Tesco (UK)

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Tesco is the UK's leading supermarket chain and narrowly overtook Carrefour in 2013 to become the world's #2 retailer, though performance since then has been dented significantly by a brutal price war in the UK and sliding sales in several other key markets. The original platform for Tesco's 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. It leapfrogged domestic arch-rival Sainsbury's in 1995 to become Britain's biggest food retailer, and continued to steadily extend its lead while also broadening its footprint considerably with an aggressive move into non-food merchandise. Tesco broke the £3bn profit barrier for the first time in 2008. After that, the group began looking 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, and that setback was followed by a series of reverses in other markets, including the UK, leading to a change of CEO at the end of 2014. In 2018, Tesco took steps to meet discounters Aldi and Lidl head-on with its own low-cost chain, Jack's.

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Tesco Hit (Poland) Tesco Lotus (Thailand)

Recent stories from Adbrands Update:

Adbrands Daily Update 2nd Oct 2019: Tesco CEO Dave Lewis took investors and employees by surprise with the announcement that he will step down next summer after five years with the supermarket group. "I believe that the tenure of the CEO should be a finite one," he said in a prepared statement, "and that now is the right time to pass the baton.  Our turnaround is complete, we have delivered all the metrics we set for ourselves." Separately, Lewis told the Financial Times that he needs to "recharge the batteries". He said the retail environment is "all consuming. The business never sleeps. It is 365 days, 24/7 - the operational intensity is very high." His successor has already been selected: Walgreens Boots Alliance's former chief commercial officer Ken Murphy.

Adbrands Daily Update 10th Apr 2019: Tesco reported solid performance for the year to Feb, helped significantly by the addition of wholesaler Booker. Revenues rose by 11% to £63.9bn, while preatx profits jumped 29% to almost £1.7bn. In the UK, Tesco's like-for-like sales were up by a little under 2%, but Booker jumped 11%. There were single-digit declines for group operations in Europe and Asia. "After four years we have met or are about to meet the vast majority of our turnaround goals," said CEO Dave Lewis. "I'm delighted with the broad-based improvement across the business. We have restored our competitiveness for customers and rebuilt a sustainable base of profitability."

Adbrands Daily Update 28th Jan 2019: Tesco announced cuts of up to 9,000 jobs across its UK store network as part of a drive to save costs. That followed leaked media reports that the company was planning to remove fresh meat, fish and deli counters in larger stores and also scale back in-store bakeries. Tesco responded with confirmation that fresh food counters would be shut in around 90 stores, but that another 700 would retain "either a full or flexible counter offer for our customers". It said there would be no change to bakeries and that "up to half" of the 9,000 staff affected would be transferred to other customer-facing roles. Industry bible The Grocer described Tesco's decision as "ruthless but right for the business". Fresh counters contribute only minimal turnover. "Industry sources say they create food waste and it is understood many of them have been haemorrhaging money for years."

Adbrands Daily Update 14th Jan 2019: Discounters Aldi and Lidl suffered unexpected reverses in the UK over the peak Christmas shopping period. Despite a big promotional push, both stores saw their market share slip back slightly from the highs they had been enjoying for the previous few months. According to Kantar Worldpanel figures, Aldi slipped from its record high of 7.6% to 7.4% for the 12 weeks to 30th Dec, while Lidl fell back to 5.4% from its own best-ever 5.6%. Small differences to be sure, but significant nonetheless. Their loss appears to have been the the big four's gain. Tesco and Sainsbury in particular notched up their best performance since Feb 2018 with 27.8% and 16.2% respectively. In a year-on-year comparison, however, Aldi and Lidl were both higher, and Tesco and Sainsbury's lower, than in Dec 2017.

Adbrands Social Media 7th Nov 2018: "However You Do Christmas". We're back to Christmas again with BBH London's seasonal campaign for top-selling supermarket Tesco. It's very much in the traditional Christmas spirit, with no surprises, but a nice little film nonetheless. If we had to carp we'd say that while the vignettes are generally well drawn, there might perhaps have been more families featured. Those three students definitely make too many appearances, as does the posh country gentleman. We don't generally approve of box-ticking for racial and religious types but it's inevitable in a spot like this. The black/white balance is excellent, but on first viewing we spotted no Muslim representation. Then we spotted a headscarved grandmother in the Scrabble vignette. Quite whose grandmother that is, though, is a bit of mystery. And while we're on the topic, definitely no Jewish families present, even the very many who celebrate a secular Christmas. Oh well, we suppose no ad can be perfect when it comes to cross-sectioning society.

Adbrands Weekly Update 20th Sep 2018: British supermarket giant Tesco finally unveiled its discount retail brand Jack's, news of which first leaked last month. The first two outlets opened this week and up to another 15 will make their debut over the next six months in lower income neighbourhoods. Most are new sites, though some will be converted from existing Tesco stores. The chain will stock a selection of around 2,600 product lines, mostly own-label under the Jack's brand. Eight out of ten products will be sourced from the UK. Named after Tesco founder Jack Cohen, the chain is designed to meet head-on the continuing challenge from German invaders Aldi and Lidl head-on. Tesco said the stores aim to undercut the German chains on price and will offer "a no-fuss approach with a simplified range of products, no fancy fixtures or fittings and no added extras, just good quality at low prices".

