Tesco (UK)


Selected Tesco advertising

Tesco is the UK's leading supermarket chain and a challenger to Carrefour as the world's #2 retailer. It leapfrogged domestic arch-rival Sainsbury's in 1995 to become Britain's biggest food retailer, and has continued to extend its lead ever since, while also broadening its footprint considerably with an aggressive move into non-food merchandise. In 1999, the group went one step further, becoming the UK's most profitable retailer as well, after Marks & Spencer announced a dramatic fall in net earnings. It has steadily improved on that position too, breaking the 3bn profit barrier for the first time in 2008 (although performance began to slow significantly during 2012). Instead, Tesco has looked mainly to the international market for further expansion. Most of its non-UK operations are concentrated in Eastern Europe and Asia - a bold attempt to break into the US market in 2007 ended in failure five years later. The platform for this astonishing growth was established in the 1970s and 1980s when former managing director Ian MacLaurin fought a long and drawn-out battle with the store's founding family to drag the brand upmarket, before overseeing a range of innovative schemes during the 1990s. However, performance has faltered dramatically since 2010 as the group wrestles with price wars and sliding sales in several key markets including the UK.

Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 25th Sept 2014: There was a shock warning from supermarket giant Tesco, which revealed it had discovered 250m of over-stated profit in draft accounts for the first half of the year. The latest errors, which were apparently brought to the board's attention by a whistleblower, are the result of erroneous accounting of revenues and associated costs, so that payments from suppliers to support product promotions were recognised in the first half but not the associated costs of the promotions. The amount is equivalent to more than a third of UK operating profits for the first six months of the year. Tesco has requested an independent investigation, though it said that there was no evidence yet of deliberate fraud. Nevertheless, four senior managers including UK managing director Chris Bush have been suspended pending the result of that investigation. Robin Terrell, head of the group's online business, is to lead the UK division on an interim basis. That news also alarmed analysts because of Terrell's lack of experience in bricks and mortar retailing in the crucial run-up to Christmas. These developments, along with a warning that the group might uncover other such discrepancies for the current or previous years, prompted yet another plunge in Tesco's share price to an 11-year low. One might think from the accompanying media frenzy that Tesco is on the verge of collapse. Nothing could be further from the truth. Latest figures from Kantar put Tesco's share of the UK grocery market at 28.8% for the 12 weeks to Sept 14th. That's down from the same time last year, but for all Tesco's widely reported troubles, it remains the UK's leading supermarket by a substantial margin, more than 11 percentage points ahead of its closest rival Asda (at 17.4% share), and more than Sainsbury's and Morrisons combined. Tesco's best-ever performance in share was 31.4% in 2011.

Adbrands Weekly Update 4th Sept 2014: UK supermarket giant Tesco cut its forecast of trading profits for the current year for the second time in two months as it struggles to bolster falling market share. It also announced the arrival of new CEO Dave Lewis a month earlier than expected. Lewis issued a rallying call to all staff: "In our DNA we have always been the customers' champion, and we will be again... These are challenging times, but we will emerge stronger. With a relentless focus on our customers, and a preparedness to challenge ourselves and take bold decisions we can retain our position as the customers' champion." It wasn't enough to reassure some institutional shareholders. Leading US fund manager Harris Associates, which had held a 3% stake in the group, cut its holding by two-thirds and bemoaned the retailer's lack of a clear strategy. Meanwhile, in a rather more lighthearted sideline, the store has been wrestling with a fake Twitter account which has been responding to genuine customer complaints with foul-mouthed but funny ripostes. For example, one job applicant who apologetically tweeted he'd just accepted a position at rival Asda instead of the one offered by Tesco, received a rogue response from "Tesco Express" of "You are dead to me". Another complained about the quality of Tesco's 60p garlic sausage slices and was asked "what the f*ck did you expect for 60p?". The account has since been shut down but you can see an entertaining account of the story here at Buzzfeed.

