The Tesco store Essay Example

The Tesco store Essay Example The Tesco store Essay The Tesco store Essay As we have chosen to report on Tesco Plc as our main company to research and advise after comparison with competition. We will compare Tesco with one of its closest market rivals; Sainsburys, to provide a analysis of what they are doing better and can learn from in order to compete as well as learn from the others mistakes, and also to consider the direction the company is heading as well as highlight the characteristics Tesco has as a company which makes it the UKs number one retailer. Tesco is a very large company in a very competitive sector. The aim of this report is to advise a shareholder on the performance of the chosen company; Tesco Plc, in order to inform them of the health of the company and advise what action they should take in relation to the companys shares. Many issues will be considered that are internal issues of the company such as its own activities as well as external issues such as competition (Sainsburys) in the market as this will obviously affect share value. We will provide in our report a portfolio of various relevant financial ratios that will help us to analyse the profit and loss accounts, and balance sheets of both companies to understand better which companies shares would be a better investment. We will use the current annual reports of both companies to make comparisons of the performance of both companies, given that the latest annual reports are already out of date by the time they are printed we will also look at other up to date sources of information on the performance of both companies such as news reports, press releases and expert analysis already in existence in order to explain our view of the present position of the company and future trading environment it will operate in. In this report we are aiming to explain why there is such a major difference between these two companies even though they operate in the same industry; using this information in the report we will present our findings and recommendations. We will also include in the appendices of the report additional information such as minutes of our team meetings and financial data. We will also provide with the report the latest annual reports of both companies as they will help the reader to further understand our findings that we base our advise upon. Tesco was founded in 1924 by Sir Jack Cohen. Using his gratuity from his Army service in the Great War he started selling groceries in the markets of Londons East End markets in 1919. The brand name of Tesco made its first appearance on tea packets in the 1920s. The name was based on the initials of T. E. Stockwell who was a partner in the firm of tea suppliers, and the first two letters of Cohen. They opened the first Tesco store in 1929 in Burnt Oak, Edgware. Tesco Stores (Holdings) Ltd was floated on the Stock Exchange in 1947, with a share price of 25p. The price at the beginning of February 2002 was around 2. 42p. modify! By the early 1960s, Tesco had become a household name. Along with groceries they also sold fresh food, household goods and clothing in their stores. Tesco stores were located in the high streets of towns and cities up and down the country. In 1961 Tesco opened the largest store in Europe at the time at 16,500 square feet of shop floor. Given the size of Tesco during the 1960s they should have been able to use their economies of scale such as bulk buying power to reduce costs in order to be able to sell goods at lower prices in order to be more competitive than their competition (especially independent stores) as they do now, but they were restricted up until 1964 when laws that allowed suppliers to insist stores sell their goods at a price set by them (Resale price maintenance) were removed. These laws made it difficult for Tesco to reduce price as the whole purpose of these laws were to protect small stores from being heavily undercut by large chains such as Tesco. A earlier version of the current reward card systems in place at all major chains of supermarkets were trading stamps introduced by Tesco to build a reward system for customers in order to build customer loyalty and entice customers through the ability to make savings. Customers received stamps when they made purchases. Once they had collected enough stamps to complete a book, they had the choice to exchange the book for cash or other gifts. The reward system was later taken up by other companies and still exists now in a more sophisticated form. As well as expanding its chain by opening new stores; Tesco also bought existing chains of stores. In 1960 it bought out a chain of 212 stores in the north of England, then another 144 stores in 1964 and 1965. In 1968 it took over the Victor Value chain of stores. Tesco was first to introduce the concept of a superstore in 1967 by opening a 90,000 square feet store in Westbury, Wiltshire. In retailing the superstore was a new concept; a very large unit on the outskirts of a town, which is designed to provide easy access to customers coming by car or public transport. The term superstore was first used in relation to the Tesco store opened in Crawley, West Sussex, in 1968. Tesco has grown at great speed in size, value and profit since its formation. In 1979, its annual turnover reached i 1. It went on to in 1987 to announce a i 500 million program to build another 29 stores. By 1991, the popularity of Tesco petrol stations at its superstores had made Tesco Britains largest independent petrol retailer. In September of 2002 Tesco launched its own exclusive clothing brand Cherokee in many of its UK stores. The Cherokee brand, along with Florence Fred and Tesco own brand clothing went on to see sales increase by 6 times the market rate. The stores have a diverse range of goods beyond just food and household goods such as clothing, electronics, financial services and petrol to name a few. It has tried to target important niche markets such as organic food that are growing in size.