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Tesco’s Grocery Retail in the US
In 2007, UK based company Tesco PLC entered the US grocery market with its Fresh & Easy stores. This article will examine Tesco’s market entry, performance, the difficulties it has faced, and what the future holds for Fresh & Easy.
On the surface, the US grocery retail market is an attractive prospect to potential new entrants. It is massive in size and scale compared to the UK, and has the potential to provide huge returns. In reality, grocery retailing in the US is a tough, highly competitive industry where market share is difficult to attain. Tesco spent years researching, planning, and preparing for its entry into the US market. Research led the company to choose the West Coast as a starting point.
The company had to take into account possible challenges it may have faced to its entry, in particular the differences between consumer preferences in the UK and the US and the domination of strong incumbents in the US grocery market. Other UK retailers have failed to achieve success within the US retail market. While this does not bode well for the company, Tesco looked at a different strategy in the hope of seeing greater success.
The company has been underperforming in the US market, and to date has operated at a loss. Various factors have contributed to the company’s underperformance. Amongst other things, Tesco’s lack of local knowledge, the economic downturn, and differences in cultural norms and consumer preferences have all contributed to its lack of success. Tesco is continuing to plough on with its US expansion, making changes as it feels necessary, subject to financial results and customer feedback.