Tescos is a United Kingdom based international supermarket chain. It is the largest British
retailer both by global sales and by domestic market share. Originally specialising in food,
it has moved into areas such as clothes consumer electronics, consumer financial services
internet services and consumer telecoms.
The Current Position
In 1995 Tesco overtook Sainsburys as the UKs largest supermarket. In 2001 Tesco
occupied 15.6% of the UK grocery retail market and was the market leader by 6%. Tescos
enormous share still grew and by September 2004, it had increased to a massive 28%,
around 12% more than its nearest market rival, Asda. In the year ended 26 February 2005
Tesco made a pre-tax profit of 1.962 billon on turnover of 33.974 billion. Some would
argue that if we were to include Tescos share of the convenience store market (bizarrely
considered a separate sector by UK competition authorities) in this figure, Tesco could be
said to control 34% of the grocery market. Considering how concentrated and cut-throat
the supermarket market is, this is quite an achievement.
Tesco is equally impressive when considering its share of the total retail market. In its
interim statement of results (August 2003), Tesco claimed our share of the total retail
market is just 12.3% and there is a lot left to go for. Already, just 12.3% means that almost
one pound in every eight spent in the UK is spent in Tesco.
Tesco profits have increased every year but one since 1987. In April 2004, Tesco
announced profits of 1.6bn for the financial year ending on 28 February; 4.4m profit a day,
17.6% higher than the previous year. As a comparison, in 2003 Tesco made as much profit
as M&S, Sainsbury, Next and WH Smith combined.
Tesco is Europes second largest supermarket after the French firm Carrefour, and
according to Mintel market research in 2004, Tesco is closing the gap. It is the fourth
largest supermarket in the world. Tesco operates 2,318 stores in 12 countries around the
world and employs 326,000 people, 237,000 of them in Britain where it is the largest
private employer. According to Terry Leahy, CEO Tesco, Tesco is market leader in 6 out of
the 12 countries that it operates in, with its largest store, not in Bristol or Birmingham, but
in Budapest.
Formats
Tescos UK stores are divided into five formats, differentiated by size and the range of
products sold.
Tesco Extra are larger, out-of-town hypermarkets that stock all of Tescos product ranges.
The first Extra opened in 1997 thanks to the Tesco Hypermarkets that opened in 1976 with
a flagship store in Irlam( amazing enough this store was sadly demolished to make way for
a smaller Tesco Extra). The 100th store opened in the 2004/05 financial year. The number
of these is now being increased by about 20 a year, mainly by conversions from the second
category. Typical size 66,000 square feet (6,100 m). As of January 2006 Tescos largest UK
store is in Slough and is 190,000 square feet (18,300 m). This store is unusual in being
raised on stilts to maximise space utilisation. A standard Wal-Mart Supercenter in the U.S.
is around 200,000 square feet (20,000 m).
Tesco stores are standard large supermarkets, stocking groceries plus a much smaller range
of non-food goods than Extra. They are referred to as superstores” for convenience, but
this word does not appear on the shops. It is the standard” Tesco format, accounting for the
majority of UK floorspace. Most are located in suburbs of cities or on the edges of large
and medium-sized towns. The typical size is 31,000 square feet (2,900 m).
Tesco Metro stores are sized between normal Tesco stores and Tesco Express stores. They
are mostly located in city centres and on the high streets of small towns. Typical size is
12,000 square feet (1,100 m).
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 and small shopping
precincts in residential areas, and on petrol station forecourts. There are 546 stores at 26
February 2005 year end, with a typical size of 2,000 square feet (190 m).
One Stop 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. There are
more than 500 of them. Typical size 1,300 square feet (120 m).
In May 2005 Tesco confirmed that it will be trialing a non-food only format.
Tesco Homeplus : These stores offer all of Tescos ranges except food in warehouse-style
units in retail parks. The first one opened in Manchester in September 2005. 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 operates 1,878 stores in the UK, 261 stores in Europe and 179 stores across Asia, and
plans to open 184 stores worldwide over the next year.
A study carried out for the Sunday Times by research group CACI revealed that Tesco has
almost total control of the food market in 108 of Britains postal areas – 7.4% of the
country. This includes Epping in Essex, Penarth in South Glamorgan and Buckingham. In
