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.
Associated British Foods-owned bread brand Kingsmill is set to return to Tesco shelves, after the UK's largest retailer delisted the brand in March....
US foodservice distributor Sysco has pulled the plug on its plan to buy local rival US Foods, four months after the country's competition watchdog moved to block the deal....
In an announcement that would have surprised few, Kraft Foods Group said today (1 July) its shareholders had thrown their weight behind the plans to combine the business with HJ Heinz. The market's at...
Whole Foods Market already had a reputation for being pricey. This will only be compounded by news that the retailer has been accused of routinely overcharging consumers by overstating the weight of p...
- What Grexit could mean for the food industry
- just-food's pick: Top trends at Fancy Food Show
- Focus: Can General Mills improve US retail sales?
- How Russia's embargo affects domestic firms
- Focus: ConAgra own-label exit plan is about growth
- Mondelez launches Oreo Thins in US
- