Read the article and do the assignments that follow
While reading the article find the words that match the following definitions.
| · net income before federal income taxes are subtracted | |
| · a business or person that sells goods to the consumer, as opposed to suppliers who normally sell their goods to another business | |
| · a product manufactured specifically for a retailer and bearing the retailer’s name | |
| · a pushcart used by street vendors, especially by costermongers. | |
| · the amount of an asset or resource that exceeds the portion that is utilized | |
| · a set of economic policies a government undertakes to control public sector debt | |
| · produced and distributed in large quantities and intended to appeal to the widest range of consumers | |
| · careful and detailed examination of something on order to get information about it | |
| · prolonged public disagreement or heated discussion | |
| · all the real estate investment of a person or company | |
| · power and influence over other people and events | |
| · a violent disturbance of / by a crowd |
Tesco: How one supermarket came to dominate
There's a famous stat - that at its peak one pound in every seven spent in the UK went into a Tesco till.
It's the UK's biggest retailer by sales and also the nation's biggest private employer, with more than 330,000 staff working in 3,146 stores. Pre-tax profits are in the billions and its achievements and failures make national, often international, news.
It's the world's third largest supermarket group, with stores in 12 countries. More than 27 million people outside the UK have a Tesco Clubcard.
It's part of the fabric of daily life. Nearly everyone has an opinion on it, often vehement.
It all started in 1919 with Jack Cohen. The 21-year-old left the Royal Flying Corps at the end of World War I and used his demob money to buy surplus food from the Army and sell it from a barrow in Hackney. His first stock was fish paste and golden syrup.
By 1924 he had started selling his first own-brand product, tea. Looking for a name he took the first three letters of his supplier, TE Stockwell, and combined them with the first two letters of his own. Tesco was born and the first shop was opened in 1929 in north London.
Cohen believed in the business model "stack 'em high, sell 'em low". It earned him the nickname "slasher Jack".
"Cohen built his business when there was still a lot of austerity around," says Phil Lyon, a retail historian at Queen Margaret University Edinburgh. "To drive business development of that kind at that time was quite remarkable. He totally understood what worked for the mass market."
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In the recession at the start of the 1990s Tesco quickly realised shoppers wanted their money to go further.
The company launched its Value range in 1993. It went on to become the second biggest grocery brand in the UK at its peak and the brand alone generated an estimated annual turnover of more than £1bn. By 1996 Tesco's sales in the UK had jumped ahead of Sainsbury's.
The size of the company's orders allowed them to negotiate bargains with even the biggest manufacturers.
As this power grew the relationship between all the big supermarkets and their suppliers came under scrutiny. In 2000 the Competition Commission carried out a major inquiry into the issue which lead to the creation of a Code of Practice. It's an issue that rumbles on, with dairy farmers protesting last year about the low price some supermarkets pay for milk.
Tesco says it negotiates the best prices on behalf of customers but that it is also fair and that suppliers stay with the company. It says it pays one of the highest prices for milk out of all the main supermarkets.
But what really took Tesco to the top was watching customer behaviour. It was the first British supermarket to do so and it was a game-changing move.
The introduction of the Tesco Clubcard is the single most significant factor in the success of the company, says Sir Terry Leahy, the supermarket's chief executive from 1997 to 2011.
The idea of a loyalty scheme was not new. The savvy Cohen had been an early adopter of Green Shield Stamps in 1963 and successfully exploited the incentive scheme to his advantage. But the Clubcard was a loyalty scheme for the age of computerised research.
Tesco collected raw data on what people were buying and turned it into profitable information. It was also able to offer personalised discounts and rewards. Rolled out nationally in 1995, the card was an instant success. One year later Tesco became the UK's top supermarket.
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The scheme fundamentally changed the way all supermarkets did business and typifies Tesco's success, say business analysts.
"It became such a success story because it was aggressive at adapting to consumer trends, diversifying and innovating," says Gray. "It took a hell of risks in the 1990s but they paid off."
And diversify it did. Tesco is now a bank, it offers insurance, credit cards and loans. You can buy a flat-screen TV, a mobile phone and clothes alongside bread, milk and butter. It runs education programmes for staff and keep fit classes.
Even its critics have some grudging regard for the company.
Tesco went on to cement its dominance by expanding massively - the source of much of the controversy. Again it had its roots in Cohen's ideas. He always believed in owning the shops he did business from. Between 1955 and 1960 alone he bought more than 500 new shops.
But it was during the recession of the 1990s that it really grew. Big sites were acquired for a new generation of out-of-town superstores. Again it spotted the market before its competitors. The same happened when it headed back into towns and cities and started opening smaller convenience stores - the Tesco Metro - in 1994.
Its property portfolio was huge and included land it didn't develop. Critics noted that if Tesco owned it no other supermarket could build on it, leaving them struggling.
But while the new developments were initially seen as progress, they came to divide opinion. Supermarkets as a whole have been criticised for creating "clone towns". National organisations like the Association of Convenience Stores (ACS) have expressed concern about the impact their "aggressive expansion" has had on small businesses.
