Tesco plc, trading as Tesco, is a British multinational grocery and general merchandise retailer with headquarters in Welwyn Garden City, Hertfordshire, England, United Kingdom. It is the third-largest retailer in the world measured by profits and ninth-largest retailer in the world measured by revenues. It has stores in 12 countries across Asia and Europe and is the grocery market leader in the UK (where it has a market share of around 28.4%), Ireland, Hungary and Thailand.
Tesco was founded in 1919 by Jack Cohen as a group of market stalls. The Tesco name first appeared in 1924, after Cohen purchased a shipment of tea from T. E. Stockwell and combined those initials with the first two letters of his surname, and the first Tesco store opened in 1931 in Burnt Oak, Barnet. His business expanded rapidly, and by 1939 he had over 100 Tesco stores across the country.
Originally a UK grocer, Tesco has diversified geographically since the early 1990s and into areas such as the retailing of books, clothing, electronics, furniture, toys, petrol and software; financial services; telecoms and internet services. The 1990s saw Tesco reposition itself: it moved from being a down-market high-volume low-cost retailer to one which appeals across many social groups, by offering products ranging from its "Tesco Value" items (launched 1993) to its "Tesco Finest" range. This broadening of its appeal was successful, and saw the chain grow from 500 stores in the mid-1990s to 2,500 stores fifteen years later.
Tesco is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. It had a market capitalization of approximately £18.1 billion as of 22 April 2015, the 28th-largest of any company with a primary listing on the London Stock Exchange.
History
1st Hour in England and we went to Tesco Supermarket! - Well, our children within 1 hour of arriving at nana and grandads house demanded we go to Tescos supermarket! I know, its crazy, but thats just what our tribe is! Hope you enjoy the vlog,...
Origins
Jack Cohen, the son of Jewish migrants from Poland, founded Tesco in 1919 when he began to sell war-surplus groceries from a stall at Well Street Market, Hackney, in the East End of London. The Tesco brand first appeared in 1924. The name came about after Jack Cohen bought a shipment of tea from Thomas Edward Stockwell. He made new labels using the initials of the supplier's name (TES), and the first two letters of his surname (CO), forming the word TESCO. After experimenting with his first permanent indoor market stall at Tooting in November 1930, Jack Cohen opened the first Tesco store in September 1931 at 54 Watling Street, Burnt Oak, Edgware, Middlesex. Tesco was floated on the London Stock Exchange in 1947 as Tesco Stores (Holdings) Limited. The first self-service store opened in St Albans in 1956 (which remained operational until 2010 before relocating to a larger premises on the same street, with a period as a Tesco Metro), and the first supermarket in Maldon in 1956. In 1961 Tesco Leicester made an appearance in the Guinness Book of Records as the largest store in Europe.
Expansion
During the 1950s and the 1960s, Tesco grew organically, and also through acquisitions, until it owned more than 800 stores. The company purchased 70 Williamson's stores (1957), 200 Harrow Stores outlets (1959), 212 Irwins stores (1960, beating Express Dairies' Premier Supermarkets to the deal), 97 Charles Phillips stores (1964) and the Victor Value chain (1968) (sold to Bejam in 1986).
Jack Cohen's business motto was "pile it high and sell it cheap", to which he added an internal motto of "YCDBSOYA" (You Can't Do Business Sitting On Your Arse) which he used to motivate his sales force.
In May 1987, Tesco completed its hostile takeover of the Hillards chain of 40 supermarkets in the North of England for £220 million.
In 1994, the company took over the supermarket chain William Low after fighting off Sainsbury's for control of the Dundee-based firm, which operated 57 stores. This paved the way for Tesco to expand its presence in Scotland, in which its presence was weaker than in England.
Tesco introduced a loyalty card, branded 'Clubcard' in 1995, and later an Internet shopping service. In 1996 the typeface of the logo was changed to the current version with stripe reflections underneath, whilst the corporate font used for store signage was changed from the familiar "typewriter" font that had been used since the 1970s. Overseas operations were introduced the same year. Terry Leahy assumed the role of Chief Executive on 21 February 1997, the appointment having been announced on 21 November 1995.
