Reach into your pocket and you will probably find evidence of Tesco. Whether it is a Clubcard, mobile phone or just a receipt from one of its 3,000 stores, the UK’s biggest retailer is engrained in everyday British life.
As its chief executive, Ken Murphy, proudly proclaimed this month, the supermarket chain has grabbed even more of our spending this year, landing almost a third of all grocery sales and receiving more than £1 in every £10 spent in UK retail. Data released this week showed Tesco’s sales growth outgunning its traditional rivals.
The retailer’s resurgence represents a remarkable turnaround for a business whose relentless growth across Britain through the 1990s and early 2000s was abruptly curtailed as management became too focused on overseas expansion and profits over service.
A devastating accounting scandal in 2014 appeared to close the chapter on a corporate success story that had regulators and politicians concerned about its all-encompassing dominance. Now, Tesco seemingly has its mojo back and is quietly reasserting its stranglehold on the UK market – this time in a far less visible manner.
‘Every little helps’
The term “Tescopoly” was first coined in the noughties, when concerns about the retailer – and it supermarket peers – putting local high street shops out of business were at their height.
Regulators allowed Tesco, then led by Sir Terry Leahy, to buy up the 860-store convenience chain T&S Stores in 2002, and it later marched into selling electrical goods, homewares and clothing in its out of town Homeplus stores from 2005. Tesco had already set up a banking venture with Royal Bank of Scotland in 1997 and its mobile phone service with O2 in 2003.
Huge superstores were built on the edge of towns around the country and there were concerns about it hoarding land to block rivals from setting up shop nearby and using its dominant scale to bully suppliers.
“Nowhere is it written on the sliding supermarket doors that by crossing the threshold your vibrant, distinctive local economy will begin to wither,” wrote Andrew Simms, the author of 2007’s Tescopoly: How One Shop Came Out on Top and Why it Matters.
By the time Tesco tried to take on Amazon and Apple with the Hudl tablet computer in 2013, it seemed there was no area of life where the supermarket did not reach. Cafes and restaurant chains, such as Harris + Hoole and Giraffe, had been acquired to help fill the giant stores, which had become unloved.
Today, Hudl, Homeplus and even Giraffe may be just a memory of a hubristic time when Tesco had operations across the world from the US to South Korea, while regulators have since acted to prevent the holding of land to block rivals. However, with its globetrotting ventures much reduced, those close to the business say remaining the grocery kingpin in the UK and selling a wider variety of products to shoppers has become even more important.
Kings of convenience
At its peak in 2007, Tesco’s market share neared 32%, driven by huge scale and punchy marketing. Today that figure stands at 28.3%, up from as low as 26.5% in 2020. Although the figure remains some way off its high, Tesco’s new UK boss Ashwin Prasad reportedly told suppliers the retailer wants to top 30% again. Its nearest competitor, Sainsbury’s, trails well behind, on 15.3%.
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