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Case Presentations 12-1: Tesco

The UK's largest retailer attempted entry into the United States in 2007. What strategy did they use and has it succeeded?
by

Jeshua Jay

on 26 July 2013

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Transcript of Case Presentations 12-1: Tesco

Case 12-1: Tesco
Differentiation
In the United States, Tesco has chosen to build small convenience stores in stead of "big box" supercenters.

This allows them to compete in a less saturated for of retail and avoid the backlash that other retail giants receive.
Discussion Questions
1. What are the keys to Tesco's success in the competitive retailing industry?
Tesco's slogan, "Every Little Helps", is applied in their committment to building and maintaining good relationships with suppliers and distributors. They have developed one of the best supply chains in retailing.
2. In view of the tough retailing environment, what changes do you think Tesco might be forced to make to the "Fresh and Easy" concept?
Americans tend to have larger cars and better roads than Europeans or Asians. The idea to have smaller stores catering to smaller area is different, but it may not be the best in a country where people are able to conveniently buy in bulk.
3. Which of the market entry strategies identified in this chapter is Tesco using in the United States? Do you think this is an appropriate strategy?
Tesco used the Organic growth strategy by building their own new stores in the United States. Due to the level of difficulty entering the retail market in the United States, they probably should have considered an acquisition strategy instead.

Tesco is the largest supermarket chain in the UK with over 2,300 stores.

It operates supercenters, standard supermarkets, smal convenitence stores, and an online retail site which recieves over 100,000 orders every week.

It has one of the best supply chains in the industry.
http://timesonline.typepad.com/dons_life/2009/11/the-tesco-university-library.html
Tesco has its strengths, but lacks the global presence of giants like Walmart and Carrefour.

It has begun negotiating expansion into India and China, as well as the United States.

The Global Scene
http://www.businessinsider.com/walmarts-huffington-post-ban-2012-12
Tesco in the United States
More than 100 "Fresh and Easy" stores, the American face of Tesco, have been opened in the United States since November 2007.

Tesco only has small stores in the United States, but it plans to establish its own distribution network. They will bring two of their own suppliers with them to the States.
http://intheblueroom.com/itbrwp/wp-content/uploads/2013/04/WorldMap.png
http://www.ramendays.com/fresh-and-easy-pizza/
Tesco Today
Tesco recently announced it will be selling the "Fresh and Easy" brand and leaving the US.

The withdrawal comes at a $1.8 billion dollar loss.

The niche Tesco hoped to occupy was rendered ineffective by the recession and more price-conscious consumers.

Tesco will shift its focus back to the UK and Asia.
http://lorialexander.blogspot.com/2013/05/white-flag-of-surrender.html
http://www.nytimes.com/2013/04/18/business/global/tesco-to-pay-dearly-to-leave-us.html
http://www.reuters.com/article/2013/04/17/us-tesco-results-idUSBRE93G06O20130417
http://www.usatoday.com/story/money/business/2013/04/17/tesco-exits-usa/2090801/
Full transcript