Tesco Fresh & Easy

Tesco Fresh & Easy

BACKGROUND

History of Tesco

The Tesco's founder was Jack Cohen who originally owned Tesco's. On the first day of selling stock at the market he made a profit of one pound. When he made money he used the money to buy goods. He bought goods that other store didn't sell in their store.

Jack Cohen was the person who founded the name for Tesco, after he bought a large shipment of tea in 1924. He used the three first letters from the name of the tea suppliers name "T.E" stock well and add his own surname then this formed the "Tesco". By 1939 he opened hundreds of stores. When he opened hundreds of stores he went to America for holiday, he found out that the stores there were self-service, he used this idea in his stores and this saved him lots of money on shop staff wages. When he found that this method was successful he invited his son Critman in law to join his business.

History of Fresh & Easy

On February 9, 2006, Tesco announced that it planned to move into the United Sates by opening a chain of small format grocery stores in the Western states (Arizona, California and Nevada) in 2007 named Fresh & Easy. The initial planned capital expenditure is up to £250m ($436m USD) per year. After Tesco CEO Terry Leahy announced serious resources had been committed to developing a format that would be popular with American consumers, investors responded with some skepticism with a small drop in the company's share price. The markets were expected to be around 1,400 square meters (15,000 sq. ft.) good-sized supermarkets in many countries, but about one-third the size of an average supermarket within the US. By January 2007, Tesco opened its U.S. headquarters in El Segundo, California, near Los Angeles International Airport. The company initially expanded into Southern California, Phoenix, Arizona, and Las Vegas, Nevada.

This case is about how Tesco, one of the biggest retail stores in the world on its entry to the United States, under a new name, Fresh & Easy. Also it talks about the problems they had to face and their still facing on this new market, because the competition in the United States is very strong.

The company’s history would say that they are going to triumph in this new international market as they did in other ones, but things are not going well, and only new strategies and time will decide the Fresh & Easy future in the United States.

UPDATING

Tesco’s Fresh & Easy hadn’t cause the major impact it was expected to cause in the United States, mainly because it doesn’t have the product variety the customer is seeking for.

“Fresh & Easy Neighborhood Market Inc. filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court, weeks after being promised to Los Angeles billionaire Ron Burkle.

The grocery chain, which is in the process of trading hands from British supermarket giant Tesco to Burkle’s Yucaipa Cos., cited debt between $500 million and $1 billion in its court filing Monday.”

This talks about recent performance of Fresh & Easy in the US, and means that the company is failing on its adventure on the American lands.

The move “is simply the next step in the restructuring process” during the sale and will have “no impact” on customers’ shopping experience, Fresh & Easy said in a statement.

“It’s business as usual as we continue the transition to new ownership,” the company said.

This statements gives us some questions, will Fresh & Easy go to another company’s hands or is Tesco going to implement new strategies to save the company’s bankruptcy?

PEOPLE INVOLVED

In this case customers are the most important agent, because the company depends directly on their behavior because daily efforts are based on customer loyalty.

Jack Cohen, (6 October 1898 – 24 March 1979) was a British businessman who founded the Tesco supermarket chain. He was born in Whitechapel in the East End of London.

As he founded one of the most successful retail stores in the world Cohen wouldn´t live to see his work at its best.

Terry Leahy, (born 28 February 1956) is an English businessman, previously the CEO of Tesco, the largest British retailer and the third-largest retailer in the world measured by revenues.

He applied for a job at Tesco, but lost out to another candidate. After that candidate was quickly reassigned upwards, Leahy returned to Tesco in 1979 as a marketing executive. Tesco was a resolute market follower of the two leading brands, Marks & Spencer as the then world's most profitable retailer, and Sainsbury's as the world's most profitable food retailer. Leahy concluded that Tesco should stop following a strategy of catch-up and start leading through market knowledge, which led to his success in devising and implementing the Tesco Club card loyalty program and also successfully monitoring the shopping habits of Club card holders.

Leahy was appointed to the board in 1992, and in 1995 Tesco became the UK's biggest retailer. Leahy became chief executive in 1997, on the retirement of mentor Lord MacLaurin who wanted to appoint a successor to lead international expansion and increased market share. Tesco stretched its lead as the UK's largest retailer and also grew internationally: Leahy continued to visit a Tesco store somewhere every week, normally on a Friday.

Following Tesco's announcement of £2 billion in profits in April 2005, Leahy hit back against protests that the company was "too successful".

On 8 June 2010, Tesco announced that Leahy was to retire as chief executive in March 2011. Leahy has been paid £8.42m in performance related bonuses since his departure from Tesco, in addition to a pension pot worth £18.4m at the time of his departure. Since then he has focused on startup investments.

Laehy is one of the key factors for the company to grow so quickly and large scale way. He saw the opportunity to grow the company and took it, taking it on to be recognized as one of the top businessmen in the history of the UK.

Tesco’s Board is composed by 12 persons, which are:

- Sir Richard Broadbent: Non-executive Chairman

- Philip Clarke: Group Chief Executive

- Laurie McIlwee: Chief Financial Officer

- Patrick

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