Market cap

* For banks, enterprise value is substituted with market cap. Source: Bloomberg Finance L.P.

Performance of the brand

Tesco is a UK-based grocery and general merchandising retail chain. It is the largest British retailer by both global sales and domestic market share, with profits exceeding £3 billion. With operations in 14 countries, employing over 492,000 people and serving millions of customers every week, Tesco is the third largest global retailer based on revenue after Walmart and Carrefour. In 2010, Tesco was ranked fifth in the Baber Smith’s Insight Survey of Britain’s most trusted retailers.

Tesco weathered the storm of the financial crisis by posting record profits of £3 billion in April 2009, which is the biggest profit ever reported by a British retailer. Over the last few years Tesco has diversified from just being a food retailer and now has financial, clothing, telecommunications, internet, insurance and electronics operations. In October 2009 it launched an online clothing store to try to compete more effectively with the likes of Primark, John Lewis and Marks & Spencer to become the number one clothing retailer in the UK. Tesco also agreed a deal in November 2009 that allowed it to sell the iPhone, a move that will help grow its fledgling mobile phone business. In 2000, Tesco launched its online grocery business which is now the largest and most profitable business of its kind in the world.

Tesco’s revenues have increased from £56,910 million in 2010 to £60,931 million in 2011 representing an increase of 7.1%. The operating profit of Tesco was £3,811 million in 2011, an increase of 10.2% over 2010. 67% of all revenues were created in UK, followed by Asia with 17% and Europe with 15%.

Supported by its 7.1% revenue increase, Tesco’s brand value grew by 2.4% to $21,640 million and Tesco received the AAA brand rating for the first time, despite its enterprise value falling from $69,868 million to $63,038 million in 2011.

Positive Aspects

A leader in green retailing

Tesco’s 2050 target to be a zero-carbon business will be achieved through improved efficiency and by generating its energy from renewable sources. In 2010, Tesco has reduced emissions from its baseline portfolio of buildings by 7.7%. The retailer has also pledged to help customers cut their carbon footprints by 50% by 2020. Tesco plc has worked with the Carbon Trust and other stakeholders to develop a universal carbon footprint label which describes the emissions associated with each product. Since January 2008, Tesco has carbon labelled more than 500 everyday products in the UK and has also started to label products in South Korea, helping customers to make greener choices.

Focus on community engagement 

Tesco has exceeded its target of donating at least 1% of pre-tax profits to charities and good causes in 2010. In total, it donated over £64 million that year. Further, Tesco raised £7.2 million for its UK Charity of the Year, CLIC Sargent (Cancer and Leukaemia in Childhood) through a range of product promotions in Tesco stores throughout the year which donated a proportion of sales value to the charity. In addition, the retailer continues to roll out its ‘Community Champions’ across the Group. Community Champions are Tesco employees who spend a proportion of their week coordinating activities in their local communities. In 2010, Tesco counted over 650 Community Champions across the Group.

Tesco’s Clubcard as an effective Customer Relationship Management tool

With the introduction of the Tesco Clubcard in 1997, consumers are not only rewarded for their loyalty but it also provides insights from millions of customer transactions. From this, Tesco can develop tailored ranges, promotions and marketing by country or region, right down to the individual customer via their Clubcard mailing. The knowledge and expertise of operating Clubcard was developed in the UK but has now been rolled out to a further 11 countries across the Group, with more members in Asia and Europe than at home in the UK.

 

Negative Aspects

Promoting alcohol consumption through low priced alcoholic beverages

In 2009, Tesco came under increased pressure after 'Our Life', a community engagement group, published a survey outlining that many supermarkets across the UK sell alcoholic beverages such as beer, wine and spirits too cheap and are therefore responsible for increased alcohol consumption. The cheapest offer available within the survey was Tesco's own brand imported lager which was available for 16p per unit. In addition to the low-priced alcoholic beverages, Tesco also offered various promotions involving alcoholic drinks. 

Tesco embroiled in a Turkish corruption scandal   

In 2008, Tesco has been embroiled in a corruption scandal in Turkey amid allegations that its local developer bribed officials in order to receive planning permission for its new Istanbul outlet. The supermarket paid the company’s local developer Mehmet Karasu US$13 million for the site and he was accused of then offering US$1 million to a member of Turkey’s AKP party in order to have permission for the development agreed within less than a year. Although Tesco itself is not suspected of any wrongdoing, it has had to deal with considerable negative publicity, highlighting the potential pitfalls for foreign companies conducting business in Turkey, which still has a long way to go in.

 

 

Last changed September 1, 2011

League tables

Tesco appears in the following brand league tables:

Rank 4 in the Best Retail Brands 2012.
Rank 24 in the Global 500 2012.
Rank 2 in the Best Retail Brands 2011.
Rank 3 in the UK Top 50 2011.
Rank 19 in the Global 500 2011.
Rank 19 in the Global 500 2011.
Rank 17 in the Global 500 2010.
Rank 3 in the UK Top 50 2010.
Rank 20 in the Global 500 2009.
Rank 26 in the Global 500 2008.
Rank 32 in the Global 250 2007.