Tesco

For other uses, see Tesco (disambiguation).

Tesco

File:Tescologo.svg
Company type	Public (LSE: TSCO)
Industry	Retail
Founded	1919 in East London by Jack Cohen
Headquarters	Cheshunt, England, UK
Key people	David Reid (Chairman), Sir Terry Leahy (Chief Executive)
Products	Groceries, Consumer goods, financial services, telecoms
Revenue	£46.6 billion (2007)
Operating income	£2.47 billion (2007)
Net income	£1.90 billion (2007)
Number of employees	273,028
Subsidiaries	Tesco Stores Limited Tesco Ireland Limited Tesco Personal Finance (50%)
Website	www.tesco.com
Footnotes / references 1. Results for 52 weeks ended 24 February 2007

Tesco plc is a British-based international grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share with profits exceeding £2 billion. In 2008, the company overtook German retail giant Metro AG to become the world's fourth largest retailer, the first movement among the top five since 2003.

Originally specialising in food and drink, it has diversified into areas such as clothing, consumer electronics, consumer financial services, retailing and renting DVDs, CDs, music downloads, Internet service, consumer telecoms, consumer health insurance, consumer dental plans and software.

History

Formation

First self service Tesco, St Albans, England

Jack Cohen founded Tesco in 1919[2] when he began to sell surplus groceries from a stall in the East End of London. The Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from T.E. Stockwell. He made new labels using the first three letters of the supplier's name (TES), and the first two letters of his surname (CO), forming the word "TESCO".

The first Tesco store was opened in 1929 in Burnt Oak, Edgware, Middlesex. Tesco floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited. The first self service store opened in St Albans in 1947 (still operational in 2007 as a Metro), and the first supermarket in Maldon in 1956.

During the 1950s and the 1960s Tesco grew organically, but also through acquisitions until it owned more than 800 stores. The company purchased 70 Williamsons stores (1957), 200 Harrow Stores outlets (1959), 212 Irwins stores (1960), 97 Charles Phillips stores (1964) and the Victor Value chain (1968) (sold to Bejam in 1986).

Management and strategy changes

Founder Jack Cohen was an enthusiastic advocate of trading stamps as an inducement for shoppers to patronise his stores. He signed up with Green Shield Stamps in 1963, and became one of the company's largest clients.

In 1973 Jack Cohen resigned and was replaced as Chairman by his son-in-law Leslie Porter. Porter and managing director Ian MacLaurin abandoned the "pile it high sell it cheap" philosophy of Cohen which had left the company "stagnating" and with a "bad image". In 1977 Tesco launched "Operation Checkout" with the abandonment of Green Shield stamps, price reductions and centralised buying for all stores. The result was a rise in market share of 4% in two months.

1980s

In May 1987 Tesco completed its hostile takeover of the Hillards chain of 40 supermarkets in the North of England for £220 million.

1990s

Tesco at Seacroft, Leeds. This was built as a redevelopment of the 1960s Seacroft Civic Centre.

In 1994, the company took over the Scottish supermarket chain William Low. Tesco successfully fought off Sainsbury's for control of the Dundee-based firm, which operated 57 stores. This paved the way for Tesco to expand its presence in Scotland, which was weaker than in England. In 2006 Inverness was branded as "Tescotown", because well over 50p in every £1 spent on food is believed to be spent in its three Tesco stores.

In 1995, Tesco became the UK's market leader in the supermarket sector, beating Sainsbury's.

Tesco introduced a loyalty card, branded 'Clubcard', in 1995 and later an Internet shopping service. As of November 2006 Tesco was the only food retailer to make online shopping profitable.

Terry Leahy assumed the role of chief executive on 21 February 1997, the announcement having been made on 21 November 1995.

On 21 March 1997 Tesco announced the purchase of the retail arm of Associated British Foods which consisted of the Quinnsworth, Stewarts and Crazy Prices chains in the Republic of Ireland and Northern Ireland, as well as associated businesses for GB£640 million. The deal was approved by the European Commission on 6 May 1997. This acquisition gave it both a major presence in the Republic of Ireland, and a larger presence in Northern Ireland than Sainsbury's which had begun its move into the province in 1995.

In 1996, the typeface of the logo was changed to the current one shown on the top of the page with stripe reflections underneath the typefaces as Tesco used them on their carrier bags. The "typewriter" typeface that the company had been using since the 1970s for its in-store signage was also dropped during this period.

In 1997, Tesco Stores Limited and Esso Petroleum Company Ltd (now part of Exxonmobil Corporation) came together to form a business alliance. The agreement included several petrol filling stations on leases from Esso, where Tesco would operate the store under the Express format. In turn, Esso would operate the forecourts and sell their fuel via the Tesco store. Ten years later, over 600 Tesco/Esso stores can now be found across the United Kingdom.

2000s

Trolley shelter

In July 2001 it became involved in internet grocery retailing in the USA when it obtained a 35% stake in GroceryWorks.

In 2002 Tesco purchased 13 HIT hypermarkets in Poland; to date there are over 350 Tesco Stores in Poland and this portfolio is still growing with the introduction of Tesco Express stores around all major cities. It also made a major move into the UK convenience store market with its purchase of T & S Stores, owner of 870 convenience stores in the One Stop, Dillons and Day & Nite chains in the UK.

In October 2003 it launched a UK telecoms division, comprising mobile and home phone services, to complement its existing Internet service provider business. In June 2003 Tesco purchased the C Two-Network in Japan. It also acquired a majority stake in Turkish supermarket chain Kipa.

