Tesco Marketing Analysis

INTRODUCTION

Tesco is one of the best known names in the high street. It is a large public limited company (plc) with approximately 165 000 shareholders. By 1995, Tesco had become the largest food retailer in the UK, overtaking Sainsbury's. The company operates over 800 stores throughout Europe.

BUSINESS OBJECTIVES

Tesco sets objectives for the four main areas of its business:

customers operations people (ie employees) shareholders.

Figure 1: The Tesco Steering Wheel

Page 5: Development of Tesco, Tesco's presence in Central Europe

After serving in the First World War, Jack Cohen used his savings and started selling groceries in Londonl East End markets. Tesco was founded in 1924. The name was based on the initials of T E Stockwell, a partner in a firm of tea suppliers, and the first two letters of Cohen. In 1929, the first store was opened in Edgware, North London. The business prospered and, in 1947, Tesco Stores (Holdings) Ltd was floated on the Stock Exchange. In 1956, the first self-service supermarket was opened. Apart ftom opening new stores, Tesco has expanded by taking over other businesses. For example, in 1992, it bought 57 William Low stores in Scotland and, in 1997, it purchased 109 stores in Northern Ireland and the Republic of Ireland ftom ABF pie.

Tesco is an ambitious company with plans to open more new stores in the United Kingdom (UK). However, in recent years, a major part of the firm's strategy has been to open stores in other European countries.

Page 6: Tesco's stores 1998, Opening a new Tesco store

Figure 3: Tescos Stores, 1998

stores Sales (£m)

Ireland 109 1028

France 103 644

Hungary 43 57

Poland 31 22

Czech Republic 6 84

Slovakia 7 61

United Kingdom 534 14640

OPENING A NEW TESCO STORE

Tesco's sales in Europe have risen steadily. Expansion into central European countries, such as those shown on the map in Figure 2, can be risky because sales might not be as high as expected. Average incomes and expenditure are lower in these countries, but have the potential to grow. The cost of a good site is also much lower than in the UK. The company intends to open more new stores in Europe, requiring more investment.

Each superstore contributes between £2 million and £3 million annually to the local economy, in wages and other expenditure by the store.