Adbrands Weekly Update 24th July 2014: British supermarket giant Tesco, still struggling to turn around performance, announced the resignation of CEO Philip Clarke after just three years in his role. He will be replaced at the end of September by longtime Unilever executive Dave Lewis, former head of the packaged goods group's UK and US operations, and currently head of global personal care. Tesco chairman Sir Richard Broadbent thanked Tesco lifer Clarke for his 40 years of service but said that the board felt that this was the "appropriate moment to hand over to a new leader with fresh perspectives and a new profile". Lewis's successor at Unilever has yet to be confirmed. His departure is undoubtedly a blow to that group. Personal care has emerged as Unilever's strongest business by some margin as a result of the global success of Dove and Axe amongst other brands, and Lewis had been tipped as a possible future successor to group CEO Patrick Cescau. In another keenly felt departure, David Rubin, head of brand building for US haircare, resigned to become head of brand at social service Pinterest

Adbrands Weekly Update 12th Jun 2014: Tesco is the first of the UK's big four supermarkets to go head-to-head with the country's high street banks by launching an ordinary current account. It already offers savings, credit cards and mortgages. Tesco Bank CEO Benny Higgins - a former chief executive of NatWest - said there would be "no gimmicks, just a simple, rewarding, modern convenient current account, designed for Tesco customers by Tesco customers". Marks & Spencer is the only other major general retailer so far to offer a current account, launched last month through HSBC. Several others, including John Lewis Partnership and Sainsbury's, also offer credit cards, insurance, loans and savings products.

Adbrands Weekly Update 5th Jun 2014: Tesco overhauled its marketing structure with the creation of two new roles. Current chief marketing officer Matt Atkinson has taken on a newly created role of chief creative officer, with oversight of new customer-oriented products and services. Jill Easterbrook, previously managing director, UK developing businesses, becomes chief customer officer, another new role that will include responsibility for marketing operations. The CMO position has been discontinued. That news came a day ahead of disappointing Q1 results, in which Tesco's still troubled UK operations reported their third consecutive decline in like-for-like sales, which fell 3.7% excluding petrol. The group blamed competitive price-cutting and store revamps for the decline. Despite all the fuss over Tesco's declining like-for-life sales, the group still towers over its rivals. According to Kantar Worldpanel, for the 12 weeks to May, Tesco's market share slipped sharply compared to this time last year, but at 29.0% is still far beyond the reach of main rivals Asda (17.1% share) and Sainsbury (16.5%). 

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Tesco Personal Finance Tesco Direct
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One Stop Nutri Centre

Tesco Hit (Poland) Tesco Lotus (Thailand)

 


Adbrands Weekly Update 17th Apr 2014: As expected, UK supermarket giant Tesco reported disappointing results for the year to Feb 2014. Net revenues slipped 3% on a reported basis to 63.6bn, reflecting various divestments compared to the previous year, and underlying pretax profits fell by 7%, the second consecutive annual decline after two decades of steady growth. However lower impairments and related charges actually resulted in a 10% increase in statutory profits to 2.3bn. (Another consolation is that, despite the decline, Tesco has narrowly overtaken French rival Carrefour as the world's second largest retailer by revenues). The biggest worries are still in the UK where like for like sales dipped 1.3% ( to a final reported figure of 48.2bn), and trading profit fell by almost 4% to 2.2bn. CEO Philip Clarke said the group would continue to invest heavily in price cutting on everyday items to beat the increasingly fierce competition from discounters and rival supermarkets, and the group is also developing other initiatives designed to reignite sales growth. One is the launch of "dozens" of hot "food-to-go" counters at Tesco Express outlets in London, where overall performance remains generally strong. The new offering is designed to tempt office workers away from established high street chains such as Pret a Manger, Eat or Greggs. However the boldest strategy is a return to the US with the launch of at least seven dedicated stores for its private label fashion brand F&F. These will be managed and run in the US by the local arm of Tesco's Middle Eastern franchise partner Alhokair fashion retail. That group already operates US franchises for other European fashion brands including Monsoon, Accessorize, New Yorker and Lipsy. In its home market of Saudi Arabia it also represents Zara and other Inditex brands, Gap and Marks & Spencer. Tesco already licenses the F&F brand for franchise stores in 10 other markets worldwide.

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