Tesco's triumphs under Sir Terry

By Rebecca Marston
Business reporter, BBC News

image captionBlue-sky thinking: Tesco has led the supermarket way with a huge range of retail innovations

Sir Terry Leahy has overseen 13 years of dynamic expansion and development that has taken Tesco from living in Sainsbury's shadow to the UK's number one retailer - not to mention third in the world after Wal-Mart and France's Carrefour.

But Tesco was already jumping ahead of its rivals throughout the 1990s with a swathe of innovations that look commonplace now, but were bold breakthroughs at the time.

Local stores

One of the first revolutionary moves the big-name supermarket made was into small-scale convenience stores.

Tesco Metro burst onto the scene in Covent Garden in 1992, and in a pattern that was to become familiar, this was copied by rivals once it became clear it was a trend that could not be ignored.

Now, Sainsbury's Local, and M&S Simply Food, have small, convenience stores on UK High Streets.


Tesco's ability to spot a trend is perhaps best exemplified by its Clubcard, the chain's loyalty scheme.

The idea was rejected by Sainsbury. Its chairman said at the time he could not see the point of it.

Introduced in 1995, it was certainly not the first loyalty scheme - Green Shield Stamps anyone? - but what it did that was different was collate a huge range of information about customer preferences.

The then chairman, Lord MacLaurin, when shown the results of Clubcard's trials, is reported as saying: "What scares me about this is that you know more about my customers after three months than I know after 30 years."

Clubcard now has 20 million active members.


Lord MacLaurin, Sir Ian at the time, was himself a retailing colossus who had set Tesco on the road to expansion few could have imagined.

Perceived as relentlessly downmarket, its image was of a cross between Asda and Lidl before its slow march both upmarket and mass market took it to where it now is.

It cemented its image as a supplier of quality food when it brought in its upmarket Finest range - another first - in 1998.

Financial services

The pace of change was particularly rapid in the late 1990s.

Supermarkets were not known for having any ability apart from selling food - until Tesco started its banking joint venture with the Royal Bank of Scotland in 1997.

Tesco now supplies insurance for homes, cars and even pets, as well as savings accounts.

Overseas expansion

"When I became chief executive I had a plan to build Tesco around its customers, to make it number one in the UK and to find new long-term growth in non-food, in services and in international expansion," Sir Terry said.

And indeed, international expansion has been a significant contributor to the businesses growth.

The company employs almost half a million staff worldwide, 250,000 of which are in the UK. It has about 2,500 stores in the UK.

In the year to the end of February, the company made a pre-tax profit of £3.2bn, 10% up on the previous year.


This innovation and expansion has not been without controversy. Indeed, there is a campaign group - Tescopoly - entirely devoted to scrutinising Tesco and its influence.

It has been investigated many times by the Office of Fair Trading, over accusations of squeezing suppliers, so-called landbanking - stockpiling land to stop rivals building on it, causing the closure of smaller rivals - accusations it should be said that are also often levelled at its rivals.

Some of these probes have then been referred to the Competition Commission.

Most investigations have concluded the market is working efficiently.

'Tesco Towns'

Further debate has been held over the concept of the "Tesco Town". This term appears first to have been applied to Inverness in the north of Scotland. A relatively small city, its three Tescos have been said to have 51% of the grocery market, higher than anywhere else in the UK.

The term is also applied to the type of new development whereby Tesco will build not only a supermarket, but a school and houses, something that is being fought most notably in Seaton, in Devon.

And there is also the "Tesco Vernacular" - the architectural language of the typical Tesco supermarket with its pitched roof and gable which make the company's larger supermarkets instantly recognisable, even without the bright red banner fascia.

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