On 21 March 1997, Tesco announced the purchase of the retail arm of Associated British Foods, which consisted of the Quinnsworth, Stewarts and Crazy Prices chains in the Ireland and Northern Ireland, and associated businesses, for £640 million. The deal was approved by the European Commission on 6 May 1997.
The company was the subject of a letter bomb campaign lasting five months from August 2000 to February 2001 as a bomber calling himself "Sally" sent letter bombs to Tesco customers and demanded Clubcards modified to withdraw money from cash machines.
Diversification
In July 2001, Tesco became involved in internet grocery retailing in the USA when it obtained a 35% stake in GroceryWorks. In 2002, Tesco purchased 13 HIT hypermarkets in Poland. It also made a major move into the UK convenience store market with its purchase of T & S Stores, owner of 870 convenience stores in the One Stop, Dillons and Day & Nite chains in the UK.
In June 2003, Tesco purchased the C Two-Network in Japan. It also acquired a majority stake in Turkish supermarket chain Kipa. In January 2004, Tesco acquired Adminstore, owner of 45 Cullens, Europa, and Harts convenience stores, in and around London.
In Thailand, Tesco Lotus was a joint venture of the Charoen Pokphand Group and Tesco, but facing criticism over the growth of hypermarkets CP Group sold its Tesco Lotus shares in 2003. In late 2005 Tesco acquired the 21 remaining Safeway/BP stores after Morrisons dissolved the Safeway/BP partnership. In mid-2006 Tesco purchased an 80% stake in Casino's Leader Price supermarkets in Poland, which were then rebranded as small Tesco stores.
On 9 February 2006, Tesco announced plans to move into the United States by opening a chain of small format grocery stores in the Western states (Arizona, California and Nevada) in 2007 named Fresh & Easy.
In 2010, Tesco started funding a small film studio intended to produce Tesco exclusive direct-to-DVD films. The first film was released on 6 September called Paris Connections, based on a popular novel by Jackie Collins.
The lost years
Tesco confirmed in April 2013 that it was pulling out of the US market (Fresh & Easy Stores), at a reported cost of £1.2 billion. In September 2013, Tesco announced they would sell the business to Ronald Burkle's Yucaipa Companies for an undisclosed amount.
In September 2013, Tesco launched its first tablet computer, a seven-inch model called Hudl.
Tesco purchased the restaurant and cafe chain Giraffe in 2013 for £48.6 million. In 2014, it began to open restaurants within some of its stores. The company set up Tesco Family Dining Ltd in 2014 as part of a new department called 'new food experience', including Core Cafes, Giraffe, Decks and Euphorium bakeries. That year, Tesco reached an agreement to take the in-store cafes run by Compass Group and Elior back under its own control, so as to improve its dining offering.
On 1 September 2014, Dave Lewis (previously of Unilever) took over as CEO. In January 2015, Lewis announced plans to close the company's head office in Cheshunt and 43 loss-making stores in the near future, and the cancellation of 49 new large supermarket developments. The store closures were expected to mean 2,000 staff are made redundant while a further £250 million of cost-cutting measures are planned.
Tesco also confirmed the sale of its Blinkbox on-demand video service and its fixed-line and broadband business to TalkTalk. Tesco sold the Blinkbox Music streaming service to Guvera on 26 January 2015, and confirmed it would close its Blinkbox Books service by the end of February 2015.
In April 2016, Tesco confirmed the sale of 8.6% of its holding in Lazada Group, leaving it with an 8.3% stake. It was also reported to be seeking to sell Dobbies Garden Centres, Giraffe Restaurants and Harris + Hoole to concentrate on its main supermarket business.
On 27 January 2017, it was announced that Tesco had reached an agreement to merge with Britain's biggest wholesaler Booker Group to create the UK's largest food group, there are however concerns over market dominance with Tesco being Britain's largest food retailer and Booker being the UK's largest wholesaler.
It was announced in March 2017 that Trevor Masters, International Chief Executive, would be leaving in May after 38 years of service. Starting 1 April, Tony Hoggett will become Tesco's CEO for Asia and Matt Simister will become CEO for Central Europe.
In April 2017, the company confirmed it would sell its in-store opticians business to Vision Express.
In June 2017, Tesco announced a major cost-cutting initiative that would reduce the company's workforce by over 1200 workers. Key reductions include over a quarter of its employees in Welwyn Garden City and Hatfield, as well as closing the call centre in Cardiff. The company is hoping to reduce costs by £1.5 billion.
