Introduction
Tesco is a retail giant in the UK with a market share of more than 30% and an annual profit of close to $3 billion. The firm is the third largest retailer in the world with international presence in Eastern and Central Europe and the Far East. The key development strategy of Tesco is international expansion as further expansion opportunities in the UK have become increasingly limited. Tesco announced its plan to enter the US retail industry in 2006 when it introduced Fresh and Easy in the USA. After thorough market research and detailed analyses, Tesco rolled its first store in Hemet, California to serve the needs of consumers seeking healthy foods. This paper attempts to investigate if Tesco will succeed where other retailers have failed.
In its bid to enter the US grocery retail market, Tesco decided to use the brand name ‘Fresh & Easy’ rather than the Tesco brand that it has used for all its other international activities following preliminary market research that indicated the US shoppers wanted healthy food. From the market research conducted by Tesco, small retail shops selling a wide range of fresh, good quality, top-up groceries are not available in the US. Convenience stores in the US are only found in petrol stations and they sell doughnuts, cigarettes, and perhaps soft drinks. Tesco plans to roll out high quality healthy foods. Tesco plans to offer own-labeled and will not contain harmful fats, artificial flavorings or colors. Unlike in other countries where Tesco has entered the retail market through mergers and acquisitions, the company plans to introduce neighborhood market stores targeting the rich West Coast of the US.
Tesco should measure its success based on the profitability of its overall operation in the US. Tesco undertook an extensive consumer and market research before commencement of operations in the US, although it admitted the research had some shortfalls. Nevertheless, Tesco continues to redefine and modify its operations and adjust its prices in response to changes in the economic climate and market conditions, all with the intention of increasing sales, which will translate to increased profits. It is indicative that Tesco is taking all measures to ensure that its venture in the US is successful. I am of the opinion that they should they should institute a time limit on its market entry activity in an organized manner. The time limit should be one year as this will allow the company to understand the market in a better way.
