Tesco is the retailer that everyone loves to hate – but where everyone shops. One day it will become a mature business but for now it is teaching rival corporations that big companies can still be flexible.

The latest figures show that the UK company made £3bn pre-tax profit on sales of £60bn in 2008/09 – a more than healthy 5 per cent return during a recession. And it still remains price-competitive despite those profits. (See Tesco Share Price LON:TSCO)

It has kept ahead by changing – changing market position, changing product mix and changing geographical markets.

Unusually Tesco sells both upmarket and downmarket brands under one name. Indeed, its Finest range sits on the same shelves as its Value products. Other groups use different brand names and different outlets to straddle the market, but Tesco’s strategy has allowed it to switch the mix to low-price items as recession bites and the public spends more carefully.

So while discounters like Aldi and Lidl come into their own at times like this, Tesco has come into their territory, beating them at their own game.

Tesco has also diversified its product range. The grocer now sells everything from electrical goods to holidays to financial services – exploiting the strength of its name and its distribution network. Some of those lines may be low growth during a recession but not only can Tesco switch space back to food, it can exploit the consumer’s wariness to use price to make them switch from established providers of banking, telephones, TVs etc.

And the group has diversified geographically. Almost a third of the £60bn turnover was abroad, and while the recession is global, the greater growth was overseas. Three-quarters of the 8m sq ft of space it will open this year is outside Britain – and most of the 26,000 jobs it will create.

The UK boom was based on debt and consumer spending but Tesco is showing a spending-based group can prosper during recession. Yes, people continue purchasing food, but it takes flexibility to ensure it is not other companies’ offerings they buy.

The company is maturing. It is expanding abroad because it risks reaching saturation at home. UK sales growth is lowest and current growth is lower than in past years. But it has raised its dividend when others are cutting or freezing and it is creating new jobs (11,000 in the UK this year) when other firms are sacking.

Tesco has been through cycles: the 1970s when the middle classes shunned it, the 1980 and 1990s when they “discovered it”, the 2000s when it was fashionable to knock the global group. Surely now it is time to acknowledge that Tesco can not only pile it high and sell it cheap, and not only cash in on consumers’ aspirations, but move quickly to re-invent itself.

One day Tesco will get it wrong – just as Marks & Spencer and Sainsbury have in recent years. It’s not yet though.

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