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Tuesday, 10 April, 2001, 11:16 GMT 12:16 UK
Tesco: East End to East Asia
Lord Maclaurin
Lord Maclaurin, chairman from 1985-1997, is behind the Tesco we know today
Tesco, the UK supermarket chain that has announced annual profits of more than 1bn, started life as a one-man business in London's East End.

The company's founder was Jack Cohen, son of a Polish Jewish tailor, who in 1919 began selling groceries at knockdown prices from a market stall.

He is said to have adopted the name Tesco for his business in the 1920s after taking on a bulk consignment of unmarked tea.

The first three letters of the name came from TE Stockwell - the name of the tea supplier he took over - while the final two were the first letters of his own surname.

'Pile it high, sell it cheap'

Sir Jack - as he later became - was known for a "pile it high, sell it cheap" philosophy, which didn't change as the company grew.

He was also dismissive of advertising, saying it cost too much.

Under Sir Jack, Tesco expanded enormously.

It was a close-knit organisation, with many of the company's top executives related to each other by blood or marriage.

But according to company historians, board meetings could be fractious affairs.

One later chairman - Lord Maclaurin - criticised Sir Jack in his memoirs for an autocratic management style and compared board meetings to meetings of the Chicago Mafia with Sir Jack in the role of Godfather.

Upmarket move

By the late 1970s, Tesco was the UK's number two supermarket chain after Sainsbury's.

Under then managing director Ian Maclaurin, the store pursued an aggressive price-cutting strategy, which reduced profit margins but achieved the aim of increasing market share.

During this period, own-brand goods became more widely available and popular as a cheaper option for price-conscious shoppers.

It was only during Lord Maclaurin's final years at the company - he was chairman from 1985-1997, having joined in 1959 as one of Tesco's first management trainees - that Tesco began to threaten Sainsbury's by moving upmarket.

Since the mid-1990s, the chain has set up stores in more prestigious locations and added to its shelves goods more appealing to the wealthier consumer while not forgetting the need to compete on price.

Success online

Among other innovations, it set up Tesco Express, combining convenience stores and petrol retailing, Tesco Metro, the small, urban stores and a small number of much larger stores on the hypermarket model including its flagship Tesco Kensington store.

While the general trend has been for supermarkets to relocate to out-of-town locations, Tesco Kensington - on an urban site - was one of the first supermarket developments that included low-cost housing.

In the past five years, Tesco has also moved into financial services, through an arrangement with Royal Bank of Scotland, and has one of Europe's most successful online retailing businesses.

Its latest results indicate Tesco is one of the UK's few retailers to have made a success of international expansion as well, with a string of stores throughout Europe and others in Thailand, South Korea and Taiwan reporting substantial sales and profit increases.

Today, Tesco employs more than 240,000 people worldwide and has almost 1,000 stores, including 68 outside the UK.

The company ranks 111 in the Fortune Global 500 list of the world's biggest companies.

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10 Apr 01 | Business
Tesco profits top 1bn
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