UK operations
As of 2017, Tesco's UK store portfolio was as follows:
Tesco Extra
Tesco Extra stores are larger, mainly out-of-town hypermarkets that stock nearly all of Tesco's product ranges, although some are in the heart of town centres and inner-city locations. The largest store in England by floor space is Tesco Extra in Walkden, with 17,230 square metres (185,500 sq ft) of floorspace.
In common with other towns, such as Warrington, the St Helens store, which at 13,000 m2 (140,000 sq ft) is one of the biggest in England, was developed on the same site as the town's new rugby league stadium.
Tesco Superstores
Tesco superstores are standard large supermarkets, stocking groceries and a much smaller range of non-food goods than Extra hypermarkets. The shops have always been branded as 'Tesco', but a new shop in Liverpool was the first to use the format brand 'Tesco Superstore' above the door.
Tesco operate a number of in-shop cafes, but also began to introduce new restaurants in its shops from 2013 under the "Decks Carvery" brand.
Tesco Express
Tesco Express shops are neighbourhood convenience shops averaging 200 square metres (2,200 sq ft), stocking mainly food with an emphasis on higher-margin products such as sweets, crisps, chocolate, biscuits, fizzy drinks and processed food (due to small shop size, and the necessity to maximize revenue per square foot) alongside everyday essentials. They are found in busy city centre districts, small shopping precincts in residential areas, small towns and villages and on Esso petrol station forecourts. In 2010, it emerged that Tesco was operating Express pricing; i.e., charging more in their Express branches than in their regular branches. A spokesperson said that this was "because of the difference in costs of running the smaller shops".
Tesco Metro
Tesco Metro shops are sized between Tesco superstores and Tesco Express shops, with shops averaging 1,000 square metres (11,000 sq ft). They are mainly located in city centres beside railway stations, the inner city and on the high streets of towns.
One Stop
One Stop, which includes some of the smallest shops (smaller than a Tesco Express), is the only Tesco shop format in the UK that does not include the word Tesco in its name. The brand, along with the original shops, formed part of the T&S Stores business but, unlike many that were converted to Tesco Express, these kept their old name. Subsequently, other shops bought by Tesco have been converted to the One Stop brand. Some have Tesco Personal Finance branded cash machines. The business has attracted some controversy, as grocery prices in these shops, often situated in more impoverished areas, can be higher than nearby Tesco branded shops, highlighted in The Times 22 March 2010: "Britain’s biggest supermarket uses its chain of 639 One Stop convenience shops â€" which many customers do not realise it owns â€" to charge up to 14 per cent more for goods than it does in Tesco-branded shops."
Tesco responded to the article stating "It is a separate business within the Tesco Group, with its own supply chain and distribution network. One Stop stores offer a different range to Express shops and its operating costs are different. One Stop’s price strategy is to match to its nearest competitor, Costcutter, and is frequently cheaper."
Tesco.com Only Stores
Since 2006 Tesco has operated a number of "stores" dedicated to the fulfilment of online grocery orders:
- Pick from store like operation:
- Croydon
- Pick from store like operation with mechanised delivery marshalling:
- Aylesford
- Greenford
- Combination of pick from store and zone picking operations with mechanised delivery marshalling:
- Enfield
- Crawley
- Combination of pick from store, zone picking and goods to person operations with mechanised delivery marshalling:
- Erith
Home shopping
In the United Kingdom Tesco operates a homeshopping service through the Tesco.com website. In May 1984, in Gateshead, England, Mrs. Jane Snowball used a piece of computer technology called "Videotex" on her television to purchase groceries from her local Tesco store in the world's first recorded online shopping transaction from the home. As of November 2006, Tesco was the only food retailer to make online shopping profitable.
Tesco Clubcard
Tesco launched its customer loyalty scheme, the Tesco Clubcard, in 1995. It has been cited as a pivotal development in Tesco's progress towards becoming the UK's largest supermarket chain and one that fundamentally changed the country's supermarket business. Tesco itself was cited in a Wall Street Journal article as using the intelligence from the Clubcard to thwart Wal-Mart's initiatives in the UK.
