The History of Tesco

The History of Tesco: From Market Stall to Global Retail Giant 

Tesco, a British multinational grocery and general merchandise retailer, is a cornerstone of the UK retail landscape, commanding a significant share of the grocery market and operating thousands of stores worldwide. Founded in 1919 by Jack Cohen, Tesco’s evolution from a single market stall in London’s East End to a global retail powerhouse is a remarkable tale of entrepreneurial grit, strategic innovation, and resilience in the face of economic and competitive challenges. 

 

The Origins: Jack Cohen and the Birth of Tesco (1919–1929) 

 

Tesco’s story begins with Jack Cohen, born in 1898 to Polish Jewish immigrants in Whitechapel, London. After serving in the Royal Flying Corps during World War I, Cohen returned to civilian life with a £30 demobilization gratuity. In 1919, at age 21, he invested this sum in surplus groceries, which he sold from a market stall at Well Street Market in Hackney, East London. On his first day, Cohen earned a £1 profit on £4 in sales, revealing his natural flair for trading. This modest venture laid the foundation for what would become a retail empire. 

Cohen’s early success stemmed from his ability to source affordable goods and sell them at low prices, appealing to working-class consumers. By the early 1920s, he expanded to other East End markets, including Hoxton and Tooting, employing barrow boys to manage stalls. In 1924, Cohen created the Tesco brand name, a portmanteau derived from the initials of his tea supplier, Thomas Edward Stockwell (TES), and the first two letters of his surname (CO). The first Tesco-branded product was tea, packaged by Cohen’s wife in their kitchen. 

In 1929, Cohen opened his first permanent Tesco store at 54 Watling Street, Burnt Oak, Edgware, Middlesex. This marked a significant shift from transient market stalls to a fixed retail presence, enabling Tesco to serve growing suburban communities. The store’s success prompted Cohen to adopt a bold expansion strategy, underpinned by his philosophy of “pile it high and sell it cheap,” which prioritized high sales volumes at low margins. 

The 1930s: Rapid Expansion and Early Innovations 

The 1930s were a transformative decade for Tesco, as Cohen capitalized on the UK’s suburban growth. Rising middle-class populations in areas like Becontree, Edmonton, and Palmers Green created demand for affordable groceries, which Tesco met with new stores across Greater London and southeast England. By 1932, Tesco became a private limited company, formalizing its operations. Cohen’s hands-on approach, encapsulated in his internal motto “YCDBSOYA” (You Can’t Do Business Sitting On Your Arse), drove a culture of relentless sales growth. 

 

By 1939, Tesco operated approximately 100 stores, primarily small high-street shops stocked with dry goods like tea, sugar, and biscuits. Cohen’s entrepreneurial spirit led to early innovations, such as sourcing products directly from manufacturers to cut costs and offering discounts to attract customers. These strategies positioned Tesco as a value-driven retailer, distinct from traditional grocers who prioritized quality over price. 

 

The decade also saw Tesco navigate economic challenges, including the Great Depression, which heightened consumer demand for affordability. Cohen’s ability to maintain low prices while expanding his store network laid a strong foundation for Tesco’s post-war growth. 

 

World War II and Post-War Transformation (1940s–1950s) 

 

World War II disrupted Tesco’s expansion, as rationing and resource shortages limited retail activity. Cohen adapted by focusing on essential goods and maintaining customer loyalty through fair pricing. After the war, Cohen’s 1946 visit to the United States proved a turning point. Inspired by the efficiency of American self-service supermarkets, which reduced labor costs and improved customer flow, he resolved to modernize Tesco’s operations. 

In 1948, Tesco opened its first self-service store in St Albans, Hertfordshire, a radical departure from traditional counter-service shops. The store allowed customers to select goods themselves, streamlining operations and enhancing the shopping experience. The St Albans store remained operational until 2010, a testament to its enduring significance. In 1956, Tesco opened its first true supermarket in Maldon, Essex, a converted cinema that offered a broader range of fresh and packaged foods. 

 

The post-war economic boom and rising consumer spending fueled Tesco’s growth. In 1957, Tesco Stores (Holdings) Limited was floated on the London Stock Exchange at 25p per share, raising capital for further expansion. The 1950s saw Tesco acquire 70 Williamson’s stores (1957), 200 Harrow Stores outlets (1959), and other small chains, increasing its footprint to over 400 stores by decade’s end. These acquisitions targeted regional markets, particularly in southeast England, where Tesco consolidated its dominance. 

 

Cohen’s vision extended beyond groceries. In the late 1950s, Tesco began experimenting with non-food items, introducing clothing and household goods in select stores. This diversification foreshadowed Tesco’s later transformation into a general merchandise retailer. 

