Blog: Tesco scrambling for growth in developed markets
Katy Askew | 15 April 2014
I got an early message this morning (15 April) from our sister site, www.just-style.com. "Tesco are relaunching in the US," it read.
"Don't get excited, not grocery - clothes," it continued.
As just-style reports, Tesco plans to launch F&F stores in the northeast of the country, with the first location to open in Boston. This will be followed by four stores in New York and stores in Philadelphia and Newport, Virginia.
Call me a sceptic, but I am sceptical.
Having failed to turn a profit in the highly competitive US grocery market - just months after the group had to retreat with its tail between its legs - what makes the company think it will have more luck with its clothing offering?
In the UK, F&F sales exceeded GBP1bn (US$1.5bn) last year and LFL growth was 9%. But there isn't all that much that differentiates F&F - aside from the fact that you can pick something up while you get your groceries. Does the business stand out in terms of quality, design or even value? In a word, no.
Transplanting this to the US - a highly saturated, extremely competitive market with mature players that already have strong brand recognition - doesn't sound like a recipe for success. In fact, it sound like good money after bad.
The US has been an elephant's graveyard for UK retailers that have been lured by the fact that it is the world's largest consumer market with affluent and big-spending shoppers. For instance, M&S - that bastion of UK apparel retail - had to retreat from the US with its tail between its legs some years ago.
There have been some successes. Top Shop, for instance, operates four stores in New York, Chicago, Los Vegas and LA. The brand is also available through Nordstrom's. But then, Top Shop has something that F&F lacks: a strong identity, Kate Moss, attitude that appeals to youthful types.
Another Tesco announcement that crossed the just-food news desk raised some eyebrows last week. The retailer is reportedly looking at rolling out a food-to-go concept in London.
As our editor, Dean Best, argues this move also raises some big questions. It would see Tesco entering a saturated and highly competitive market where it will come up against established and strong competitors.
These initiatives combined suggest one thing. Tesco is clutching at straws to eke out some - any - growth in developed markets.
The UK's Serious Fraud Office has launched an investigation into the GBP263m (US$424.6m) black hole in Tesco's accounts, the retailer confirmed today (29 October)....
A mobile app that claims to be the "most comprehensive food-rating database available" to US consumers has raised the hackles of the country's food manufacturers....
Just weeks after announcing a purchasing tie-up in France with local rival Systeme U, Auchan has outlined an international agreement with Germany's Metro Group....
Saudi food-to-retail group Savola has posted a mixed set of profit figures for the first nine months of the year....
Tesco has reported a massive 92% drop in first half profits as the accounting fiasco continues to widen....
- Why data is key to shopper satisfaction
- Interview: Premier sets sights overseas
- On the money: Spreads, ice cream top Unilever woes
- Sustainability Watch: Roberto Ciati, Barilla
- Short-termism decides Chiquita's future
- Hovis CEO Spooner leaves bread maker
- Glanbia chairman to step down
- General Mills to launch "Ancient Grains" Cheerios
- Kellogg earnings beat forecast but sales pressured
- Hershey lowers FY sales, earnings forecasts
- The Future of Retailing in the UK to 2017
- Supermarkets in China
- Pubs & Bars in the UK - Industry Market Research Report
- Consumer Trends Analysis: Understanding Consumer Trends and Drivers of Behavior in the Chinese Confectionery Food Market
- Kerry Group plc - SWOT, Strategy and Corporate Finance Report