In January 2004 Tesco acquired Adminstore, owner of 45 Cullens, Europa, and Harts convenience stores, in and around London. In August 2004, it also launched a broadband service. In Thailand Tesco Lotus was a joint venture of the Charoen Pokphand Group and Tesco but facing criticism over the growth of hypermarkets. CP Group sold its Tesco Lotus shares in 2003.

In late 2005 Tesco acquired the 21 remaining Safeway/BP stores after Morrisons dissolved the Safeway/BP partnership.

In mid 2006 Tesco purchased an 80% stake in Casino's Leader Price supermarkets in Poland. They will be rebranded into small Tesco stores.

On July 14, 2007, fourteen Tesco stores across the UK were temporarily closed after a 'bomb scare' and a criminal investigation launched after threats were made. A 'suspect device' was found in one store on July 16, 2007 causing the store and surrounding area to be sealed off while the Army Explosive Ordnance Disposal unit disposed of the package.

In 2007, Tesco joined forces with O2 in Ireland to form Tesco Mobile, using the 089 prefix. Tesco owns 50% of the network, with O2 owning the remainder. Tesco has not built its own network in Ireland, but uses the O2 infrastructure already in place, similar to the arrangement in the UK. By doing this, Tesco has saved money and already has 99.6% population network coverage and 95% geographical coverage.

In 2007 Tesco was placed under investigation by the UK The Office of Fair Trading (OFT) for acting as part of a cartel of five supermarkets (Safeway, Tesco, Asda, Morrisons and Sainsburys) and a number of dairy companies to fix the price of milk, butter and cheese. In December 2007 Asda, Sainsburys and the former Safeway admitted that they acted covertly against the interests of consumers while publicly claiming that they were supporting 5,000 farmers recovering from the foot-and-mouth crisis. They were fined a total of £116M. Tesco, which maintains that it was not a part of the cartel, is still under investigation by the OFT.

Corporate strategy

• An "inclusive offer". This phrase is used by Tesco to describe its aspiration to appeal to upper, medium and low income customers in the same stores. According to Citigroup retail analyst David McCarthy, "They've pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market".
  • One plank of this strategy has been Tesco's use of its own-brand products, including the upmarket "Finest" and low-price "Value".
• Tesco implemented the Clubcard rewards program to gather necessary customer information, which it then used to cater to specific customer needs and potential wants. When shoppers signed up for the card, they automatically submitted their age, gender and address. Tesco was able to segment their shoppers based on these factors. As soon as the shopper used the card when shopping online or in-store, purchased product information was automatically uploaded into Tesco database. Product information was used to cross-sell additional products and services such as grocery delivery services.
• Beginning in 1997 when Terry Leahy took over as CEO, Tesco began marketing itself using the phrase "The Tesco Way" to describe the company's core purposes, values, principles, and goals This phrase became the standard marketing speak for Tesco as it expanded domestically and internationally under Leahy's leadership, implying a shift by the company to focus on people, both customers and employees.

Brand image

Tesco operates a "good, better & best" policy for its products, encompassing several product categories such as food, beverage, home, clothing, Tesco Mobile and financial services.

• Tesco Value - These products minimise Tesco's costs, including simple packaging to keep the retail cost as low as possible. This range has recently expanded into small home electrical items like kettles, toasters, microwaves, vacuum cleaners, food steamers, blenders and floor heaters. The packaging of these products is in a standard design across the whole range and is increasingly being removed from the ranges in many stores.
• Tesco Brand - Standard products at "mid range, own label store prices".
• Tesco Finest - These products use "superior" ingredients and in some cases, Tesco claim they are designed/recommended by top chefs. Has also moved into the Non-Food segment of the market, with Finest Health and Beauty, Home and Clothing lines being stocked in Extra stores.
• Healthy Living/Light Choices - Usually contains lower fat, sugar and salt content than in standard Tesco Brand.
• Organic - Tesco's own brand range of organic foods, has also moved into the Non-Food market, with organic bedding and clothing planned.
• Tesco Kids - Brands aimed at children, although this range is being phased out in certain areas and replaced with a dual branding with Disney.
• Best Of British - British speciality foods.
• World Foods - Speciality foods from around the world.
• Tesco Wholefoods - Range of natural, unprocessed products such as, dried fruit, seeds & nuts.
• Tesco Bakery has pastries and breads baked daily, including cookies, although many of these items tend not to be produced in store, with the stores own bakery preferring to focus its resources on faster selling items
• Free From - Food that does not contain certain ingredients (e.g. wheat, gluten, dairy & nuts).
• Tesco Christmas - Seasonal goods that Tesco only stock during the Christmas period.
• Clothing at Tesco - comprising several exclusive brands including Cherokee, Stone Bay, True and F+F (formerly Florence for women, and Fred for men) - Tesco's own clothing label.
• Technika/Digilogic - Range of Tesco own brand electrical items (from DVD players to televisions and computers).
• Tesco Mobile - Tesco's own mobile network has 5 pay as you go tariffs; Value tariff, Standard tariff, Standard Plus tariff, Extra tariff and the Staff Tariff for employees.
• Cocopia - A range of premium boxed chocolates made in the UK and Ireland exclusively for Tesco. Similar to Hotel Chocolat.

In order to protect its brand image, and given its expansion plans in Thailand, Tesco has recently been employing a policy of launching defamation proceedings. In November 2007, Tesco sued a Thai academic and a former minister for civil libel and criminal defamation. Tesco is claiming that the two pay £1.6m and £16.4m plus two years' imprisonment respectively. They have been alleged to have misstated that Tesco's Thai market amounts to 37% of its global revenues, amongst criticism of Tesco's propensity to put small retailers out of business.

