The Rise and Fall of Tesco in the United States

Open Access
- Author:
- Veiszlemlein, Erika
- Area of Honors:
- Supply Chain and Information Systems
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Dr. Robert Alexander Novack, Thesis Supervisor
Dr. John C. Spychalski, Thesis Honors Advisor - Keywords:
- Tesco
grocery
Fresh & Easy
England - Abstract:
- Tesco—an uncommon name in North America, yet one of the largest retailers of our time. With nearly 7000 stores worldwide and 460,000 employees, it is no surprise that Tesco currently holds the title of ninth largest retailer in the world. Founded in 1919 by Jack Cohen, a former member of the Royal Flying Force, Tesco began as nothing more than a small grocery stall run by a twenty-one year old boy. After thirteen years of expansion, Tesco became a private limited company in 1932, followed by the construction of its first headquarters and warehouse, the most modern of its kind in England. The next major milestone materialized following the Second World War, when it became a publically traded company in 1947. By the time Cohen died in 1979, the company’s total sales had reached £1 billion and were to double in the following three years. In 1995 it claimed the title of the UK’s top grocer, a title it continues to hold today. When the company began to experience rapid growth in the 1990’s, more strategic business plans became vital. As the turn of the millennium approached, Tesco introduced several initiatives that would change the company forever, including: 1) clearly defining the company’s mission and values, 2) becoming totally customer-oriented, 3) providing better customer value through a more lean supply chain, 4) to be as strong in non-food products as in food, 5) to develop a profitable retail service business (which would soon manifest into Tesco Bank), and finally, the topic of discussion for this thesis, 6) to be as strong internationally as domestically. To fulfill this goal of international expansion, Tesco attempted to enter a sought-after market much different from its European roots—the United States. In 2007, under the brand name “Fresh & Easy,” Tesco entered the American Market. Establishing locations in California, Arizonia, and Nevada, the chain aimed to sell fresh, readily prepared food and produce. 200 locations were established and kept their doors open for 6 years, until operations ceased in 2013 due to insufficient profits. 150 of the stores were sold off to Yucaipa Companies which kept the stores afloat until the end of 2015. The remaining fifty were closed completely, resulting in the loss of tens of millions of dollars for Tesco. Why did the expansion fail, and, if Tesco were to try again, how should they do it? The following pages will address these two critical questions.