As this power grew the relationship between all the big supermarkets and their suppliers came under scrutiny. In the Competition Commission carried out a major inquiry into the issue which lead to the creation of a Code of Practice. It's an issue that rumbles on, with dairy farmers protesting last year about the low price some supermarkets pay for milk.
Tesco says it negotiates the best prices on behalf of customers but that it is also fair and that suppliers stay with the company.
It says it pays one of the highest prices for milk out of all the main supermarkets. But what really took Tesco to the top was watching customer behaviour. It was the first British supermarket to do so and it was a game-changing move.
The introduction of the Tesco Clubcard is the single most significant factor in the success of the company, says Sir Terry Leahy, the supermarket's chief executive from to The idea of a loyalty scheme was not new.
The savvy Cohen had been an early adopter of Green Shield Stamps in and successfully exploited the incentive scheme to his advantage. But the Clubcard was a loyalty scheme for the age of computerised research. Tesco collected raw data on what people were buying and turned it into profitable information. It was also able to offer personalised discounts and rewards. Rolled out nationally in , the card was an instant success. One year later Tesco became the UK's top supermarket. The scheme fundamentally changed the way all supermarkets did business and typifies Tesco's success, say business analysts.
And diversify it did. Tesco is now a bank, it offers insurance, credit cards and loans. You can buy a flat-screen TV, a mobile phone and clothes alongside bread, milk and butter.
It runs education programmes for staff and keep fit classes. Even its critics have some grudging regard for the company. Like most supermarkets, it all started from a market stall in London Town. Tesco started in , when Jack Cohen started selling surplus groceries from a market stall in Hackney. Jack's market stall grew, and by , the first Tesco store opened in Burnt Oak, Edgware.
The store focused on dry goods, including the Tesco branded tea! During the next 10 years, the business continued to grow, with Jack opening stores in expanding London Suburbs. In , Tesco purchased a plot of land in Edmonton to allow him to build state of the art headquarters and warehousing. It was one of the first modern warehouses built for food, and introduced breakthrough ideas for stock control.
The Tesco stock was offered for sale at 25p per share. This flotation jump-started Tesco's journey into self-service stores, with its first supermarket arriving a few years later.
In , the first big step was taken, which began the transformation into the retailer we know today. Tesco opened its first self-service store. Jack had travelled to America to research self-service stores.
Tesco was changing the way it served its customer. In traditional stores, customers would form a line at a counter and a store assistant would gather the shopping from the back of the store. Self-service allowed customers to walk round the store, picking their own shopping from the shelves. The first Tesco self-service store opened in St Albans in , with initial mixed feedback from customers.
The change was as polarising as self-service checkouts are today. Mr Lewis hired management consultants Boston Consulting to prune that 90, choice down to between 65, and 70, a typical Aldi offers just 2, product lines. Tesco had expanded its product range by a third since ; by contrast its main competitors, Asda, Morrison and Sainsbury had kept their ranges at between 20, and 30, lines.
Tesco also announced plans to close 43 loss making stores 18 Express stores, 12 Metro stores, 7 superstores, and 6 non-food Homeplus stores , putting 2, jobs at risk. A further 49 Tesco stores planned to open, including some under construction, would now not go ahead; the loss to the community was not just a supermarket but the jobs, and associated development of housing units, that was to go with them.
Some of these abandoned store projects involved the restoration of historic buildings, such as a Victorian hospital in Wolverhampton. It was also to close its corporate headquarters at Cheshunt, Hertfordshire in , and move to smaller premises at Welwyn Garden City nearby. Tesco was facing the problem that shoppers were moving more towards convenience last-minute small shopping trips from local stores such as Tesco Express.
However Tesco will then face the issue of too much shelf space in its larger stores; yards of empty shelves do not look good in a supermarket. In Tesco began cutting back on the number of its large stores offering hour opening ca. These stores catered for shift workers but online shopping and garage convenience stores also took this trade.
By June almost Tesco stores that once had hour opening had ceased to operate these hours. The rise of the Internet since , when Tesco began hour opening, was to blame; insomniacs could just as easily shop at home on their computer now. Small is beautiful for Tesco. The Competition Regulator approved the deal in November However other buying groups including Spar and Bestway were concerned. At end, Bookers supplied , independent convenience stores and garage forecourt stores as well as , restaurants including Byron and Wagamamas , pubs, cinemas and other leisure venues.
Reasons for Tesco buying Bookers include,. Tesco can also market its banking and phone services in these shops. The store was located in Chatteris , Cambridgeshire, close to an Aldi. This was in competition with the discount chains Aldi and Lidl. Potentially, 15, jobs were at risk, from the , then employed by Tesco itself a 10, reduction on By Tesco had stores, with 24, staff, in Poland.
In Tesco deferred plans to sell the Kipa chain due to lack of purchase interest; Kipa stores in eastern Turkey were underperforming. It opened Fresh and Easy stores, the first was in California.
However by early there were signs that the Fresh and easy format was not doing as well as Tesco first hoped. Problems included the Japanese consumer preference for small purchases from local shops, and for using vending machines.
Tesco was now concentrating in its home ground, the UK and Ireland, where it had 3, shops, also central Europe where Tesco had shops. We developed and launched our Finest range, which was aimed at filling the gap in the market for our more affluent customers. Growth helps us bring better value to customers. The website has grown to serve over 20,, customers visiting the site every month. Hundreds of thousands of our colleagues and customers have taken part in Race for Life events, helping to raise money to support vital research.
Tesco Mobile is a joint venture with O2, with over five million customers across the UK. Putting the customer at the heart of everything. Tesco launched the new Everyday Value range to replace Tesco Value. The new products focus on three main areas: quality, providing healthier options for our customers and packaging improvements that help customers identify the products on the shelves.
We launched our Bags of Help scheme, with money raised from the 5p bag charge in England, Scotland and Wales being used to fund projects to create or improve green spaces in local communities.
In the first year of the government bag charge, Tesco customers in England saved over 1. Our Community Food Connection scheme, in partnership with food redistribution charity FareShare, provides free, surplus food every day to local charities and communities. The scheme is the biggest supermarket food redistribution scheme in the UK, and runs across all of our UK stores.
Tesco begins offering free fruit for children in stores. The aim is to create healthy eating values that will stay with kids as well as making it easier for children to get the fruit they need. We launched eight fresh food brands, including Redmere Farms and Boswell Farms, offering quality, fresh produce at low prices. Wholesaler Booker Group merges with Tesco. Tesco launches Jack's to celebrate years of great value at Tesco.
A new brand, and stores, inspired by the original value champion Jack Cohen - bringing customers great-tasting food at the lowest possible prices.
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