The first store to be opened was in 1929 in Burnt Oak, Edgware.
The business prospered and grew in the years between the wars. In 1947
Tesco Stores (Holdings) Ltd was floated on the Stock Exchange, with a share
price of 75p. The price at the beginning of March 1998 was around 515p.
Self-service supermarkets started in the USA in the 1930s during the
depression. They soon realised that by selling a wider variety and larger
volume of stock and employing fewer staff they could offer lower prices to
the public.
Self-service stores came to Britain after the Second World War, and Jack
Cohen opened the first Tesco self-service store in St Albans in 1948.
In 1956 the first Tesco self-service supermarket was opened in a converted
cinema in Maldon. By the early 1960s, Tesco had become a familiar name. As
well as groceries, the stores sold fresh food, clothing and household
goods. Tesco stores were located in the high streets of many towns. The
Tesco store which opened in Leicester in 1961 had 16,500 square feet of
selling space and went into the Guinness Book of Records as the largest
store in Europe.
By buying in bulk and keeping costs down, Tesco should have been able to
sell at very competitive prices to its customers. Until 1964, however,
suppliers were, by law, able to insist that retailers charged a set price
for their products (the system known as Resale Price Maintenance) which
meant that it was difficult to reduce prices. The intention was to protect
small shops against the lower prices that big retailers could offer their
customers.
Tesco introduced trading stamps so that it could bring lower prices to its
customers. Customers collected stamps as they purchased their groceries and
other items. When they had collected enough stamps to fill a book, they
could exchange the book for cash or other gifts. Other retailers soon
copied Tesco. Sir Jack was one of the leaders in persuading Parliament to
abolish Resale Price Maintenance in 1964. After this, Tesco continued to
offer trading stamps until 1977.
Apart from opening its own new stores, Tesco bought existing chains of
stores. In 1960 it took over a chain of 212 stores in the north of England
and added another 144 stores in 1964 and 1965. In 1968 the Victor Value
chain became part of the company.
Tesco introduced the concept of a superstore in 1967 when it opened a
90,000 square feet store in Westbury, Wiltshire. The superstore was a new
concept in retailing - a very large unit on the outskirts of a town,
designed to provide ease of access to customers coming by car or public
transport. The term superstore was first actually used when Tesco opened
its store in Crawley, West Sussex in 1968.
By 1970, Tesco was a household name. Its reputation had been built on
providing basic groceries at very competitive prices; the slogan ‘Pile it
high and sell it cheap’ was the title of Sir Jack Cohen’s autobiography.
But as people were becoming better off, they were starting to look for more
expensive luxury items as well as everyday household and food products. In
the late 1970s the company decided to broaden its customer base and make
its stores more attractive to a wider range of customers. Many of the
older, high street stores were closed and the company concentrated on
developing bigger out-of-town superstores. The superstores sold a broader
range of goods, and had wider aisles and better lighting. While still
offering very competitive prices, the emphasis was now on quality, customer
service and a customer-friendly environment. In 1974, the company developed
filling stations at its major sites, selling petrol at very competitive
prices. In line with its new image, Tesco finally stopped giving trading
stamps in 1977, at the same time introducing a price cutting campaign under
the banner "Checkout at Tesco" which proved to be a major success.
In one year in the late 1970s, the Tesco market share increased from 7% to
12%, and in 1979 its annual turnover reached Ј1 billion for the first time.
During the 1980s, Tesco continued to build new superstores, opening its
100th in 1985. In 1987 it announced a Ј500 million programme to build
another 29 stores. By 1991, the popularity of Tesco petrol filling stations
at its superstores had made the company Britain’s biggest independent
petrol retailer.
In 1985 Tesco introduced its Healthy Eating initiative. Its own brand
products carried nutritional advice and many were branded with the Healthy
Eating symbol. The company was the first major retailer to emphasise the
nutritional value of its own brands, to customers.
