When was the first superstore opened?
Tesco introduced the concept of a superstore in 1967 when it opened a 90,000 square feet store in Westbury, Wiltshire. The term superstore was first actually used when Tesco opened its store in Crawley, West Sussex in 1968.
How did Tesco change its image?
By 1970 Tesco was a household name. 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 looking for more luxurious items as well as everyday household and food products. In the late 1970’s 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. Tesco finally stopped giving out trading stamps in 1977 at the same time as introducing a price cutting campaign under the banner “Checkout at Tesco” which proved to be a major success.
How did Tesco maintain its growth in the 1980’s?
During the 1980’s Tesco continued to build new superstores, opening its 100th in 1985. In 1987 it announced a £500 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.
By 1990 Tesco was a very different company from what it was 20 years before. The Tesco superstore offered customers free parking as well as cheap groceries and a pleasant shopping environment.
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 more choice in their shopping.
Tesco broke new ground in food retailing by introducing, in 1995, the first customer loyalty card, which rewarded regular shoppers whilst helping the company discover more about it’s customers needs.
When did Tesco expand internationally?
In the 1990’s Tesco started to expand its operation outside the U.K. in Eastern Europe, it has met growing consumer aspirations by developing stores in Poland, Hungary, Slovakia and the Czech Republic. Tesco also has expanded into Taiwan, Thailand and South Korea.
How did ownership change
How did types of stores change?
Information from Tesco Web site and Textbook
Objectives of the business
Tesco’s business objectives are of the following
Customer focus is key to there strategy. Tesco’s responsibility is to deliver safe, good quality products at the right price for all of there customers. They provide access to good quality fresh food at affordable prices in communities across the UK, and their Express convenience stores can often provide access to fresh food in areas with few outlets. There value line range provides everyday items at unbeatable prices and helps their customers on a budget. In this way, they create value for customers and communities.
Tesco has a wide of operation and wants every one to buy their products. This is though as it is normally people who have moved out of their parent’s home and has accommodation of their own. Tesco's aim is to get full time loyalty from their costumers and to carry on increasing the value of their goods for the costumers. They want to under stand and respect their customers better than other supermarket chains. Their staffs is very important to them so they aim to please their staff for Tesco’s values and also to relishes their large contributions in to Tesco’s empire. To increase life for customers Tesco’s are all ways ready to take sensible risks to improve this. They also want to make life better and customers shopping experience more enjoyable in no way other competitive company scan, they will do this through using there bring people who work for them and also using technology, intelligence and sales this all should help increase better value. Tesco have also intruded a range of finical services this was started in 1997. This includes newly started pensions, investment schemes, insurance and credit cards.
Departments
- Finance
- Sales
- Marketing
- Administration
- Production
- Human resources
- Research and development
Production
Production is divided into two areas:
Planning and Control
Planning - after an product has been designed its manufacture must be carefully planned
- What raw materials will be needed and in what quantities
- How many of the products should be stored and bought
- What assistance will be required (e.g. machines)
- What personal will be required, are current staff up to the task, is training required do any of the current staff have the skills required
- How the products will be assembled
Control – to make sure that the business demands are met there are four checks
- Progress control
- Quality control
- Stock control
- Machine utilisation control
Finance and accounts
Because Tesco is such a massive business there is huge involvement in finance. There are whole departments dedicated to administration, the finance is very important in the running of a business
Setting up the company
Tesco took many decades to reach the status and recognition that it has to this day, when Tesco’s was first founded it began as a sole trader back in 1918. In the 1920’s Jack Cohen founded a business partner and after the deed of partnership had been filed, Tesco’s became a partnership. Tesco’s kept this status until the 1940’when the memorandum of association and the article of association had been filed. Tesco’s received a certificate of incorporation. It was now a private limited company. It did not take long until jack realised that the company could go one better again. In 1947 Jack Cohen released the prospectus, soon he had issued all the shares and the certificate of trading. Tesco was a public limited company (PLC) and shares could now be bought on the stock market. The first annual report was published in 1948.
Benefits of ownership
The advantages of this type of ownership are that teco’s is now protected by limited liability. This means that is the company should to go bankrupt it would not be duty of the shareholder/owners to pay off the debts, they would only lose the money they have put into the company. Raising capital is also a lot easier with shares being available to purchase on the stock market. This extra finance will help tesco’s to broaden and expand internationally. The owners can also vote on specialist managers to employ at annual general meetings.
- The owners of tecso have limited liabilities
- If the owners issue more shares, more capital can be raised therefore increasing the value of the business
- PLC’s such as Tesco’s don’t have difficulty raising finance though banks, banks can see from the certificate of incorporation (which had been issued before Tesco was first set up,) the company can raise at least £50,000. therefore the bank can see that the money will be spent wisely
Disadvantages of owner ship
Disadvantages of this type of this type of ownership is that it takes long time for decisions to be finalised
Changes in Retail
Main Activity of Tesco
Business Activity
Tesco’s main activity is to provide a service buy the retailing of manufactured goods. They also provide a range of services including loans.
