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End of the empire for Tesco?

Tesco’s recoil from the US is an interesting case in point. Commentators suggest they have misread the market.

The ‘Fresh and Easy’ brand failed to ignite enthusiasm among US shoppers who are used to stores such as Trader Joe’s, Whole Foods and Wal-Mart.

Peter Saville, partner at advisory and restructuring firm, Zolfo Cooper, said: “Tesco misread the market despite considerable research. By starting the Fresh & Easy venture from scratch, rather than acquiring an existing business, the subsidiary lacked efficiency and failed to capitalise on an existing presence.

“When business ventures like this go wrong, it is important for retailers to act quickly by assessing which strategies or divisions of their business are no longer working and exiting before its too late.”

Ajay Bhalla, professor of Global Innovation Management at Cass Business School suggested that while Tesco’s attention was turned to the US venture, the UK market had evolved as customer service and quality took prominence over low pricing.

Chief Executive Philip Clarke will now turn his attention back to the British domestic market, looking to turnaround profits which have fallen for the first time in 20 years.

The recent news will no doubt stoke optimism among independents and opponents of Tesco’s aggressive expansionism, but is this really the end of the multinational empire?

This was posted in Bdaily's Members' News section by Tom Keighley .