By 1990, Tesco was a very different company from what it had been 20 years
before. The Tesco superstore offered customers a very wide range of goods,
a pleasant shopping environment, free car parking and an emphasis on
customer service. Although many financial experts had not believed that the
company could so radically change its image, the new approach saw sales and
profits rise consistently. Existing customers took advantage of greater
choice, and new customers discovered that Tesco could successfully match
the offer of any of its retail competitors.
In the 1990s, the company built on its success by developing new store
concepts and new customer-focused initiatives. In 1992, it opened the first
Tesco Metro, a city centre store meeting the needs of workers, high street
shoppers and the local community. This was followed by Tesco Express,
combining a petrol filling station with a local convenience store to give
local communities a selected range of products. The company also expanded
into Scotland when it acquired a chain of 57 stores from William Low.
Tesco broke new ground in food retailing by introducing, in 1995, the first
customer loyalty card, which offered benefits to regular shoppers whilst
helping the company discover more about its customers’ needs. Other
customer services followed, including home shopping for those who hadn’t
the time to visit a superstore, Tesco Direct for catalogue shoppers and the
Tesco Babyclub for new parents. Currently, the company is adding financial
services to its provision for customers.
By 1995, Tesco had become the largest food retailer in the UK.
In the 1990s, Tesco started to expand its operations outside the UK. In
Eastern Europe, it has met growing consumer aspirations by developing
stores in Poland, Hungary, Slovakia and the Czech Republic.
Closer to home, in 1997 Tesco purchased 109 stores in Ireland, which gave
the company a market leadership both north and south of the border.
Tesco Chairmen 1947-1998
Sir Jack Cohen 1947-1979
Sir Leslie Porter 1979-1985
Sir Ian MacLaurin (Lord MacLaurin from 1996) 1985-1998
John Gardiner 1997
Chief Executive Terry Leahy 1997
The letters ‘plc’ at the end of its name distinguishes a public limited
company from a private limited company. Most of Britain’s famous
businesses such as Marks and Spencer, ICI, BP, and Manchester United are
public limited companies. All companies with share prices quoted n the
London Stock Exchange are public limited companies.
To become a public limited company, a business must have an issued share
capital of at least Ј50,000 and the company must have received at least 25
per cent of the nominal value of the shares. Public limited companies must
also:
. be a company limited by shares
. have a memorandum of association with a separate clause stating
that it is a public company
. publish an annual report and balance sheet
. ensure that its shares are freely transferable – they can be bought
and sold.
Benefits:
. All members have limited liability.
. The firm continues to trade if one of the owners dies.
. Huge amount of money can be raised fom the sale of shares to the
public.
. Production costs may be lower as firm may gain economies of scale.
. Because of their size plcs can often dominate the market.
. It becomes easier to raise finance as financial institutions are
more willing to lend to plcs.
Constraints:
. The setting up costs can be very expensive – running into millions
of pounds in some cases.
. Since anyone can buy their shares, it is possible for an outside
interest to take control of the company.
. All of the company’s accounts can be inspected by members of the
public. Competitors may be able to use some of this information to
their advantage. They have to publish more information than private
limited companies.
. Because of their size they are not able to deal with their
customers at a personal level.
. The way they operate is controlled by various Company Acts which
aim to protect shareholders.
. There may b a divorce of ownership and control which might lead to
the interests of the owners being ignored to some extent.
. It is argued that many of these companies are inflexible due to
their size. For example they find change difficult to cope with.
Tesco plc. is large, private sector organisation. As it is providing-
service organisation I can classify it as tertiary sector organisation.
Tesco plc. is a national company, but it is becoming to multinational. Main
objective is to make a profit.
As Tesco is a limited company that means all owners have limited liability.
If a company has debts, the owners can only lose the money they have
invested in the firm.
Main source of finance is selling shares and borrowing from the banks.
Tesco has a thousands of owners, every man who has any shares is owner; but
these people can’t control the company, so company has a board of directors
and chairman who control the company.
Tesco has a heavy programme of capital expenditure, investing in new stores
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