It has many stores which are directed at different types of customers, for example Tesco Metro is a small store in town centres, it is aimed at people without cars that cannot travel to the larger out-of-town stores. Tesco Extra is the largest Tesco store and it has the widest variety of goods. Tesco Extra is aimed at people with families. In these stores there is a playpen for children to play in while you shop and a café as well a huge range of goods.
Typical Tesco Store
In many Tesco stores you will find the following items being sold; food clothes, alcohol, music, electrical goods, pharmacy and a range of services such as insurance, savings accounts, credit cards, and loans. Also in many there is a small newsagents at the front of the store and a photo service.
Tesco have produced a card called a club card this allows customers to collect point and claim vouchers for various products. The amount of vouchers they receive depends on the amount of points they save. Regular customers can apply for a club card gold. This gives them the option of paying with their points rather than collecting vouchers.
Supermarket Trends
Looking at the data I can see that supermarkets have increased in number and independents have decreased in number. The reason for this is because there is an increasing demand for variety.
In the future I think this trend will continue as more people want variety, not many independents provide that variety.
Stakeholders in Tesco
Stakeholders
There are many groups that have an interest in a company these include, customers, shareholders, managers, owners, employees, local community, government and pressure groups. These groups are known as stakeholders. The group of stakeholders that Tesco comes into contact with most is the customers. Without the customers they would be unable to survive as customers supply the revenue
Stakeholders in Tesco: Customers
At Tesco customers have an interest in the business, they want to be able to purchase quality goods at a low cost in a friendly environment. Tesco recognise how valuable these customers are and to meet these demands Tesco provide low prices and sell quality goods. They also provide good customer services and are always expanding their ranges. The Finest* range is now a £350m line with 175 new products being introduced due to customer demand making over 500 products in the Finest* range. Also to attract more customers Tesco has long opening hours.
Tesco has invested over £1 billion since 1996 in price cuts. They are able to continue to cut prices on everyday products by buying better around the world, introducing world-leading technology and searching for efficiencies within the business and increasing sales volume.
The number of customers buying organic products over the last year has trebled. Tesco has responded to the demand by offering the largest range of organic products offered by any other UK retailer and now Tesco has nearly 30% of the UK market. In the larger stores everything from curry to cereals and coffee to gin in available in the organic range.
From this I can see that Tesco endeavours to keep all of its customers happy, and is successful in its attempt.
Tesco Website
Stakeholders in Tesco: Employees
Employees are those that are paid to carry out a specific job of work in a business. Examples of employees in Tesco are: manager, till operators, shelf stackers and supervisors.
Tesco employees have an interest in the company including good wages, safe working environment, job security and that it is a happy place to work. The fact that they want good wages often causes conflicts between the employees and the owners.
Tesco has spent £10 million on training the front-line staff in the process of building a 240,000 strong team to bring out the best in each and every one, so they can continue to do what they do so well. It is this kind of dedication that creates the friendly, stress free, working environment. Also as they are investing large amounts of money into their staff, it lets the employees know that their job is safe. In UK stores we have introduced a new programme which concentrates on product knowledge and customer service, with three levels of attainment. With the Manchester Business School, Tesco has developed a store managers’ programme, combining financial planning, local marketing, selling strategies and change management.
These managers’ interests are different from the other employees. The managers may want the status of a company car and receive regular bonuses for good performance.
Through the new Extra Choices staff club Tesco is able to leverage the best possible deals for the staff, including family holidays, shows and home entertainment.
Tesco Website
Stakeholders in Tesco: Shareholders
The Tesco employees now own 88,533 shares, 36.32% of all shares, other individuals own 126,373, 41.84%, and corporate institutions own 28,781 shares, just 11.84%.
Shareholders invest in Tesco in order to see an increase in their investments. Their interest in Tesco will be that the company is successful because they will want their dividend to be high. For their dividend to be high, Tesco will have to have a large turnover.
The Tesco board has recommended a final dividend of 3.50pence. This, together with the interim divided of 1.48pence, gives a total for the year of 4.98pence up 11.2% and maintains dividend cover at 2.27 times.
Tesco has now started an Extra Choices staff club where the employees can purchase shares in Tesco. Around 50% of eligible staff now take up Tesco’s Sharesave scheme. This year Tesco made a record payout of £123m shared between 33,000 staff, and in addition Tesco paid a profit-share bonus of £44m to it’s UK staff. This year the Sharesave scheme was introduced to Republic of Ireland.
Tesco Website
Stakeholders in Tesco: The Local Community
The local community is the area around each Tesco store. This could range from rival stores to houses. Some members of the local community form pressure groups.
