Tesco PLC

Company Information

• Date Founded: 1919
• Industry: Retail grocery
• Corporate Headquarters: Welwyn Garden City, United Kingdom
• Type: Public

Overview

Tesco PLC is a British retail grocery store chain; it is one of the largest and most successful companies of its kind in the world. From the time it was founded by former member of the Royal Airforce Jack Cohen in 1919, Tesco rose to become the most dominant player in Britain's retail grocery market and a major force in the global market. Like Wal-Mart, its American equivalent and largest international competitor, Tesco operates hypermarkets that stock both traditional grocery store offerings and typical department store goods, such as clothing and appliances, in oversized, big-box outlets. In addition to these hypermarkets, Tesco operates normal supermarkets, consolidated urban stores, convenience stores, and other similar facilities. Along with its brick-and-mortar outlets, Tesco maintains an expansive online marketplace, where Internet shoppers can purchase an array of groceries and retail goods. By 2024, Tesco PLC operated in just over 4,250 stores in the UK and made a revenue of roughly 62.88 billion British pounds in the UK and Republic of Ireland in 2023 and 2024.

As it grew over the years, Tesco branched into a range of other industries, including banking, insurance, telecommunications, and consumer research. Tesco's success did not come without controversy, however. The chain's rapid expansion and aggressive marketing tactics have often been a considerable source of concern for critics, many who feel that the retail giant poses a serious threat to healthy competition. Many of Tesco's most outspoken critics assert that the chain's continuing efforts to tighten its control of the retail market threatens the survival of local businesses and negatively affects the economic well-being of many small towns. Regardless, Tesco remains a retail powerhouse in the United Kingdom and worldwide in the twenty-first century.

History

After World War I (1914-1918), John Edward "Jack" Cohen, a young British Airman who served with the Royal Flying Corps, used the salary he saved from his time in the service to open a small grocery stall in London's East End. At first, Cohen focused simply on acting as a market trader, selling whatever grocery goods he could afford to stock. As he began to see some success, he gradually moved into other London markets and started developing wholesaling relationships with fellow traders. In 1924, Cohen created the Tesco name when he began selling his own brand of tea. The name itself was a mashup of the first three letters in the name of Cohen's supplier, TE Stockwell, and the first two of his own last name, Cohen. Eight years later, Cohen used the Tesco name to create Tesco Stores Limited, the company from which the modern chain evolved.

After a visit to the United States in 1935, Cohen became determined to bring the emerging American concept of self-service supermarkets to Britain. Although World War II (1939-1945) temporarily halted his plans, Cohen eventually opened the first Tesco self-service store in St Albans, Hertfordshire, in 1947. While the idea of a self-service grocery store was not initially popular among British consumers, it eventually caught on and forever changed the course of Tesco's development.

Throughout the 1950s and 1960s, Tesco quickly expanded, opening new stores across the country and acquiring a number of existing stores. Tesco opened its first true supermarket in 1956. Located in Maldon, Essex, the original Tesco supermarket stood apart from the chain's other stores because it offered both typical dry goods and a new range of fresh foods. In the early 1960s, Tesco began to put apparel and homeware sections in its larger stores—a move that laid the groundwork for the debut of the chain's first hypermarket in 1968. By the time of Cohen's death in 1979, Tesco was operating hundreds of supermarkets and hypermarkets across Great Britain. It also opened several gas stations in various locations earlier in the decade.

Tesco's success continued throughout the 1980s and 1990s and into the 2000s. During that period, the chain opened its first international stores, further expanded its extensive product line, and entered the telecommunications field. In 2009, the chain partnered with Royal Bank of Scotland to establish Tesco Bank. Due to weak global economic conditions, Tesco experienced financial problems in the early 2010s. In 2013, the chain reported a loss in profits for the first time in twenty years. The chain rebounded in 2016 and once again began growing sales. Tesco saw strong sales growth during the COVID-19 pandemic, with a 15 percent increase in the twelve weeks ending July 2020 compared to the previous year. However, growth slowed in 2020 and 2021, dropping by 1.4 percent in November 2021. Sales rebounded in the second half of 2022 and 2023, aligning with global inflation trends. Even after some of its financial woes, Tesco remained a leader in the retail industry into the twenty-first century.

Tesco established their online presence in 2000 with the launch of their website, Tesco.com. Tesco.com offered online grocery shopping, as well as other services like home delivery of flowers, financial services, and more. By the 2020s, Tesco.com was consisently the world’s second most visited grocery website, attracting over 25 million monthly visits, with a 28 perent conversion rate, the highest among UK grocery websites.

F&F (Florence & Fred) is Tesco’s international fashion brand, offering clothing, footwear, accessories, and homeware. Launched in 2001 in the UK and Ireland, F&F expanded globally and online in the early 2010s, opening its first standalone store in London in 2010. The brand provides fashion for men, women, and children, along with home essentials. Committed to sustainability, F&F supports initiatives like CanopyStyle and responsible viscose manufacturing. Its goals include becoming the world’s leading affordable fashion brand and delivering trend-driven styles that surprise and delight customers.

Impact

Much of Tesco's success results from its founder's business philosophy. From an early stage, Cohen sought to stock his stores with the widest possible assortment of products and sell them at the lowest possible cost to the consumer. His famous motto was "stack 'em high, sell 'em low." This approach, which was largely unheard of at the time, quickly proved profitable. Tesco's broad selection of goods and low prices were attractive to shoppers looking for convenience and a good deal. Fueled by Cohen's commitment to his pioneering business model, Tesco enjoyed enormous success and became a household name.

As Tesco evolved and expanded over the years, Cohen and its other executives continued to play close attention to its customers' desires and behaviors. This commitment proved vital to the chain's success. Recognizing that customers were receptive to various incentive schemes that gave them additional reasons to shop at specific stores, Tesco became one of the first major British retailers to embrace Green Shield Stamps, which were part of a sales promotion in which shoppers could obtain special stamps to purchase gifts from a catalog. Tesco's largest success in generating customer loyalty—and one that had a tremendous impact on the chain's modern expansion—was the Tesco Clubcard. First introduced in the 1990s, the Tesco Clubcard transformed the British retail industry. For customers, the card offered an opportunity to receive individual discounts and shopper rewards. For Tesco, the Clubcard was a means of collecting information on consumer trends. Thanks to its Clubcard program, Tesco was able stay on the cutting edge of the retail industry in the digital age and continue diversifying into new and more profitable business areas.

In 2024, Tesco secured a deal to purchase nearly two-thirds of the energy produced by the 450 million euro Cleve Hill solar park in Kent, England, enough to power 144 large stores. This agreement would supply up to 10 percent of Tesco’s UK electricity demand over fifteen years and support its goal of becoming carbon neutral by 2035. The Cleve Hill project, featuring 560,000 solar panels and energy storage, represents the UK’s largest corporate solar power purchase deal. With this addition, Tesco’s renewable energy agreements would cover 45 percent of its UK electricity needs by 2030 and reinforce its commitment to sustainable energy solutions.

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