Cardholders can collect one Clubcard point for every £1 (or one point for €1 in Ireland and Slovakia or 1 point for 1zł in Poland) they spend in a Tesco store, or at Tesco.com, and 1 point per £2 on fuel (not in Slovakia). Customers can also collect points by paying with a Tesco Credit Card, or by using Tesco Mobile, Tesco Homephone, Tesco Broadband, selected Tesco Personal Finance products or through Clubcard partners, E.ON and Avis. Each point equates to 1p in store when redeemed or up to four times their value when used with clubcard deals (offers for holidays, day trips, etc.) Clubcard points (UK & IE) can also be converted to Avios, and Virgin Atlantic frequent flyer miles.
Petrol stations
Tesco first started selling petrol in 1974. Tesco sells 95, 97 and 99 RON (a fuel developed by Greenergy of which Tesco is a shareholder) petrol from forecourts at most Superstore and Extra locations. Tesco have recently diversified into biofuels, offering petrol-bioethanol and diesel-biodiesel blends instead of pure petrol and diesel at their petrol stations, and now offering Greenergy 100% biodiesel at many stores in the southeast of the United Kingdom. In 1998, Tesco and Esso (part of Exxonmobil) formed a business alliance that included several petrol filling stations on lease from Esso, with Tesco operating the attached stores under their Express format. In turn, Esso operates the forecourts and sells their fuel via the Tesco store. As of 2013, there were 200 joint Tesco Express/Esso sites in the UK.
Subsidiaries
Tesco Bank
In the United Kingdom Tesco offers financial services through Tesco Bank, formerly a 50:50 joint venture with The Royal Bank of Scotland. Products on offer include credit cards, loans, mortgages, savings accounts and several types of insurance, including car, home, life and travel. They are promoted by leaflets in Tesco's stores and through its website. The business made a profit of £130 million for the 52 weeks to 24 February 2007, of which Tesco's share was £66 million. This move towards the financial sector diversified the Tesco brand and provides opportunities for growth outside of the retailing sector. On 28 July 2008, Tesco announced that they would buy out the Royal Bank of Scotland's 50% stake in the company for £950 million.
Telecoms
Tesco operates a mobile phone business across the United Kingdom, Ireland, Slovakia, Hungary and the Czech Republic. It first launched in the UK in 2003 as a joint venture with O2 and operates as a mobile virtual network operator (MVNO) using the network of O2 with the exception of Hungary where the network of Vodafone Hungary is used. As a virtual operator, Tesco Mobile does not own or operate its own network infrastructure. By January 2011 Tesco announced it had over 2.5Â million UK mobile customers.
Tesco also operated a home telephone and broadband business. Its broadband service launched in August 2004 to complement its existing internet service provider business, providing an ADSL-based service delivered via BT phone lines. In January 2015, Tesco sold its home telephone and broadband business, together with Blinkbox, to TalkTalk for around £5 million. Its customers were transferred by 2016.
Tesco Tech Support
Tesco acquired a small I.T. support company called The PC Guys in 2007, and were able to launch Tesco Tech Support in December 2008.
Former operations
Tesco Home 'n' Wear
In the 1960s, Tesco set up a non-food division, Tesco Home 'n' Wear, headed by Leslie Porter. It had stand-alone stores and departments in larger stores, and from 1975 a distribution centre in Milton Keynes. Although Tesco continued to stock non-food items the stand-alone stores were closed and the name was no longer in use when Tesco Extra was launched.
Tesco Homeplus
In May 2005, Tesco announced a trial non-food only format near Manchester and Aberdeen, and the first store opened in October 2005. The stores offered all of Tesco's ranges except food in warehouse-style units in retail parks. Tesco introduced the format as only 20% of its customers had access to a Tesco Extra, and the company was restricted in how many of its superstores it could convert into Extras and how quickly it could do so. Large units for non-food retailing are much more readily available. The format was not Tesco's first non-food only venture in the UK. Until the late 1990s/early 2000s there were several non-food Tesco stores around the country including Scarborough and Yate. Although not in a warehouse style format, the stores were located on high streets and shopping centres, they stocked similar items to Homeplus stores. In both cases this was because another part of the shopping centre had a Tesco Superstore that stocked food items only. By 2014, the number of Homeplus stores in the United Kingdom had reached 12; the newest store opened in Chester in July 2009. In 2012 it was reported that Tesco was looking to close the business to focus on groceries. On 28 January 2015, Tesco confirmed it would close six Homeplus stores on 15 March 2015, and the remaining six stores closed on 27 June 2015.