The local community see Tesco as a good source of local jobs and increasing wealth in the area. Also Tesco may be willing to sponsor local events. The Tesco store will also help keep the area successful. Tesco has lots of integrated policies for corporate social responsibilities, backed by key programmes to support local people and communities and to protect the environment. Tesco monitor performance by setting targets in each of their key areas to drive improvements.
Some members of the local community object to some of the things that Tesco do and try to change the laws. These groups of people are known as pressure groups.
Their interests in Tesco will be that there is not too much damage to the environment. These interests mean that they sometimes may conflict with the owners, the members of the local community that objects to something that Tesco does may form a pressure group.
During the last year Tesco has also been helping the unemployed, schools, the environment and charities, Tesco has donated nearly £3m to their charity of the year, Macmillan Cancer Research.
In a new scheme with the government Tesco is working in some of the highest unemployment areas in the UK to boost job prospects for the long term. During the last year Tesco has created 2000 new jobs for unemployed people providing training, family support and childcare.
Tesco’s Computers for Schools Scheme is now in its 11th year and so far £62.5m worth of equipment to 22,000 schools. In October the scheme won Nestle Social Commitment prize at the Food and Industry Awards.
Tesco has focused a programme of environmental activity with annual targets, monitoring their performance to ensure that they exceed legal requirements and continuously improve. Their aim is to minimise the environmental impact of their business.
Tesco has won the Queen’s Award for the environment for the reusable green trays, which saves over 75,000 tonnes of packaging every year. Also Tesco recycles 85% of their packaging waste, more than any other retailer. They also provide recycle bins for customers at over 300 stores and build 90% of their stores on brown field sites. Tesco has also won an award for reducing energy consumption by 20%.
Tesco Website
Stakeholders in Tesco: The Government
The government often offer companies incentives to move to an area, usually large sums of money known as grants. The grant could be to make the company locate in an area of high unemployment or on a brown field site. The government may provide money to train staff if the company locates in an area on high unemployment.
The government will receive taxes from Tesco when they make a profit. These taxes include V.A.T, corporation tax and business tax. Tesco is also affected by economic policies and decisions to change the law. The government will be interested in Tesco because they will want to make sure that Tesco doesn’t break any laws. The government will also want Tesco to provide jobs in high unemployment areas which brings prosperity to the area.
Tesco is currently working with the government in a scheme that is bringing jobs to areas of high unemployment. Tesco has been given lots of money from the government for this.
Tesco Website
Stakeholders in Tesco: Suppliers
Suppliers supply Tesco with goods to sell that they require to keep their customers happy.
Suppliers may drive large lorries so their interests in Tesco will be that the stores have good road links with easy access. They will also want to make sure that Tesco can keep up with payments and are willing to make regular orders to keep a regular income.
Tesco’s interests in suppliers will be that the goods they have ordered arrive on time, and it is the correct order. They will also want to know what time they are going to deliver the goods as a delivery at the busiest time of the day is not ideal.
Tesco has built partnerships with many suppliers and organisations to drive up standards for customers. One of these partnerships is with the National Farmers Union and is developing a new industry standard, the British Farm Standard, recognised by the red tractor logo. It is used on British produce which has been independently verified as food that consumers can trust, produced in a way that is kind to animals and caring to the environment.
Tesco Website
The use of ICT within the business and how it has affected Tesco’s
New technology has changed the world, Tesco especially has benefited from this especially. It has revolutionised Tesco's operational in all aspects of the word. Computers and computer-based products control most if not all of Tesco’s it would not run as smoothly with out it. Computers controls ordering from the supplers throw to distribution and store design. With out this technology expanding their stores
Computer aided design (CAD) is used to plan both the stores and how they fit in to their environment and also inside the store, so no space is wasted and products are so placed in the right position. This then should make the customers shopping experience easier and less stressful as all of one type of product is in the same area. This is one of the technology advances, which helps the customer but is not seen. Though there are advances, which we all see, and they help us to hurry up the shopping. Things like monitors, tills, barcodes and scanners these also help fed back to the head office computer were new stock can be ordered, take over checked and the store performance in general can be regulated.
Communication.
Tesco's have now used this improvement in communication by computers to allow people to shop from home at any time on their computers Using "Tesco online." They simply connect to the Internet and then send over the order and also the time at which it is to be delivered. This type of shopping is also becoming available throw television the first example of this is sky digital. Tesco has also created a free Internet package, were the connection to the Internet is free and you just pay for the local phone call. The connection is also used to advertise the company.
It is also essential to the club card system as with out the system of computers it would not even be feasible to run it manually. As the detail that has spent that day and the information on this is record on the computer based check out system then the details are transferred over night to the main frame computers at the head office where it is processed and worked out hen the necessary information is added to the customers account. It's a changing world and with out computers all of this would not be even dreamt of.
