Tesco in Turkey

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Case Details:

Case Code : BSTR407
Case Length : 15 Pages
Period : 2002-2011
Pub Date : 2012
Teaching Note :Not Available
Organization : Tesco Plc.
Industry : Retail
Countries : UK, Turkey

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

Tesco was founded in 1919 by Jack Cohen (Cohen), who invested his serviceman's gratuity of 30 in a grocery stall. The first private label product introduced by Cohen was Tesco Tea. The name Tesco was a combination of the initials of the tea supplier TE Stockwell, and the first two letters of Cohen's name.8 Tesco opened its first store in 1929 in Edgware, London, and incorporated it in 1932. By 1939, it had around 100 stores across the United Kingdom.9 In 1947, Tesco Stores (Holdings) Limited was floated on the Stock Exchange with a share price of 25 pence and the first supermarket10 was opened in 1956 in Maldon, Essex.

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The first Tesco superstore11, with an area of 90,000 square feet, was opened in 1967. The company's driving force was the idea: 'Pile it high and sell it cheap.' Though this strategy helped to attract a large number of customers, it also served to brand it as a store for middle class customers and to give it a low-end image. By the 1970s, shoppers no longer found Tesco's 'Pile it high, sell it cheap' strategy appealing. People were getting richer and were looking for more expensive and luxury items. Tesco's fortunes took a turn for the worse and the expression "doing a Tesco," came to be considered as equivalent to failure.

To arrest the downslide in its fortunes, Tesco's management went in for an overhaul of its stores. Several stores were closed down to concentrate on the superstores. The smaller stores that still remained were refurbished to make them more customer-friendly. Tesco diversified into operating petrol pumps in 1974. By 1979, the company's turnover had reached 1 billion.

In 1985, Ian MacLaurin (Laurin) became the first CEO of Tesco from outside the Cohen family. Laurin realized the need for streamlining Tesco's operations. He closed down most of the smaller stores and was instrumental in starting several large - above 30,000 square foot stores - in the suburbs. Tesco also introduced a centralized distribution system, fresh foods, and its own label for food products. All these moves proved successful...

Excerpts - Next Page>>

8] Jenny Stocks, "Tesco by Numbers,"www.dailymail.co.uk, October 12, 2010.
9] "Factbox-Key facts About Tesco," www.reuters.com, May 14, 2008.
10] A supermarket is a store that sells a wide variety of food. Most supermarkets also sell a variety of other household products that are consumed regularly, such as household cleaning products, medicines, and clothes. Some sell a much wider range of non-food products.
11] A superstore is a superlative name for a large department store. Usually associated with large chains, a superstore sells a wide range of products from toys and electronics to clothing and groceries and even furniture, sporting goods, and automotive supplies.

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