Dobbies Garden Centres
Dobbies is a chain of garden centres across Scotland, England and Northern Ireland. Tesco completed its acquisition of Dobbies in 2008, and the company continued to trade under its own brand, from its own head office in Melville, near Edinburgh. On 17 June 2016, Tesco sold the company on to a group of investors led by Midlothian Capital Partners and Hattington Capital for £217 million.
Harris + Hoole
In 2012, Tesco invested in a new coffee shop chain, named Harris + Hoole after coffee-loving characters in Samuel Pepys' diary. Tesco took full ownership of the business from its founders Nick, Andrew and Laura Tolley in February 2016, and agreed in June 2016 to sell it to Caffè Nero.
Giraffe
Giraffe is a restaurant chain in the United Kingdom which Tesco purchased in March 2013 as part of a strategy of making use of excess space in its stores. Tesco sold the chain to Boparan Holdings in June 2016.
Euphorium Bakery
Euphorium Bakery opened a concession in Tesco's Kensington store in 2012, and in 2013 Tesco bought a stake in the business. It purchased the remaining stake in April 2015. In August 2016, Tesco sold Euphorium's high street stores and factory in Islington to Soho Coffee, and its factory in Weybridge to Samworth Brothers.
International operations
Tesco has expanded its operations outside the UK to 11 other countries in the world. The company pulled out of the USA in 2013, but continues to see growth elsewhere. Tesco's international expansion strategy has responded to the need to be sensitive to local expectations in other countries by entering into joint ventures with local partners, such Charoen Pokphand in Thailand to form Tesco Lotus, and by appointing a very high proportion of local personnel to management positions. It also makes small acquisitions as part of its strategy: for example, in its 2005/2006 financial year it made acquisitions in South Korea, one in Dubai, UAE; one in Poland and one in Japan. On 7 September 2015, Tesco sold its South Korean business, Homeplus, to MBK Partners and partnered with a Canadian pension fund and Temasek Holdings for the deal.
Ireland
Tesco Ireland was formed by the Tesco PLC 1997 takeover of the Irish retailing operations of Associated British Foods, namely Powers' Supermarkets Limited and its subsidiaries, trading as "Quinnsworth" and "Crazy Prices".
Corporate affairs
Corporate strategy
According to Citigroup retail analyst David McCarthy, "[Tesco has] pulled off a trick that I'm not aware of any other retailer achieving. That is to appeal to all segments of the market". One plank of this strategy has been Tesco's use of its own-brand products, including the upmarket "Finest", mid-range Tesco brand and low-price "Value" encompassing several product categories such as food, beverage, home, clothing, Tesco Mobile and financial services.
Beginning in 1997 when Terry Leahy took over as CEO, Tesco began marketing itself using the phrase "The Tesco Way" to describe the company's core purposes, values, principles, and goals This phrase became the standard marketing speak for Tesco as it expanded domestically and internationally under Leahy's leadership, implying a shift by the company to focus on people, both customers and employees.
A core part of the Tesco expansion strategy has been its innovative use of technology. It was one of the first to build self-service tills and use cameras to reduce queues, and an early adopter of NFC Contactless Payment card technology. In 2016, Tesco developed a mobile payment wallet, PayQwiq using both NFC Contactless and barcode technology to allow payment using mobile phones in store (along with supporting other contactless mobile wallets such as ApplePay).
Financial performance
All figures below are for the Tesco's financial years, which run for 52- or 53-week periods to late February. Up to 27 February 2007 period end the numbers include non-UK and Ireland results for the year ended on 31 December 2006 in the accounting year. The figures in the table below include 52 weeks/12 months of turnover for both sides of the business as this provides the best comparative.
Despite being in a recession, Tesco made record profits for a British retailer in the year to February 2010, during which its underlying pre-tax profits increased by 10.1% to £3.4 billion. Tesco now plans to create 16,000 new jobs, of which 9,000 will be in the UK. In 2011 the retailer reported its poorest six-monthly UK sales figures for 20 years, as a result of consumers' reduced non-food spending and a growth in budget rivals.
