business news in context, analysis with attitude

• In the UK, The Independent has a piece about Tesco’s planned entry into the US next month with a number of 10,000 square-foot stores in Southern California, Arizona and Nevada. Two paragraphs bear repeating:

“Tesco grew in the UK by copying the pile-it-high-sell-it-cheap strategy of retailers such as Wal-Mart. But it now claims that, after years of careful and secretive research, it can offer US shoppers something they do not already have: "Whole Foods quality at Wal-Mart prices", via local convenience stores.”


“Tesco is not trying to compete directly with the so-called ‘big box retailers’, such as Safeway, Wal-Mart, Costco and Target, which operate huge, largely out-of-town supermarkets. Instead, it aims to supply a growing number of shoppers who are eschewing the traditional American weekly drive to a hypermarket in favour of more frequent trips to a local store.”


“As well as offering its own products with no artificial colours and flavours and no trans-fats, Tesco is positioning its chain as the ‘good guy’ of US retailing. In an industry where leading players such as Wal-Mart have been heavily criticised for low pay and poor working conditions, it is offering staff benefits such as health insurance, pensions and paid holidays.”
KC's View:
MNB is forever preaching that to be successful when competing with the major chains, one has to do something different, whether in terms of product selection, marketing image, locations, whatever. But there has to be a differential advantage, or there is really no advantage at all.

It would certainly seem that this is what Tesco is trying to do. It remains to be seen whether US customers will appreciate the effort and respond …

One other note. In chatting with a variety of people the past few weeks, I’ve picked up an undercurrent of “chatter” that suggests Tesco’s US staffers may be approaching the marketplace – and especially the buying function – with an arrogance that may go beyond a healthy self-confidence. If this is true – and it is not, to be sure, a universal reaction to Tesco – then the company may be in for a bit tougher ride than it would otherwise.