What Is The Background Of Tesco

CHAPTER 2 LITERATURE REVIEW

In this chapter, literature review will be divided into three parts. The first part is to review the market of Tesco in the UK. The second section is to illustrate the customer loyalty. The third part is to investigate the reasons of customers ranking highly in attitudinal loyalty but not in behavioral.

2.1 Background of Tesco in the UK

Tesco PLC is a British multinational grocery and general merchandise retailer. Its headquarter is in Cheshunt, Hertfordshire, England, United Kingdom (Tesco Stores Limited, 2012). Measured by profits, Tesco is the second-largest retailer in the world and measured by revenues, it is the third-largest retailer in the world, after Wal-Mart and Carrefour (Potter, 2011). Tesco has stores in 14 countries through Asia, North America and Europe. In this article (“International”, 2010), it shows that Tesco is also the grocery market leader in the UK where it has a market share of nearly 30%, the Republic of Ireland, Malaysia and Thailand.

Jack Cohen founded Tesco in 1919 from a market stall in London’s East End. In 1929, the flagship Tesco store was opened by Cohen in Burnt Oak, North London (Clark, 2008). During the 60s supermarkets started to expand quickly by selling more products in larger stores. In 2000 Tesco.com was launched and until November 2006 Tesco was the only food retailer that makes online shopping profitable (Walker, 2006).

Over the years the business has grown and now Tesco is operated in 14 countries around the world. Over 530,000 people are employed and tens of millions of customers are served every week (Overview, 2014).

2.1.1 Competition between Tesco and other UK supermarkets

In the UK, Tesco, ASDA, Sainsbury’s and Morrisons totally account for 67.9% o...

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...s do not own loyalty cards. They might prefer the lowest price compared with other supermarkets. (Figure 10). For the loyalty program, 33 respondents choose Club Card of Tesco, 26 prefer free goods and 24 like Nectar Card of Sainsbury. It is obvious that most customers in favor of the lowest price although Club Card of Tesco still wins some popularity.

From Figure 11, almost 80 percent of respondents indicated that loyalty program would not affect their decisions to spend more on the supermarkets. If they own loyalty cards with supermarkets (Figure 12), there are several ways to redeem points. 41 percent of respondents choose to reduce money for products with enough points whereas 29 percent would rather exchange goods or services. Very few customers choose to redeem points on member discount at regular intervals (7%) and customized services for members (3%).