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Free for all users | see full profile for current activities: Jack Cohen started selling cheap groceries from a market stall in London's East End in 1919. His first products were fish paste and sugar syrup, but in around 1924 he began to retail packet tea, supplied by wholesaler TE Stockwell. This he named Tesco, a brand created from an a malgamation of the names TE Stockwell and Cohen. The name stuck, and Jack Cohen opened his first Tesco shop in Edgware in 1929. Business boomed and a series of other shops were opened in and around London before the start of World War II. Cohen had become increasingly influenced by the sales philosophy of American retail groups, and he got his first opportunity to put them into practice after the war. The company went public in 1947, and Cohen moved to self-service shopping the following year. The Tesco philosophy, as conceived by Cohen, was "Pile it high and sell it cheap". (Another favourite slogan, first coined in his market trading days was "Always keep your hand over the money and be ready to run.") In 1956, he opened the first UK supermarket, broadening the product range to include fresh food and clothing.

The group grew rapidly through acquisition, swallowing other retail chains around the country. Another American import was Green Shield stamps, introduced in 1963. At the time, legislation forced all retailers to sell goods at the manufacturer's specified price. With no opportunity to discount, it was hard for any store to develop its customer base by competing on price. However, Green Shield stamps allowed customers to build up loyalty points, which could be redeemed for cash or against other goods. These proved popular with Tesco customers, and as the business got bigger, so did the stores. Tesco coined the term superstore in 1968 when it opened a 90,000 sq ft store in West Sussex, then the largest in Europe. Cohen was knighted the following year.

During the 1970s, Tesco found its development increasingly hampered by its generally down-market image, a legacy from the "pile it high" days, as well as by Cohen's autocratic, aggressive and often undisciplined leadership style. Ian MacLaurin, a former management trainee who had worked his way up to become the company's managing director, dubbed Cohen "Slasher Jack" in his autobiography, and described company board meetings as being "like a meeting of the Chicago mafia, with Jack in the role of Godfather". Nevertheless, the group slowly began to move upmarket, closing older city centre outlets in favour of out-of-town superstores. Tesco introduced the first supermarket forecourt petrol station in 1974, and slowly rolled out the concept nationally. Despite the move upscale, Tesco didn't abandon its reputation for keen prices - its "Operation Checkout" discounting promotion in 1977 increased the store's market share from 7% to 12% in just one year. That year also witnessed the first cracks in Cohen's steely control of the business, after MacLaurin and Cohen clashed over the issue of Green Shield stamps. Cohen saw them as the cornerstone of the business, but MacLaurin argued that they promoted a downmarket image for the store. To Cohen's dismay, Tesco's board of directors supported MacLaurin over the company's founder and the scheme was dropped.

The 1980s became a time of considerable transition for the group. Sir Jack Cohen died in 1979, and was replaced as chairman by his malleable son-in-law Leslie Porter. Within the company, MacLaurin began a complete overhaul of the business, gradually prising it away from Porter and the Cohen family in what became an increasingly bitter struggle. MacLaurin replaced Porter as chairman in 1985. His first challenge was a bid by Cohen's daughter Dame Shirley Porter to join the board, but she was rebuffed.

The 1990s saw a series of innovations which left Sainsbury's standing. The remaining city centre stores were given a complete overhaul, rebranded as Tesco Metro from 1992 onwards, while the petrol forecourt outlets were grouped under the Tesco Express brand. The Tesco Clubcard, introduced in 1995, was a brilliant innovation, replacing the old trading stamps concept with a more upmarket reward scheme which also allowed the store to track purchasing habits in extensive detail. It was rapidly adopted by other retailers, including Sainsbury's, which was also quick to copy Tesco's launch of a banking service in partnership with Royal Bank of Scotland in 1996. In 1997, Tesco was the first UK food retailer to offer an Internet-based home shopping service, and the Tesco Extra hypermarket format was launched for the biggest stores the same year. A year later MacLaurin retired as chairman. Following the lead of Dixons, the home shopping service was bundled into a free ISP service, Tesco.net, in 1999.

Over the following years, the group became increasingly active in the international market. An initial foray into the Republic of Ireland in 1979 was abandoned during the 1980s. In 1993, the group made another attempt to go abroad, acquiring 100 Catteau supermarkets in northern France for £158m. By 1995, the group had added a hypermarket in Paris and a wine shop in Calais, both under the Tesco name. However all were sold two years later. Eastern Europe proved more fruitful for the group. In 1994, Tesco bought a controlling share of the Global S Markt supermarket chain in Hungary, followed by Poland's Savia chain and other stores in 1995. Tesco entered the Czech Republic and Slovakia in 1996, spending £79m to buy American supermarket chain K-mart's stores there. In 1997, the group returned to Ireland, buying 109 stores from Associated British Foods for £630m to become the country's leading supermarket business. In 1998 the group acquired Lotus, the second largest retailing business in Thailand with 13 modern hypermarkets, and followed this in 1999 with a partnership deal with Samsung Corporation to develop hypermarkets in South Korea. In March 2000 the group announced plans to open 20 hypermarkets in Taiwan over the next five years. At the end of 2000 the group announced it had teamed up with Asian conglomerate Sime Darby to open 15 hypermarkets in Malaysia.

Building on the success of its online operations, Tesco took a 35% stake in the online operations of US grocery retailer Safeway. The British company agreed to adapt its successful UK model for Safeway's GroceryWorks service. In 2001, the group acquired a controlling stake in The Nutri Centre, a specialist mail order retailer selling complementary medicine products. Later the group said it would take on UK high street clothing retailers Gap and Next, following negotiation of an exclusive licence to import Cherokee American clothing, already sold exclusively through Target stores in the US and Zellers in Canada. At the end of the year, the group announced that it would acquire British convenience store operator T&S Stores for around £530m in shares and debt. See full profile for current activities

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