An investigation led by BBC’s Panorama identified the issues of accounting mis-declaration including an overstatement of commercial income by GBP 208 million9 and the cases of supplier mistreatment. In one notable case, “L’Oreal, which led the French cosmetics giant to threaten legal action after a disputed payment of about GBP1m demanded by Tesco”.10 An extensive media coverage of the scandal caused a massive blow to Tesco’s brand image leading to the resignation of CEO Philip Clark. The retailer is yet to regain the stakeholders’ trust after this devastating incident.
The company derives substantial benefits from its Clubcard in multiple levels. Firstly, Clubcard is effectively used as a tool to increase consumer retention and consumer loyalty, where consumers collect one point for each GBP 1 spent. At least four times a year, the holder receives a statement and vouchers to the value of points they have saved3. Secondly, the Clubcard plays in instrumental role in collecting important data about consumer behavior and this information is used by the company to improve its value offerings. Moreover, Tesco sells customer data onto FMCG suppliers and producers4 thus creating an additional revenue channel for the business.
4. The company has a strong property portfolio and this fact increases its overall value. There are 7817 Tesco shops around the world5 and the company owns 53 per cent of its total retail space.6 The ownership of the majority of its stores makes the company profits more immune to rising rent fees. Moreover, due to its strong property portfolio, Tesco has an option of gaining financial resources to deal with emergencies via selling a part of its property.