Advertising

Tesco's main advertising slogan is "Every little helps". Its advertisements in print and on television mainly consist of product shots (or an appropriate image, such as a car when advertising petrol) against a white background, with a price or appropriate text, e.g. "Tesco Value", superimposed on a red circle. On television, voiceovers are provided by recognisable actors and presenters, such as James Nesbitt, Jane Horrocks, Terry Wogan, Ray Winstone, Neil Morrissey, Martin Clunes, David Jason and Kathy Burke among others.

Corporate tax structure

In May 2007 it was revealed that Tesco had moved the head office of its online operations to the tax haven of Switzerland. This allows it to sell CDs, DVDs and electronic games through its web site without charging VAT. The operation had previously been run out of the tax haven of Jersey, but had been closed by authorities who feared damage to the islands's reputation.

In February 2008 a six month investigation by The Guardian revealed that Tesco had developed a complex taxation structure involving offshore bank accounts in the tax haven of the Cayman Islands. Tesco is in the process of selling its UK stores, worth an estimated £6 billion, to Cayman Island based companies set up by Tesco. These companies then lease the stores back to Tesco. At the time The Guardian claimed that this arrangement would enable Tesco to avoid an estimated £1 billion tax on profits from the property sales, and also to avoid paying any tax on continuing operation of the stores, as the rate of corporation tax in the Cayman Islands is zero. Tesco defended this arrangement, saying it has a duty to organise its affairs in a tax-efficient manner, and pointing out that the corporation already pays a lot of tax, including VAT on behalf of its customers, and PAYE and National insurance contributions on behalf of its employees.

Following these revelations, several MPs called for an inquiry into Tesco's tax avoidance schemes.

Tesco issued a libel writ against the Guardian five weeks later. Tesco denied that it had avoided paying £1 billion corporation tax, but refused to answer further questions, or to clarify the purpose of the complex artificial tax structure they had created. Further investigations by the Guardian discovered that the tax structures were aimed at avoiding Stamp Duty Land Tax, and not corporation tax as originally thought. SDLT is leveled at 4%, and corporate tax at around 30%, so the figure of £1 billion tax avoided by Tesco has been revised to an estimated £90-£100 million. According to the Guardian "Tesco has been involved in a game of cat and mouse with HM Revenue & Customs since 2003. On three occasions when the government has closed a loophole to prevent avoidance, Tesco has taken advantage of ingenious schemes to get around it. Tesco still has 36 stores wrapped up in UK limited partnerships - with Cayman Islands registered partners - which were established in 2006 before the latest loophole was closed."

In June 2008 the government announced that it was closing another tax loophole being used by Tesco. The scheme, identified by British magazine Private Eye, utilises offshore holding companies in Luxembourg and partnership agremeents to avoid a corporation tax liability of up to £50 million a year. Another scheme previously identified by Private Eye involved depositing £1 billion in a Swiss partnership, and then loaning out that money to overseas Tesco stores, so that profit can be transferred indirectly through interest payments. This scheme is still in operation and is estimated to be costing the UK exchequer up to £20 million a year in corporation tax. Tax expert Richard Murphy has provided an analysis of this avoidance structure.

Corporate social responsibility

Tesco has made a commitment to Corporate social responsibility, in the form of contributions of 1.87% in 2006 of its pre-tax profits to charities/local community organisations. This compares favourably with Marks & Spencer's 1.51% but not well with Sainsbury's 7.02%. Will Hutton, in his role as chief executive of The Work Foundation recently praised Tesco for leading the debate on corporate responsibility. However Intelligent Giving has criticised the company for directing all "staff giving" support to the company's Charity of the Year.

In 1992 Tesco started a "computers for schools scheme", offering computers in return for schools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92m of equipment went to these organisations. The scheme has been also implemented in Poland."BITC - Tesco Computers for Schools". Retrieved 2006-01-19.

UK operations

Stores

Tesco's UK stores are divided into five formats, differentiated by size and the range of products sold. these are shown below

Tesco Extra, Southport, England

• Tesco Extra are larger, mainly out-of-town hypermarkets (exceptions include Wrexham Extra, Hexham Extra, Kingston upon Hull Extra, Warrington Extra, Stevenage Extra, Wigan Extra, Grimsby Extra, Galashiels Extra, Slough Extra, Yeovil Extra, Baldock Extra, Swindon Extra, Hartlepool Extra, Burnley Extra and Elgin Extra, which are in the heart of the town centre and Cardiff Western Avenue Extra and Cardiff Pengam Green Extra are located in the inner city) that stock all of Tesco's product ranges - with large car parks free for about 3 hours.

The first Extra opened in 1997. The 100th store opened in the 2004/05 financial year (specifically opening 29 November 2004, located on the Newport Road in Stafford, Staffordshire). The number of these is now being increased by about 20 a year, mainly by conversions from the second category.

The largest store in England by floor space is Tesco Extra in Pitsea, near Basildon with floorspace of 11,600 m² (125,000 sq ft) and the largest in Scotland is the Port Glasgow store, which opened in July 2007 with a floorspace of 10,200 m² (110,000 sq ft).. The largest in Wales is the Tesco Extra in Culverhouse Cross, Cardiff, 9,800 m² (105,000 sq ft) constructed in 2007.

Other large stores include Bar Hill Extra, Cleethorpes Extra, Newcastle upon Tyne Extra, Milton Keynes Extra and Stockton-on-Tees Extra which are all in the 11,000 m² (120,000 sq ft) range. Newer Tesco Extra stores are usually on two floors, with the ground floor for mainly food and the first floor for clothing, electronics and entertainment. Most Tesco Extra stores have a café.