By 2014, Tesco appeared to have lost some of its appeal to customers. The share price lost 49 per cent of its value up to October as it struggled to fend off competition from rivals Aldi and Lidl. In October 2014, Tesco suspended 8 executives following its announcement the previous month that it had previously overstated its profits by £250 million. The misreporting resulted in almost £2.2 billion being wiped off the value of the company’s stock market value. The suspended executives included former commercial director Kevin Grace and UK managing director Chris Bush. The profit overstatement was subsequently revised upwards to £263 million following an investigation by the accountancy firm Deloitte and it was clarified that the inflated profit figure was the result of Tesco bringing forward rebates from suppliers. The Serious Fraud Office (SFO) confirmed on 29 October 2014 that it was carrying out a criminal investigation into the accounting irregularities but declined to give further details.
According to Kantar Worldpanel, Tesco's share of the UK grocery market in the 12 weeks to 18 March 2012 was 30.2%, down from 30.6% in the 12 weeks to 18 March 2011.
In terms of the wider UK retail market, Tesco sales account for around one pound in every ten spent in British shops. In 2007 it was reported that its share was even larger, with one pound in every seven spent going to Tesco. In 2006, Inverness was branded as "Tescotown", because well over 50p in every £1 spent on food is believed to be spent in its three Tesco stores. By 2014 competition from other retailers led to a fall in Tesco's market share to 28.7%; this was the lowest level in a decade.
Tesco has made a commitment to corporate social responsibility in the form of contributions of 1.87% in 2006 of its pre-tax profits to charities/local community organizations. This compares favourably with Marks & Spencer's 1.51% is lower than that of Sainsbury's 7.02%. This figure, £42 million, is lower than the amount of money reported to have avoided in Tax during 2007 (see below). Will Hutton, in his role as chief executive of The Work Foundation recently praised Tesco for leading the debate on corporate responsibility. However Intelligent Giving has criticized the company for directing all "staff giving" support to the company's Charity of the Year.
In 1992, Tesco started a "computers for schools scheme", offering computers in return for schools and hospitals getting vouchers from people who shopped at Tesco. Until 2004, £92 million of equipment went to these organizations. The scheme has been also implemented in Poland.
In 2009, Tesco used the phrase, "Change for Good" as advertising, which is trade marked by Unicef for charity usage but not for commercial or retail use, which prompted the agency to say, "It is the first time in Unicef’s history that a commercial entity has purposely set out to capitalise on one of our campaigns and subsequently damage an income stream which several of our programmes for children are dependent on." They went on to call on the public "...who have children’s welfare at heart, to consider carefully who they support when making consumer choices."
Tesco's own labels for personal care and household products are cruelty-free â€" this means they are not tested on animals.
In June 2011, Tesco announced that it was working with 2degrees Network to create an online hub as part of its target to reduce its supply chain carbon footprint by 30% by 2020.
In September 2011 a Greenpeace report revealed that Tesco supermarkets in China were selling vegetables that contained illegal pesticides or at levels exceeding the legal limit. A green vegetable sample from Tesco turned up methamidophos and monocrotophos, the use of which has been prohibited in China since the beginning of 2007.
Advertising
A notable 1980s advert was "Checkout 82," which was made in 1982, where a till would have a receipt coming out of it with the prices on. This advert had synthpop music as the backing and people singing "Check it out, check it out".
Adverts in the early '90s had a man called David, portrayed by Dudley Moore, on the hunt for free-range chickens from France and discovering many goods from around the world to purchase for Tesco. Late 2000s adverts have included many celebrities and celebrity voice-overs such as The Spice Girls and the voice of actors James Nesbitt and Jane Horrocks.
Tesco's main advertising slogan is "Every little helps". Its advertisements in print and on television mainly consist of product shots (or an appropriate image, such as a car when advertising petrol) against a white background, with a price or appropriate text (e.g., "Tesco Value") superimposed on a red circle.
Tesco's in-store magazine is one of the largest-circulation magazines in the United Kingdom, with a circulation of 1.9 million as of 2013.
In November 2013, Tesco announced they would introduce face-scanning technology developed by Amscreen at all of their 450 UK petrol stations to target advertisements to individual customers.
Criticism
Criticism of Tesco includes allegations of stifling competition due to its undeveloped "land bank", and breaching planning laws.
