategic advertisement to sell its brand locally and globally. It is noted as one company that uses very many advertisements yearly. It’s advertisements emphasis about affordable prices for their products and on healthy living. Tesco’s marketing department is very dynamic and innovative on the most successive advert to employ.
The following are examples of adverts that have been used in the past; in 1982 it used its famous advert referred as “Checkout 82” .this advert involved a till with receipt coming from it with various prices. In 2003 Tesco advertised through adverts that comprised of items and shopping trolley that contained information about Tesco. Currently, Tesco is using adverts that comprises of celebrates such as the Spice Girls
In conclusion, Tesco can be considered as a very successful company that originated from scratch to become a global company through its strategic chose of its corporate strategy,
Social responsibility and Advertising. Thus, it can be a good role model for those upcoming companies that they can live beyond their odds to become among the leading organizations in the world.
Tesco Corporate Profile (2004). Retrieved from https://corporatewatch.org/tesco-company-profile/
Tesco Corporate Social Responsibilities (2010). Retrieved from https://www.tesco-programmes.com/
Tesco PLC (2010) .Tesco Strategy. Retrieved from https://www.tescoplc.com/about-us/