• Tesco superstores are standard large supermarkets, stocking groceries and a much smaller range of non-food goods than Extra stores. They are referred to as "superstores" for convenience, but this word does not appear on the shops. It is the "standard" Tesco format. Most are located in suburbs of cities or on the edges of large and medium-sized towns. The typical size is 2,900 m² (31,000 sq ft).

• Tesco Metro stores are sized between Tesco superstores and Tesco Express stores. They are mainly located in city centres, the inner city and on the high streets of small towns such as Rowlands Gill and Nelson. Typical size is 1,100 m² (12,000 sq ft). The first Tesco Metro was opened in Covent Garden, London in 1992.

  

  Tesco Metro, Manchester, England on New Years Eve 2007

  Since then all Tesco branches that have a high street format including those which opened before the Covent Garden branch have been subsequently rebranded from Tesco to Tesco Metro probably to give an identity to the Tesco high street sub brand. The Tesco store in Devizes was the last store to finish rebranding, in September 2006. The store had not been renovated for over 20 years.

• Tesco Express stores are neighbourhood convenience shops, stocking mainly food with an emphasis on higher-margin products (due to lack of economies of scale) alongside everyday essentials. They are found in busy city centre districts, small shopping precincts in residential areas, small towns and on Esso petrol station forecourts. There were 827 stores at 23 February 2008 year end, with a typical size of 190 m² (2,100 sq ft).

• One Stop are the only category which does not include the word Tesco in its name. These are the very smallest stores. They were part of the T&S Stores business but, unlike many which have been converted to Tesco Express, these will keep their old name. However, some have Tesco Personal Finance branded cash machines. There are more than 500 of them. One Stop Stores also work on a different pricing and offers system to the other Tesco stores, and generally have later opening hours than all except the 24-hour Tesco stores. Typical size 125 m² (1,350 ft²).

In May 2005 Tesco announced a trial non-food only format in Manchester and Aberdeen, and the first store opened in October 2005:

• Tesco Homeplus stores offer all of Tesco's ranges except food in warehouse-style units in retail parks. Tesco is trying this format because only 20% of its customers have access to a Tesco Extra, and the company is restricted in how many of its superstores it can convert into Extras and how quickly it can do so. Large units for non-food retailing are much more readily available. It plans to open at least three more Homeplus stores in 2006. As of 2 October 2006 Homeplus remains a "trial" format and no decision has been taken on expansion beyond the three stores already open and two that will open shortly. The Staines branch opened on 27 November 2006. The newest Homeplus branch opened in Cribbs Causeway, Bristol in July 2008.

This is not Tesco's first non-food only venture in the UK. Until the late 1990s/early 2000s there were several non-food Tesco stores around the country including Scarborough and Yate. Although not in a warehouse style format, the stores were located on high streets and shopping centres, they did stock similar items to Homeplus stores. In both cases this was because in another part of the shopping centre was a Tesco Superstore which stocked food items only.

As of 23 February 2008, at the end of its 2007/08 financial year, Tesco's UK store portfolio was as follows.

Format	Number	Total area (m²)	Total area (sq ft)	Mean area (m²)	Mean area (sq ft)	Percentage of space	+/- Stores 2007/8
Tesco Extra	175	1,126,264	12,123,000	6,436	69,274	40.87%	28
Tesco	424	1,198,728	12,903,000	2,827	30,432	43.49%	9
Tesco Metro	160	174,844	1,882,000	1,093	11,763	6.34%	2
Tesco Express	827	166,575	1,793,000	201	2,168	6.04%	92
One Stop	513	64,660	696,000	126	1,357	2.35%	7
Tesco Homeplus	7	24,991	269,000	3,251	35,000	0.91%	2
Total	2,106	2,756,062	29,667,000	1,309	14,087	100%	118

Distribution

In common with most other large retailers, Tesco draws goods from suppliers into regional distribution centres, for preparation and onward delivery to stores. Tesco is extending this logistic practice to cover collection from suppliers (factory gate pricing) and the input to suppliers, in a drive to reduce costs and improve reliability. RFID technology is taking an increasing role in the distribution process.

Road

In 2007 Tesco was facing national disruption to its distribution network after a dispute with drivers at its distribution depot in Livingston, Scotland. In response to fears over increasing road congestion, fuel prices, and concern over its carbon footprint, Tesco is switching some of its supply chain to alternative modes, detailed below.

Rail

Tesco has been transporting goods by rail since 2006 using its distribution partner the Eddie Stobart Group. Volumes are set to increase in 2007 with new routes.

Canal

In October 2007 Tesco started using the Manchester Ship Canal to transport wine from Liverpool to a Manchester distribution facility. Combined with sea transport from the south coast where the wine was previously offloaded, this new mode replaces road journeys from the south coast to Manchester.

Other Businesses

Garden Centres

Tesco announced its intention to purchase Dobbies Garden Centres for £155.6 million on 8 June 2007. Dobbies operates 21 garden centres, mainly in Scotland. The deal was confirmed as successful by the board of directors of Tesco on 17 August 2007 when the board announced that they had received 53.1% of shares (or 5,410,457 shares) which confirmed conditions set out in the offer made on 20 June 2007. Although the deal had been confirmed by Tesco the offer remained open to Dobbies shareholders until 20 August 2007.

Tesco acquired Dobbies Garden Centres in September.

