05 Feb 2008


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Will Tesco make it in the US?

Tesco

Fresh and Easy

Kroger

Wal-Mart

Nielsen

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Tesco Fresh & Easy will challenge Kroger 05 Feb 2008

Contributors to this article

Nielsen's Consumer Insight team analyses the competitive threat of Tesco's Fresh & Easy chain

Fresh & Easy: targeted at prime locations for category growth

Tesco's launch of its Fresh & Easy Neighborhood Market in Southern California in November 2007 made US retailers and manufacturers wake up and smell their organic breakfast blend coffee.

Its promise of low prices, convenient shopping alternatives, and fresh/organic quality foods — together with its environmentally- and socially-enviable sustainability efforts — all sound too good to be true to the American market. It begs the question: can one retailer be all things to all consumers? One thing is for sure. Tesco is a formidable
competitor.

Global footprint
Tesco is the UK's largest retailer and the third largest international retailer, operating over 3,200 stores across 13 countries and employing more than 400,000 people.

Tesco touts that its success is due in large part to its ability to deliver a consistently strong customer offering on every visit and every transaction, and by focusing on the company's core purpose: to create value for customers to earn their lifetime loyalty.

And it seems to be working. Just 10 years ago, Tesco was simply a British grocery business. Today, its international businesses reach far beyond just food retailing. With commerce in telecoms, financial services, legal services, books, music, electrical goods and hypermarkets, it has come a long way in a short time. And staying true to its core strategy has paid off with consistent and steady revenue performance.

Ingredients for success
Three words — follow the customer. Sounds simple, but it is what Tesco credits the secret to its turnaround and continued success. Its store and category performance are benchmarked on five components of the “Tesco shopping trip”:

• The prices are good
• I can get what I want
• The staff are great
• I don't queue
• Shopping is easy and enjoyable

And, “doing well by doing good” is equally qualified by its corporate sustainability efforts that make good on its promise of being a responsible company and a good neighbour. From procedures to reduce carbon emissions for its stores and transportation fleet to reformulating foods to promote healthier living, Tesco may have hit the consumer sweet spot by supporting important issues that reverberate across the globe.

Entry in the US — a brave new world
While Tesco's track record in the UK and around the world is undeniable, it may have met a new level of challenge when landing on US soil.

• Will American consumers embrace Fresh & Easy's small, sterile and utilitarian-styled format with limited assortment options?

• Has Tesco taken into account the unique blend of diverse consumer tastes and ethnicities in the areas where they have opened doors?

• Which retailers will potentially take the biggest hit — or offer the biggest threat?

While the retail giant is still getting its feet wet, a detailed review of the California, Phoenix and Las Vegas markets — Tesco's first ports of US entry — provide some important answers.

Read the full review in Consumer Insights

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