 

The 1960s: Supermarkets, Superstores, and Policy Influence 

 

The 1960s marked Tesco’s emergence as a national retailer, driven by the supermarket boom and changing consumer habits. In 1960, Tesco opened a 1,600-square-meter supermarket in Leicester, earning a Guinness World Record as Europe’s largest store at the time. The store’s scale reflected Tesco’s ambition to offer a one-stop shopping experience, combining food and non-food products under one roof. 

 

Tesco’s acquisition strategy accelerated, with purchases including 212 Irwin’s stores (1960), 97 Charles Phillips stores (1964), and the Victor Value chain (1968, later sold to Bejam in 1986). By the late 1960s, Tesco operated over 800 stores, ranging from small high-street shops to larger supermarkets. In 1968, Tesco pioneered the “superstore” concept with a 40,000-square-foot store in Crawley, West Sussex, designed to serve car-owning suburban shoppers with extensive product ranges and parking facilities. 

 

Tesco also influenced UK retail policy during this period. In the early 1960s, Cohen lobbied Parliament, alongside Conservative MP Edward Heath, to abolish Resale Price Maintenance (RPM), a regulation that prevented large retailers from undercutting smaller shops. The 1964 Resale Prices Act ended RPM, enabling Tesco to offer competitive discounts and gain market share. This legislative victory underscored Tesco’s growing influence in the retail sector. 

 

The decade also saw Tesco introduce “Home ‘n’ Wear” departments in larger stores, expanding its non-food offerings to include clothing, kitchenware, and electronics. These initiatives diversified revenue streams and positioned Tesco as a versatile retailer. 

 

The 1970s: Challenges and Repositioning 

 

By the early 1970s, Tesco operated nearly 900 stores and was a household name. However, its “pile it high, sell it cheap” strategy, while effective for growth, resulted in slim margins and a downmarket image. The 1973 oil crisis and UK recession exposed these vulnerabilities, as inflation and reduced consumer spending squeezed profits. In 1973, Jack Cohen stepped down as chairman, passing leadership to Ian MacLaurin, who initiated a strategic overhaul. 

 

MacLaurin recognized that Tesco’s focus on low prices had compromised quality and customer perception. In 1977, Tesco discontinued Green Shield Stamps, a loyalty scheme that had become costly and outdated, redirecting savings into price reductions. The company also modernized its stores, improving layouts and product displays to enhance the shopping experience. By 1979, Tesco’s sales reached £1 billion, doubling to £2 billion by 1982, reflecting the success of these reforms. 

 

In 1974, Tesco entered the petrol retail market, opening forecourts at select stores. By 1991, it was the UK’s largest independent petrol retailer, leveraging its scale to offer competitive fuel prices. The 1970s also saw Tesco experiment with new store formats, including smaller convenience stores and larger out-of-town superstores, to cater to diverse customer needs. 

 

The 1980s: Consolidation and Competition 

 

The 1980s were a period of consolidation for Tesco, as it faced growing competition from Sainsbury’s, Asda, and emerging discounters. In 1987, Tesco executed a hostile takeover of Hillards, a 40-store supermarket chain in Northern England, for £220 million, strengthening its presence in Yorkshire and Lancashire. The acquisition marked Tesco’s willingness to pursue aggressive growth strategies to maintain market leadership. 

 

Under MacLaurin’s leadership, Tesco continued to refine its brand image, emphasizing quality alongside value. The company invested in private-label products, which offered higher margins than branded goods, and upgraded its store portfolio to appeal to middle-class shoppers. By the late 1980s, Tesco was the UK’s second-largest grocer, trailing Sainsbury’s but poised for further growth. 

 

The decade also highlighted Tesco’s need to adapt to evolving consumer preferences. As shoppers prioritized quality and convenience, Tesco began planning initiatives to enhance customer loyalty and diversify its offerings, setting the stage for its 1990s transformation. 

 

The 1990s: Loyalty, Diversification, and Global Ambition 

 

The appointment of Terry Leahy as CEO in 1997 marked a new era for Tesco. Leahy, who joined Tesco in 1979, sought to reposition the company as a customer-centric retailer appealing to all social groups. In 1993, Tesco launched the “Tesco Value” range, offering low-cost essentials, followed by the premium “Tesco Finest” range in the early 2000s, catering to affluent shoppers. These product lines broadened Tesco’s appeal and boosted profitability. 

 

The 1995 introduction of the Tesco Clubcard, a loyalty program that rewarded customers with points redeemable for discounts, was a game-changer. The Clubcard not only fostered customer retention but also provided valuable data on shopping habits, enabling Tesco to tailor promotions and optimize inventory. By 1995, Tesco overtook Sainsbury’s to become the UK’s leading grocer, a position it has held since. 

 

Tesco embraced e-commerce early, launching Tesco.com in 2000. By 2006, it was the UK’s most profitable online grocery platform, offering home delivery and click-and-collect services. The company also diversified its store formats, introducing Tesco Metro (1992) for urban shoppers, Tesco Express (1994) for convenience, and Tesco Extra hypermarkets for comprehensive shopping. By 2008, Tesco operated six formats: Extra, Superstores, Metro, Express, Homeplus, and One Stop. 