Personal Finance

Main article: Tesco Personal Finance

Tesco has a banking arm called Tesco Personal Finance, a 50:50 joint venture with the Royal Bank of Scotland. Products on offer include credit cards, loans, mortgages, savings accounts and several types of insurance, including car, home, life and travel. They are promoted by leaflets in Tesco's stores and through its website. The business made a profit of £130 million for the 52 weeks to 24 February 2007, of which Tesco's share was £66 million.

This move towards the financial sector has diversified the Tesco brand and provides opportunities for growth outside of the retailing sector.

Tesco personal finance offers loans, car loans, instant access saving accounts, business credit card, bonus credit card (the credit card that pays you interest back), Clubcard credit card (where you can earn 1 point for every £4.00 spent on it) and mortgages. Tesco also offer insurance including travel insurance, pet insurance, car insurance, life insurance, home insurance and car breakdown cover in association with Green Flag. A key marketing strategy is Tesco offering Clubcard points or free petrol when you buy Tesco Car Insurance.

The company is currently trialling a finance centre in the Glasgow Silverburn Extra store providing free financial advice and quotes for insurance and loans, this service is staffed by trained Royal Bank of Scotland staff. The centre also has a Euro cash machine providing commission free Euros and a Bureau de Change run by Travelex. If successful this trial will roll out to a number of other key and flagship stores.

On 28 July 2008 Tesco announced that they were buying out the Royal Bank of Scotland's 50% stake in the company for £950 million.

Telecoms

Tesco operates ISP, mobile phone, home phone and VoIP businesses. These are available to UK residential consumers and marketed via the Tesco website and through Tesco stores.

Though it launched its ISP service in 1998, the firm did not get serious about telecoms until 2003. It has not purchased or built a telecoms network, but instead has pursued a strategy of pairing its marketing strength with the expertise of existing telcoms. In autumn 2003 Tesco Mobile was launched as a joint venture with O2, and Tesco Home Phone created in partnership with Cable & Wireless. In August 2004 Tesco broadband, an ADSL-based service delivered via BT phone lines, was launched in partnership with NTL. In January 2006, Tesco Internet Phone, a Voice over Internet Protocol, VoIP, service was launched in conjunction with Freshtel of Australia.

Tesco announced in December 2004 that it has signed up 500,000 customers to its mobile service in the 12 months since launch. In December 2005, it announced it had one million customers using its mobile service. In April 2006 it announced that it had over one and a half million telecom accounts in total, including mobile, fixed line and broadband accounts. Template:PDFlink

On 19 December 2006 Tesco Ireland announced that it would enter into a joint venture with O2 Ireland to offer mobile telecommunications services. The service, which will be Ireland's first MVNO, will use the O2 network but operate separately. It will be allocated the STD code 089. As with Tesco's similar service in the UK, it will be branded Tesco Mobile. The network is due to start operating in Ireland on October 29, 2007.

Fuel

Tesco supermarket petrol pump at night

See also: 2007 UK petrol contamination

Tesco first started selling petrol in 1974. Tesco sells 95, 97 and 99 RON (a fuel developed by Greenergy of which Tesco is a shareholder) petrol on a retail basis from forecourts at most superstore and Express locations. Tesco have recently diversified into biofuels, offering petrol-bioethanol and diesel-biodiesel blends instead of pure petrol and diesel at their petrol stations, and now offering Greenergy 100% biodiesel at many stores in the southeast of the United Kingdom.

Tesco's own 99 Octane branded petrol as supplied by Greenergy has been the control fuel used by all the cars in the British Rally Championship since 2006. This partnership will continue in 2008.

On 28 February 2007 motorists in South East England reported that their cars were breaking down. This was due to petrol sold by Tesco and others being contaminated with silicon, the fuel coming from the Vopak terminal in the Thames Estuary, where fuel is supplied by Harvest Energy and Greenergy. Then on 2 March 2007 Tesco announced that they were emptying and refilling tanks at 150 petrol stations but were not suspending sales.

Tesco has been criticised with claims that they had been alerted to the problem as early as 12 February 2007. Affected motorists are facing bills of several hundred pounds to repair their cars and, with up to 10,000 cars needing repair, the suppliers could be liable for compensation claims of up to £10 million. However, on 6 March, Tesco offered to pay for any damage caused by the faulty petrol, after printing full page apologies in many national newspapers.

Tesco Clubcard

Main article: Tesco Clubcard

Of the major supermarkets in the UK, only Tesco and Sainsbury's offer a loyalty card-scheme to customers. Tesco's Clubcard scheme has been operating since 1995 and has now become the largest loyalty card in the UK, with around 13 million active Clubcard holders.

Customers can collect one Clubcard point for every £1 (or €1 in Ireland) they spend in a Tesco store, Tesco Petrol or Tesco.com. Customers can also collect points by paying with a Tesco Credit Card, or by using Tesco Mobile, Tesco Homephone, Tesco Broadband, selected Tesco Personal Finance products or through Clubcard partners, Powergen and Avis. Each point equates to 1p in store when redeemed or 4p when used with clubcard deals (offers for holidays, day trips, etc). Clubcard points can also be converted to Airmiles. Clubcard points are also converted into coupons which can be redeemed extra points or cash totals

Holders receive quarterly Clubcard statements offering discount coupons which can be spent in-store, online or on various Clubcard deals.

Tesco was cited in a Wall Street Journal article as using the intelligence from the Clubcard to thwart Wal-Mart's initiatives in the UK.

Internet operations

Main article: Tesco.com

Tesco operates the world's largest grocery homeshopping service, as well as providing consumer goods, telecommunications and financial services online.

