Tesco.com - A Rare Profitable Dotcom
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : ITSY025
Case Length : 14 Pages
Period : 1990-2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Tesco plc
Retail ing
Countries : UK
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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
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Tesco's roots can be traced back to 1919, to a grocery
selling business set up in London by an ex-army person Jack Cohen (Cohen). In
1924, Cohen named his business Tesco, based on the first three letters of a tea
shipment he had procured (T E Stockwell) and the first two letters of his
surname. In 1929, he opened the first Tesco store and within a year, he
established many more outlets under the Tesco label. Over the next few years,
the business expanded gradually to various parts of the UK. In the late 1940s,
Cohen introduced the self-service mode (customers picking up the merchandise
themselves) in Tesco stores. Growth for Tesco came largely through the
acquisitions route as Cohen purchased many small shopping store chains all over
the UK. |
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In the early 1960s, the company began selling clothing, household goods and
fresh food, in addition to groceries. By now, Tesco had become a household
name in the UK because of its competitive prices. However, due to the Retail
Price Maintenance (RPM) system prevalent in the country at the time (which
prohibited large retailers from selling below a price agreed upon by the
suppliers), companies like Tesco were not able to compete with the small
retailing outfits on the pricing front. To overcome this problem, Tesco came
up with the idea of 'trading stamps.' These stamps were given to customers
in return for making purchases at its stores. After the customers collected
a specified number of stamps, they could exchange them in return for cash or
gifts. This scheme became very popular and Tesco's popularity and sales
soared substantially...
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Launching Tesco.com
During the 1990s, Internet based businesses were
sprouting all over the world. The dotcom fever being at its peak at the
time, the online groceries business was also expected to become
successful. This business took shape in the US, with the establishment
of high-profile companies such as Webvan and Streamline.com. Partly
inspired by its decades-old expertise in the grocery selling business,
and partly by the hectic activity in the online grocery business in the
US, Tesco too decided to tap the Internet for business. And, in 1996, it
established a small task-force of six middle-level managers to put in
place a basic online selling framework... |
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