In 2006 the Office of Fair Trading referred the market to the Competition Commission for a second time. It concluded that in many respects UK grocery retailers were "delivering a good deal for consumers" but action was "needed to improve competition in local markets".
Because of its huge expansion Tesco has often been singled out for more vehement criticism. The National Consumer Council has called it the Marmite of British business, appearing both among the most trusted and the most distrusted companies in consumer surveys.
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"It's because of its sheer size and clout," says Simms. "It's incredibly hard for smaller operators to compete against."
Wrangles over planning permission for developments often find Tesco in the news.
Smaller disputes are pitched as David and Goliath battles. Just last week campaigners in Sherborne, Dorset, claimed victory when the supermarket decided not to open a store in the town.
But Tesco said planning issues and not protest influenced the decision.
In 2011 a raid on a squat occupied by opponents of a newly opened Tesco store in Bristol left eight police officers and several protesters injured. It resulted in rioting during which the shop was attacked.
On the flip side there is a group campaigning for new Tesco stores. Earlier this year in Felixstowe people staged a rally with placards that read: "Yes to Tesco". They said they didn't want to lose the chance of the supermarket opening a superstore in the area as it would give local people "real choice".
But despite its dominance, times have got tougher for Tesco. This year its profits fell for the first time in 20 years. It was said to have taken its "eye off the ball" in the lucrative UK market and focused on foreign markets too much.
What does it mean for the company? Based on history, the chain will probably adapt and change, say business analysts.
Maybe it should ask itself what Jack Cohen would do.
BBC News Magazine, September 9th, 2013
NOTES
1. Value range-in theUnited Kingdom, it is common practice for retailers to have their own value brand in an effort to compete on price. Tesco's value brand was originally launched in 1993 as Tesco Value, with distinctive blue-and-white striped packaging The original Tesco Value brand had been launched in the midst of a supermarket price war, and targeted a low price point, with cans of beans costing 3p a canand loaves of bread for 7p.
2. Code of Practice-a set of written regulations issued by a professional association or an official body that explains how people working in a particular profession should behave – Кодекспрофессиональнойэтики
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3. Green Shield Stamps- a British sales promotion scheme that rewarded shoppers with stamps that could be used to buy gifts from a catalogue or from any affiliated retailer. The scheme was introduced in 1958 by Richard Tompkins.
4. The National Association of Convenience Stores (NACS), founded on August 14, 1961, is an international trade association representing more than 2,100 retail and 1,600 supplier company members. NACS member companies do business in nearly 50 countries worldwide, with the majority of members based in the United States. The association serves the convenience and fuel retailing industry by providing industry knowledge, connections and advocacy to ensure the competitive viability of its members' businesses. NACS defines aconvenience store as a retail business that provides the public with a convenient location to quickly purchase a wide variety of consumable products and services, general food and gasoline.
5. Marmite is something causing a strong feeling of either liking or disliking.
6. The story of David and Goliath can be found in First Samuel 17 of the Bible. It tells the story of the giant Goliath, a nine-foot soldier from Gath, who boasted he could beat any individual soldier in the Israelite army. Nobody in the army dared to take him on - except David, a shepherd boy who believed strongly in God. "The Lord who delivered me from the paw of the lion and from the paw of the bear, will deliver me from the hand of this Philistine," David said.King Saul wanted to arm David with a sword and armor, but David refused, saying his strength came from God, not from weapons. All he brought to the battlefield was a sling and a stone. Of course, David's expertly flung stone nailed Goliath in the head and killed him.
USEFUL TERMS AND EXPRESSIONS
· pre-taxprofit – прибыль до вычета налогов
· own-brandproduct – товар, продаваемый под собственной торговой маркой розничной сети
· value brand – бюджетная торговая марка
· bargain – выгодная сделка;удачная покупка
· austerity – режим жесткой экономии
· to carry out inquiry (into smth) – провестирасследование
· to pay off – окупиться
· todiversify – разнообразить, варьировать, диверсифицировать, вкладывать капитал в различные предприятия
· controversy – спор,дискуссия, полемика, разногласия
· to acquire – приобретать
acquisition – приобретение
mergers and acquisitions – слиянияипоглощения
· to spot – обнаружить, определить, выявить
· wrangles – ожесточенные споры, прения
· clout – влияние, власть
· riot – мятеж , волнения, беспорядки
· lucrative – прибыльный, высокодоходный, выгодный
Exercise № 4
Explain or paraphrase the following:
· to make the news
· part of the fabric of daily life
· the business model "stack 'em high, sell 'em low"
· to negotiate bargains
· to come under scrutiny
· a game-changing move
· to cement one’s dominance
· an early adopter of Green Shield Stamps
· David and Goliath battle
· to have roots in smth
· to take one’s eye off the ball
· clone towns
· on the flip side
Exercise № 5
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