Tesco has operated on the internet since 1994 and was the first retailer in the world to offer a robust home shopping service in 1996. Tesco.com was formally launched in 2000. It also has online operations in the Republic of Ireland and South Korea. Grocery sales are available within delivery range of selected stores, goods being hand-picked within each store, in contrast to the warehouse model followed by Ocado. This model, which is now used by Sainsbury's, allows rapid expansion with limited investment, but has been criticised for a high level of substitutions. Nevertheless, it has been popular and is the largest online grocery service in the world. In 2003, tesco.com's CEO at the time, John Browett, received the Wharton Infosys Business Transformation Award for the innovative processes he used to support this online grocery service.

On 1 October 2006, Tesco announced that it will be selling six own-brand budget software packages for under £20 each, including office and security suites, in a partnership with software firm Formjet. As Formjet is exclusive distributor for Panda Software and Ability Plus Software, packages from these companies are likely to feature.

High-tech services

Tesco offers broadband services.

The company also has a digital photo shop that offers products such as, mugs, shirts, celebration cakes and table mats. The service is powered by Pixology.

Tesco offer an internet-based DVD rental service, which is operated by LOVEFiLM . Music downloads are also available.

International operations

Countries in which Tesco operates.

Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such as Samsung Group in South Korea (Samsung-Tesco Home plus), and Charoen Pokphand in Thailand (Tesco Lotus), appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Poland and one in Japan.

In late 2004 the amount of floorspace Tesco operated outside the United Kingdom surpassed the amount it had in its home market for the first time, although the United Kingdom still accounted for more than 75% of group revenue due to lower sales per unit area outside the UK. Tesco regularly makes small acquisitions to expand its international businesses.

In September 2005 Tesco announced that it was selling its operations in Taiwan to Carrefour and purchasing Carrefour's stores in the Czech Republic and Slovakia. Both companies stated that they were concentrating their efforts in countries where they had strong market positions.

China

Tesco entered China by acquiring a 50% stake in the Hymall chain from Ting Hsin of Taiwan in September 2004. In December 2006 it raised its stake to 90% in a £180 million deal. Most of Tesco China's stores are based around Shanghai, but according to Tesco it plans to equip the business to expand more quickly and in different areas. Tesco has been increasing its own brand products into the Chinese market as well as introducing the Tesco Express format.

Czech Republic

A Tesco store in Hradec Králové, Czech Republic

Tesco opened its first store in the Czech Republic in 1996 and now has over 84 stores, with further planned. Tesco opened its first stores in the Czech Republic by buying US corporation Kmart's operations in the country and converting them into Tesco stores. Tesco is also keen to expand non-food items and has already opened petrol stations and offers personal finance services in the Czech Republic.

France

Tesco used to have one store in France, located in Calais and mainly serving British tourist shoppers, but has recently closed.

Hungary

Tesco launched in Hungary in 1994 after purchasing KMart's operations in the area. It also opened its first hypermarket in Hungary in the same year. Tesco operates through 101 stores in Hungary with further openings planned. Tesco offers its value, standard, healthy living and finest range in its stores. Tesco Hungary also offers a clothing line and personal finance services.

Ireland

Tesco operated in what was then a fiercely competitive Irish grocery market in the early eighties. The going was too tough for Tesco and they withdrew from the market on Monday 26 May 1986 nursing considerable losses.[ Irish Times-(1) 26 Feb 1986 page1. "Tesco denies pull-out rumors" (2)15 March 1986 page 1."Tesco to Pull out of Ireland" (3) 26 May 1986 page 14 "State approves Tesco takeover"]

Tesco re-entered the Irish market in 1997 after the purchase of Power Supermarkets Ltd. It now operates from 101 stores across Ireland. It, like Tesco UK offers a home delivery shopping service available to 80% of the Irish population as well as petrol, mobile telephone, personal finance, flower delivery service and a weight-loss programme. Also available is Tesco's loyalty programme, the Clubcard.

Tesco is now the grocery market leader in the Republic of Ireland, with a reported November 2005 share of 26.3%. Tesco Ireland also claims to be the largest purchaser of Irish food with an estimated €1.5 billion annually.

Japan

Tesco Japan first began operations in 2003. It was brought about by a buy-out of C Two stores for £139 million in July 2003 and later Fre'c in April 2004. Tesco has adopted an approach which focuses on small corner shops operating similarly to its Express format rather than opening hypermarkets. It has also launched its range of software in Japan.

Malaysia

A Tesco outlet in Bandar Bukit Tinggi, Klang, Malaysia.

Tesco opened its first store in Malaysia in May 2002. Tesco partnered with local conglomerate Sime Darby Berhad which holds 30% of the shares. Tesco also acquired Makro, a local wholesaler which was rebranded Tesco Extra and provides products for local retailers. Tesco Malaysia offers a value range, own branded range, electronic goods, the loyalty clubcard and clothing.

Poland

A Tesco Hypermarket in Prokocim, Poland

Tesco entered the Polish market in 1995. It currently operates from 280 stores and has plans to open even more. Tesco Poland offers the value, healthy living and own branded line of products as well as regional produce, petrol, personal finance services and on-line photo processing. Tesco Poland is keen to promote its green credentials.

Slovakia

Tesco Slovakia opened in 1996 as part of Tesco's international expansion aims. It now operates from 48 stores and has plans to introduce Tesco Express like local stores. Tesco Slovakia has recently put great emphasis on organic products. However, Tesco Slovakia caused controversy amongst the Slovak government when it was found to have come foul of food safety laws in 2006.

