Tesco Analysis

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  • Topic: Tesco, Asda, Morrisons
  • Pages : 26 (5810 words )
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  • Published : March 1, 2013
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History

Tesco was founded about 1919 by a person call Jack Cohen in London's East End. In this year as well he Jack Cohren started was selling groceries in the markets of the East End. After about 5 years the name TESCO started to appear on labels because Jack Cohen brought a large shipment of tea from a company called T.E. Stockwell. Due to this he put the first two letters of the supplier of tea along with the first two letters of his surname and this spelt out TESCO. The first Tesco store opened in 1929 and now it has 1,800 stores just in the UK and its present felt in 12 countries.

Tesco now is the largest British retailer, both by global sales and by domestic market share, and the fourth largest retailer in the world behind Wal-Mart of the United States, Carrefour of France, and The Home Depot of the United States. Tesco used to only sell food but now it has moved into areas such as clothes, consumer electronics, consumer financial services, selling and renting DVDs, compact discs and music downloads, internet service and consumer telecoms.

Introduction

Tesco over the years is UK's most popular retailer with over 13 million customers a week, number of non - food products/services available has gradually increased, Tesco.com is the world largest home delivery service in the world and it is operating in 12 different countries with further expansion in other countries. The reason for all these success mentioned above is all down to one thing, which is the approach taken by Tesco on customer focused. Tesco is unique in this way because many retailers would tend to focus only on profits. However, Tesco as well as making profits would like to "create value for customers, to earn their lifetime loyalty". ( Tesco Interim report, 2005) This can be seen in Tesco mission statement and the way this is achieved is through corporate strategy. The corporate strategy of this retailer consist of four parts; UK Core Business, Retail Services, Non-Food and International. It can be seen from the annual report that the profits in each of these four strategies have gone up. In the UK Core Business profits went up 14.9% compared with few years back where there was an increase of 12.7% , Retailing Services was £40 million pounds but now it is £70 million pounds, Non - food was expected market share to only be 6% but it is actually 7% and the operations in overseas market is now in 12 countries.

The success of this strategy needs to be broken down in order to provide evidence to show how effective Tesco as been and in what way.

1) UK Core Business - Tesco has got a strong UK Core Business because this is where everything started from and gradually as the years went on the retailer was able to exploit opportunities. This was done through innovation and having the energy in finding ways to expand. After five years there were only 728 stores in the UK (Tesco Account Watch, 2002). However, now that numbers has dramatically increased to 1,800 stores (Tesco, 2006) with more then 260,000 employees. From this it can be seen that Tesco idea of expansion was a huge success and this is reflective in the profitability where the sales are £32.7 billion pounds and the operating profits are £1.788 million pounds.

2) Non-Food - This is seen as being important for Tesco because in the future they would like be in front of their competitors. This can be seen in an annual report of 2002 where it state that "..in the long term would like to be as strong as it is in food to have 6% market share within the next three years." (Tesco Account Watch, 2002)However Tesco have succeeded the expected market share by gaining a market share of 7%. (Tesco,2006) The main reason why this has gone up is due to the fact that Tesco has been able to offer over 100 new products including CDs, electrical goods, clothes etc at low prices and at good quality. By doing this, it will allow this retailer to keep customer loyalty for a long time as well.

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