Tesco: Delivering the goods (A)

The two parts of this case (A & B) explore how Tesco became a high performance organization. Case A focuses on how, between 1992 and 2005, Tesco transformed itself from an unremarkable domestic chain into a leading international retail group. Domestically, Tesco’s market share grew almost as big as its next two nearest competitors put together. It used its strong home base to expand globally and ended up with more retail space overseas than in the UK. It did not grow big by acquiring competitors – though it took over some smaller businesses that enabled it to extend its range of formats to include convenience stores. Rather, it thrived by spotting social trends and reacting swiftly to them. Its loyalty card scheme (Clubcard) represented a success story in itself, providing Tesco with unrivalled understanding of its customers’ shopping habits. Yet the Clubcard was merely one component of a wider philosophy of listening to customers and ensuring that procurement was consumer-led. Case A looks at how Tesco developed these capabilities and how it worked to increase its lead by ensuring that its goods remained desirable, affordable and available. In the process, its brand became one of the most trusted in Britain. Combined with best-in-class understanding of its customers, this enabled Tesco to move into areas, including financial services, which others thought they owned. By 2005, it seemed that nothing could stop the Tesco juggernaut. So what were the drivers of this continuous innovation and expansion into new areas? And what, if anything, could threaten Tesco’s run of success?