South Korea

Tesco launched its South Korean operations in 1999 and partnered with Samsung, Tesco holds 81% of the shares in the venture. It operates both hypermarkets and its express format as well as a home delivery shopping service. It is the largest foreign food retailer in South Korea, although significantly behind its local rivals such as Lotte, and Shinsegae Group.

On 14 May 2008, Tesco agreed to purchase 36 hypermarkets with a combination of food and non-food products from E-Land for $1.9 billion (976 million pounds) in its biggest single acquisition, making Tesco the second largeest in the country. The majority of the E-Land stores formerly belonged to French retailer Carrefour before 2006 and most of the stores will be converted to Tesco Homeplus outlets. Tesco's South Korean discount store chain, Home Plus, currently has 66 outlets.

Thailand

A Tesco Lotus store in Nakhon Sakon, Thailand

Main article: Tesco Lotus

Tesco entered Thailand in 1998 and operates through 380 stores as part of a joint venture with Charoen Pokphand and named the operation Tesco Lotus. This partnership was dissolved in 2003 when Charoen Pokphand sold its shares to Tesco. Tesco Lotus sells a diverse range of products from value food products to electronics to personal finance services. The company is keen to promote its green values and has partnered with the UNEP. Tesco Lotus claims to serve 20 million customers every month and that 97% of its goods are sourced from Thailand.

Turkey

Tesco entered Turkey in 2003 and uses the trading name "Kipa". Tesco remains focused on building infrastructure in Turkey to complete its expansion plans and has already introduced the Tesco Express format into Turkey. There are plans to increase the rate of expansion as basic infrastructure is built.

United States

A Fresh & Easy store in Summerlin, Nevada, United States

Main article: Fresh & Easy

In February 2006, Tesco announced its intention to move into the United States market, opening a chain of convenience stores on the West Coast (Arizona, California and Nevada) in 2007 named Fresh & Easy. The company established its U.S. headquarters in El Segundo, California at 2120 Park Place. The first store opened in November 2007 with 100 more expected in the first year. They plan to open a new one every two-and-a-half days in America, to mimic the successful expansion of pharmacy chains such as Walgreens in the U.S.

The first Tesco Fresh & Easy Neighbourhood Markets opened in Hemet (Riverside County), Anaheim (Orange County), Arcadia (Los Angeles County), West Covina (Los Angeles County) and Upland (San Bernardino County), California in 2007.

Fresh & Easy operates 62 stores in the U.S. at the moment (July 13th, 2008).

Non-UK store summary

The following table shows the number of stores, total store size in area and sales for Tesco's international operations. The store numbers and floor area figures are as at 23 February 2008 but the turnover figures are for the year ended 31 December 2005, except for the Republic of Ireland data, which is at 24 February 2007, like the UK figures. This information is taken from the Template:PDFlink.

Country	Entered	Stores	Area (m²)	Area (sq ft)	Turnover (£ million)
People's Republic of China	2004	56	465,258	5,008,000	552
Czech Republic	1996	108	430,420	4,633,000	807
France	1992	1	1,400	16,000
Hungary	1994	125	513,196	5,524,000	1,180
Republic of Ireland	1997	104	232,351	2,501,000	1,683
Japan	2003	144	39,577	426,000	287
Malaysia	2002	26	213,212	2,295,000	247
Poland	1995	334	698,910	7,523,000	1,135
Slovakia	1996	65	270,441	2,911,000	498
South Korea	1999	142	556,118	5,986,000	2,557
Thailand	1998	532	847,462	9,122,000	1,326
Turkey	2003	79	180,789	1,946,000	256
United States	2007	60	18,288 (est.)	60,000 (est.)
Total		1,776	4,467,422	43,408,258	10,528 (exc USA)

Former markets

Taiwan

• In September 2005, Carrefour sold to Tesco 11 stores in the Czech Republic and four in Slovakia. Tesco paid €57.4 million as well as its stores in Taiwan.

France

• Although Tesco currently owns one store in France, it previously owned a French chain called Catteau between 1992 and 1997.

Financial performance

Tesco is listed on the London Stock Exchange under the symbol TSCO. It also has a secondary listing on the Irish Stock Exchange with the name TESCO PLC.

All figures below are for the Tesco's financial years, which run for 52 or 53 week periods to late February. Up to the 27 February 2007 period end the numbers include non-UK and Ireland results for the year ended on 31 December 2006 in the accounting year. The figures in the table below include 52 weeks/12 months of turnover for both sides of the business as this provides the best comparative. Including 60 weeks of non-UK and Ireland sales the figures to 24 February 2007 were: revenue £46,600 million; profit before tax £2,653 million; profit for year £2,478 million; basic earnings per share 22.36 pence.

Group revenue for the 26 weeks to 26 August 2006 was £20,735 million, compared to £17,170 million in the 24 week interin period reported in 2005. On a comparable 26 week basis group sales increased by 12.7% and group profit increased by 10.3%.

52/3 weeks ended	Turnover (£m)	Profit before tax (£m)	Profit for year (£m)	Basic earnings per share (p)
24 February 2007	46,600	2,653	1,899	22.36
25 February 2006	38,300	2,210	1,576	19.70
26 February 2005	33,974	1,962	1,366	17.44
28 February 2004	30,814	1,600	1,100	15.05
22 February 2003	26,337	1,361	946	13.54
23 February 2002	23,653	1,201	830	12.05
24 February 2001	20,988	1,054	767	11.29
26 February 2000	18,796	933	674	10.07
27 February 1999	17,158	842	606	9.14
28 February 1998	16,452	760	532	8.12

As of its 2006 year end Tesco was the fourth largest retailer in the world behind Wal-Mart, Carrefour and Home Depot. Tesco moved ahead of Home Depot during 2007, following the sale of Home Depot's professional supply division and a decline in the value of the U.S. dollar against the British Pound. METRO was only just behind and might move ahead again if the euro strengthens against the pound, but METRO's sales include many billions of wholesale turnover, and its retail turnover is much less than Tesco's.