 

Internationally, Tesco expanded aggressively. In 1995, it entered Poland, the Czech Republic, and Slovakia, followed by Ireland in 1997 through the £640 million acquisition of Associated British Foods’ retail arm. Tesco ventured into Asia, acquiring South Korea’s Homeplus and entering Thailand and Malaysia. By 2011, Tesco operated in 13 countries, with over 5,000 stores globally. However, its 2006 US venture, Fresh & Easy, struggled due to misaligned market strategies, leading to a withdrawal in 2013. 

 

The 2000s: Dominance and Diversification 

 

The 2000s solidified Tesco’s dominance in the UK and its ambition to become a global retail leader. The company diversified beyond retail, launching Tesco Personal Finance (later Tesco Bank) in 1997, which offered banking and insurance services. Tesco Mobile, a joint venture with O2, became a leading mobile virtual network operator. These ventures leveraged Tesco’s brand and customer base to generate new revenue streams. 

Tesco also invested in sustainability and community initiatives, launching the “Computers for Schools” program and committing to reduce carbon emissions. Its focus on corporate social responsibility enhanced its reputation and aligned with growing consumer demand for ethical business practices. 

 

By 2008, Tesco’s UK market share peaked at around 30%, and its global workforce exceeded 400,000. The company’s ability to combine scale, innovation, and customer focus made it a model for modern retailing. 

 

The 2010s: Challenges and Recovery 

 

The 2010s tested Tesco’s resilience. In 2013, the company reported its first profit drop in 20 years, driven by intense competition from discounters Aldi and Lidl, whose low-cost models appealed to price-sensitive shoppers. In 2014, a major accounting scandal revealed that Tesco had overstated profits by £263 million, triggering a £2 billion share price drop and the resignation of Chairman Richard Broadbent. The scandal damaged Tesco’s reputation and prompted regulatory scrutiny. 

 

To stem losses, Tesco closed 57 UK stores in 2014, abandoned 49 planned openings, and sold non-core assets, including its South Korean Homeplus chain. The company also moved its headquarters from Cheshunt to Welwyn Garden City in 2016 to reduce costs. Under CEO Dave Lewis, appointed in 2014, Tesco refocused on its core UK business, simplifying operations and improving product quality. 

 

Lewis introduced initiatives to compete with discounters, such as the “Farm Brands” range, which offered low-cost meat and produce under fictional farm names. Tesco also strengthened its online and convenience offerings, capitalizing on the growing demand for digital shopping. By 2017, Tesco’s recovery was evident, with rising profits and a stabilized market share. 

 

In 2018, Tesco acquired Booker, the UK’s largest wholesale supplier, for £3.7 billion, expanding its reach into the catering and convenience store sectors. The acquisition bolstered Tesco’s supply chain and diversified its revenue base. 

 

The 2020s: Adapting to a New Era 

 

The COVID-19 pandemic, beginning in 2020, presented both challenges and opportunities for Tesco. As lockdowns drove demand for online grocery shopping, Tesco’s early investment in e-commerce paid dividends, with Tesco.com handling record order volumes. The company hired thousands of temporary workers and implemented safety measures to protect staff and customers. 

 

Tesco also accelerated its sustainability efforts, committing to net-zero emissions by 2035 and expanding its range of plant-based and eco-friendly products. The company’s “Aldi Price Match” campaign, launched in 2020, directly challenged discounters by matching prices on key items, reinforcing its value proposition. 

 

Under CEO Ken Murphy, appointed in 2020, Tesco has continued to innovate. The company has expanded its Clubcard Prices program, offering exclusive discounts to loyalty members, and invested in technology to enhance supply chain efficiency. Tesco’s focus on healthy eating, reflected in its “Better Baskets” campaign, aligns with consumer trends toward wellness and sustainability. 

 

As of April 2025, Tesco remains the UK’s largest retailer, with approximately 4,000 stores, including 2,800 Express stores, and a workforce of over 300,000. Its diversified portfolio, spanning retail, banking, telecom, and wholesale, positions it as a resilient player in a competitive market. Tesco’s ability to support military veterans through employment programs and its partnerships with charities like FareShare underscore its commitment to community impact. 

 

Conclusion 

 

Tesco’s history is a testament to its adaptability and customer focus. From Jack Cohen’s market stall to a global retail giant, Tesco has navigated economic upheavals, competitive pressures, and societal shifts with remarkable agility. Its innovations, from self-service stores to the Clubcard and e-commerce, have redefined retailing, while its international ventures and diversified services reflect its ambition.  

 

Despite challenges, including scandals and discounter competition, Tesco’s recovery and ongoing evolution demonstrate its enduring relevance. As it approaches its second century, Tesco continues to shape the future of retail, balancing value, quality, and sustainability to meet the needs of a changing world.