Tesco versus Sainsbury's: Growth Strategies and Corporate Competitiveness

In 2008, the UK-based international food and general merchandising retailer Tesco reached a market share of about 30% in the UK, roughly the same as its rivals Sainsbury's and ASDA combined. Tesco has greatly diversified, extending its business lines from food into non-food, clothing, financial services, and telecommunications. It ranks sixth in the international retail market behind Wal-Mart (US), Carrefour (France), Home Depot (US), Metro (Germany), and Royal Ahold (Netherlands).
Tesco was not always the dominant player it is today. In 1990, it was a mid-sized food chain far behind its rival, Sainsbury's. Starting in the 1990s, it pursued a broad set of growth initiatives, steadily increasing its market share and gaining importance. In 1995, Tesco surpassed Sainsbury's to become the UK's market leader. Today, Tesco is the clear market leader. How did that happen? Why was Tesco so successful in growing sales and profits, while Sainsbury's could not keep pace? Where did the competitive actions of these firms differ? Let us start with a close look at their origins.