At 24 February 2007 Tesco operated 1,988 stores in the UK (2.581 million m², 27.7 million square feet) and 1,275 outside the UK (3.75 million m², 40.4 million square feet).

The company has a total market value of about £36,761.71m (April 2007). Tesco is the largest private sector employer in the UK and second to the NHS overall.

UK market share

Graph Showing Market Share of Tesco

According to TNS Worldpanel, Tesco's share of the UK grocery market in the 12 weeks to 20 May 2007 was 31.32%, down 0.03% on 12 weeks to 22 April 2007. Across all categories, over £1 in every £7 (14.3%) of UK retail sales is spent at Tesco. Tesco also operates overseas, and non-UK revenue for the year to 24 February 2007 was up 18% on 25 February 2006

Supermarket	Consumer Spend (£000s)	Market Share 20th April 2008	Change
Tesco	6,336,887	31.1%	0.3%
Asda	3,444,410	16.9%	0.1%
Sainsbury's	3,265,244	16.0%	0.4%
Morrison's	2,317,304	11.4%	0.3%

Tesco litigation

As with any large corporation, Tesco is involved in litigation, usually from claims of personal injury from customers, claims of unfair dismissal from staff, and other commercial matters. Two notable cases were Ward v Tesco Stores Ltd, which set a precedent in so called 'trip and slip' injury claims against retailers; and Tesco Supermarkets Ltd v Nattrass, which reached the House of Lords, and became a leading case regarding the coporate liability of businesses for failures of their store managers (in a case of misleading advertising).

Criticism

Main article: Criticism of Tesco

In Thailand, Tesco has been criticised for aggressively pursuing critics of the company. Writer and former MP Jit Siratranont is facing up to two years in jail and a £16.4m libel damages claim for saying that Tesco was expanding aggressively at the expense of small local retailers. Tesco served him with writs for criminal defamation and civil libel.

Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank", pugilistically aggressive new store development without real consideration of the wishes, needs and consequences to local communities, using cheap and/or child labour, opposition to its move into the convenience sector and breaching planning laws.

A recent criticism from 2007 occurred when Tesco failed to deliver groceries via online shopping to a university campus in Sussex, offering no refund or apology. This sparked a local backlash from many customers who had similar dissatisfying experiences with Tesco's online delivery service.

Despite practising a 'One in front' policy, in December 2006 The Grocer magazine published a study which named Tesco as having the slowest checkouts of the six major supermarkets. Somerfield had the shortest queues with an average wait of 4 min 23 seconds. In order of least time spent at the checkout, the other major supermarkets were Waitrose, Sainsbury's, Asda, Morrisons and Tesco.

The Grocer also named ASDA as the cheapest UK supermarket (based on 33 items). Tesco was second and Sainsbury's and Morrisons joint third. Tesco price check tends to differ saying out of 7134 (compared to ASDA) products, (Survey carried out between 09 July 2007 and 11 July 2007) Tesco is cheaper:1835 (compared to 1251 the previous week), Tesco is more expensive:975 (compared to 984 the previous week) and Tesco is the same price: 4324 (compared to 4996 the previous week).

Tesco received criticism for bureaucratic and inflexible parking systems in its Bloomfield store in Dublin, Ireland.

Further reading

1. Simms, Andrew (2007). Tescopoly: how one shop came out on top and why it matters. London: Constable. ISBN 1845295110. {{cite book}}: Cite has empty unknown parameter: |coauthors= (help)
2. Humby, Clive (2006). Scoring points : how Tesco continues to win customer loyalty. London & Philadelphia: Kogan Page. ISBN 9780749447526. {{cite book}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
3. Nash, Bethany (2006). Fair-Trade and the growth of ethical consumerism within the mainstream : an investigation into the Tesco consumer. Leeds: University of Leeds. ISBN 75272130. {{cite book}}: Check |isbn= value: length (help); Cite has empty unknown parameter: |coauthors= (help)

See also

• Supermarkets in the United Kingdom
• TNS Worldpanel
• Tescopoly

Notes

1. ^ The business in China was a joint venture at February 2006 (now a 90% owned subsidiary; see above) and its turnover is not reported in Tesco's 2006 brokers' pack.
2. ^ Tesco owned a French chain called Catteau between 1992 and 1997. Its existing single store in France is a wine warehouse in Calais, which opened in 1995 and is targeted at British day trippers. Wine is much cheaper in France than in the UK because the duty is far lower. Turnover is not reported separately.
3. ^ Tesco Stores (Malaysia) Private Limited was incepted on 29 November 2001, as a strategic alliance with local conglomerate, Sime Darby Limited of which the latter holds 30% of total shares. On 31 January 2007, Tesco Stores (Malaysia) Sdn Bhd's CEO Chris Bush announced in a letter published on Makro Cash & Carry (Malaysia) Sdn Bhd's website that it was purchasing Makro and converting and refurbishing all its stores to a new format called Tesco 'Extra'. [3] It is not known whether the format will be similar to Tesco UK's format.
4. ^ Tesco Stores in Turkey are known as Kipa.

External links

Official

• Tesco UK
• Tesco Corporate site

Critical sites

• Tescopoly.org, Coalition of campaign groups criticizing Tesco.