Litigation
The Tesco supermarket chain is involved in litigation such as the Ward v Tesco Stores Ltd and Tesco Supermarkets Ltd v Nattrass cases. Tesco have been criticized for aggressively pursuing critics of the company in Thailand. Writer and former MP Jit Siratranont faced up to two years in jail and a £16.4 million libel damages claim for saying that Tesco was expanding aggressively at the expense of small local retailers. Tesco served him with writs for criminal defamation and civil libel. The Thai court dismissed the case, ruling that the criticism made by the defendant was 'in good faith by way of fair comment on any person or thing subjected to public criticism'.
In November 2007, Tesco sued a Thai academic and a former minister for civil libel and criminal defamation, insisting that the two pay £1.6 million and £16.4 million plus two years' imprisonment respectively. They have been alleged to have misstated that Tesco's Thai market amounts to 37% of its global revenues, amongst criticism of Tesco's propensity to put small retailers out of business.
In August 2013, Tesco was fined £300,000 after admitting that it misled customers over the pricing of "half price" strawberries.
Price-fixing
In 2007, Tesco was placed under investigation by the UK Office of Fair Trading (OFT) for acting as part of a cartel of five supermarkets (Safeway, Tesco, Asda, Morrisons and Sainsburys) and a number of dairy companies to fix the price of milk, butter and cheese. In December 2007, Asda, Sainsburys and the former Safeway admitted that they acted covertly against the interests of consumers while publicly claiming that they were supporting 5,000 farmers recovering from the foot-and-mouth crisis. They were fined a total of £116 million.
Corporate tax structure
In May 2007, it was revealed that Tesco had moved the head office of its online operations to Switzerland. This allows it to sell CDs, DVDs and electronic games through its web site without charging VAT. The operation had previously been run from Jersey, but had been closed by authorities who feared damage to the island's reputation. In June 2008, the government announced that it was closing a tax loophole being used by Tesco. The scheme, identified by British magazine Private Eye, utilizes offshore holding companies in Luxembourg and partnership agreements to reduce corporation tax liability by up to £50 million a year. Another scheme previously identified by Private Eye involved depositing £1 billion in a Swiss partnership, and then loaning out that money to overseas Tesco stores, so that profit can be transferred indirectly through interest payments. This scheme is still in operation and is estimated to be costing the UK exchequer up to £20 million a year in corporation tax. Tax expert Richard Murphy has provided an analysis of this avoidance structure.
Tax avoidance has not always related to corporation tax. A number of companies including Tesco used a scheme to avoid VAT by forcing customers paying by card to unknowingly pay a 2.5% 'card transaction fee', though the total charged to the customer remained the same. Such schemes came to light after HMRC litigated against Debenhams over the scheme during 2005.
Opposition to expansion
Tesco's expansion has not been without criticism and, in some cases, active opposition.
- In March 2007, residents in Bournville, Birmingham fought to maintain the historic alcohol-free status of the area, in winning a court battle with Tesco, to prevent it selling alcohol at their local outlet. No shops are permitted to sell alcohol in the area and there are no pubs, bars or fast-food outlets in Bournville due to its Quaker roots.
- Plans for a large Tesco store in St Albans, Hertfordshire, attracted widespread local opposition. This led to the formation of the "Stop St Albans Tesco Group". In June 2008, St Albans Council refused planning permission for the proposed new store.
- In April 2011, longstanding opposition to a Tesco Express store in Cheltenham Road, Stokes Croft, Bristol, evolved into a violent clash between opponents and police. The recently opened storefront was heavily damaged, and police reported the seizure of petrol bombs. Opponents have suggested that the store would damage small shops and harm the character of the area.
Halal in UK stores
As of August 2012, around 27 UK Tesco superstores have halal meat counters. The meat sold is advertised as "stun-free", which puts the meat sold in contradiction of RSPCA standards on animal welfare. The sale of such meat would be illegal in the UK were it not for an exemption in the law granted to Jews and Muslims.
Horse meat found in burgers
In January 2013, the British media reported that horse meat had been found in some meat products sold by Tesco, along with other retailers, particularly burgers. David Cameron called this "unacceptable", with products showing 29.1% horse meat in the "Value" range burger, which were supposed to be beef. It was later revealed in February 2013 that some of Tesco's Everyday Value Spaghetti Bolognese contained 60% horse meat. Tesco withdrew 26 of its products in response, and announced that they were working with authorities and the supplier to investigate the cause of the contamination.
