‘What Makes Tesco Successful? Place or Price Strategy?’

Topics: Tesco, Sainsbury's, Asda Pages: 4 (1421 words) Published: December 2, 2012
‘What makes Tesco successful? Place or Price strategy?’

Company Background
Tesco was founded by Jack Cohen, who sold groceries in the markets of the London East End from 1919. The Tesco brand first appeared in 1924. He started by buying 30 pounds worth of army surplus rations. On his first day of selling this stock at the market he made a profit of one pound. After selling all of this he had made himself some money to work with. He used this money to buy goods, which other stores would not sell. By 1939, his empire had grown and he had opened up one hundred stores. Jack then went to America for a holiday. Where he found the stores out there were all self-service, he thought this idea was great and could save him a lot of money in shop staff wages. He brought this idea back with him to England and set it up and found this method to be most successful and then introduced every shop to this. Tesco then started their long running campaign to expand by buying up cheap chains of shop. He owned 400 stores worldwide. An idea to create a non-food floor that would only sell items such as clothes and kitchen items also came along. This was so successful that it promoted an idea to build a special designed "super market". The Tesco stores then started to reduce prices. In Europe the group recorded revenues of £44.6 billion during the year ended February 2011, a rise of 5.5% over 2010. The working profit of the group was £2.5 billion during financial year 2011, a rise of 3.8% over 2010. The net profit was £2,671 million in fiscal year 2011, a raise of 14.3% over 2010 in UK alone. (Tesco Annual Report 2011) Its recent overall strategy has been straightforward – expansion by all available means in order to create the greatest possible economies of scale to severely threaten its competitors.

Tesco’s objectives
Tesco aim is to retain loyal customers. Their objectives are to keep customers happy, to achieve high profit margins, to motivate workers, expand abroad, support...
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