Discrimination against the blind
In July 2013 Tesco security staff violated the UK Equality Act 2010 when they refused to allow a blind lady's guide dog from entering the Feltham store. Tesco staff refused to apologise for the violation of the law for 5 days. It was also revealed that security staff had thrice previously ordered a different blind person and his guide dog to leave the store. Following further incident in 2013 when the manager of Tesco in Sutton ordered a blind person and her guide dog to leave the store, Tesco stated that their staff had received training to ensure that such an incident would not happen again. However, a year later in 2014 three Tesco cashiers banned a blind person and her dog from their store.
Slavery in Thailand
In 2014, The Guardian reported that Tesco is a client of Charoen Pokphand Foods. Over 6 months The Guardian traced the whole chain from slave ships in Asian waters to leading producers and retailers.
Sale of goods from Israel
Tesco has been targeted by protesters complaining the supermarket chain sells goods made in Israel, with most complaints being about products emanating from Israeli settlements in the West Bank. Protests generally occur when Israeli military operations are being carried out in the Gaza Strip or the West Bank. A protest at a store in Birmingham on 16 August 2014 resulted in a protester being arrested.
Mothballing of new stores
Tesco's financial crisis of 2014 led to their reducing their capital expenditure on new stores, which led to the boarding up of new unopened stores in Chatteris, Cambridgeshire and Immingham, Lincolnshire. The controversial Chatteris mothballing caused local criticism after the £22 million project had re-routed a river and built a controversial roundabout and underpass, whereas the much anticipated Immingham development demolished a local shopping centre and closed several local stores to enable its construction. The impending arrival of Tesco also contributed to the Co-operative to close their store in the town. Tesco's announcing the indefinite delay in their store opening left the town of around 15,000 inhabitants without a supermarket; this despite the fact that Tesco went ahead with the opening of stores in Little Lever, Dunfermline and Rotherham.
Security
On 17 July 2015 Tesco disabled their online photo site as part of a precautionary security measure. This coincided with several other retailers, including CVS and Walmart Canada, had shut down similar services regarding a security breach at PNI Digital Media.
Suppliers
The UK Groceries Code Adjudicator found in a 2015-16 investigation into Tesco that some suppliers paid "large sums of money in exchange for category captaincy or participation in a price review". She found some evidence of benefits which suppliers derive from these arrangements, but also recorded a concern - to be investigated further - as to whether the purpose of the Groceries Code was being circumvented by these payments.
Chairman of Tesco
Chairmen of Tesco have been:
- Sir Jack Cohen, 1947 to 1970
- Hyman Kreitman, 1970 to 1973
- Sir Leslie Porter, 1973 to 1985
- Lord MacLaurin, 1985 to 1997
- John Gardiner, 1997 to 2004
- Sir David Reid, 2004 to 2011
- Richard Broadbent, 2011 to 2015
- John Allan, March 2015 to present
See also
- List of supermarket chains in the United Kingdom
- Tesco Town
- Tesco Everyday Value
- Tesco Venture Brands
- Walmart
- Asda
- Sainsbury's
- Morrisons
- Lidl
- Aldi
References
Further reading
- MacLaurin, Sir Ian (1999). Tiger by the Tail: A Life in Business from Tesco to Test Cricket. London: Pan Books. ISBNÂ 0-330-37371-4.Â
- Simms, Andrew (2007). Tescopoly: How one shop came out on top and why it matters. London: Constable. ISBNÂ 1-84529-511-0.Â
- Humby, Clive; Hunt, Terry; Phillips, Tim (2006). Scoring points: How Tesco continues to win customer loyalty. London & Philadelphia: Kogan Page. ISBNÂ 978-0-7494-4752-6.Â
- Nash, Bethany (2006). Fair-Trade and the growth of ethical consumerism within the mainstream: an investigation into the Tesco consumer. Leeds: University of Leeds. OCLCÂ 75272130.Â
- Leahy, Terry (2012). Management in 10 Words. London: Random House. ISBNÂ 1847940897.Â
External links
- Official website
- Corporate website
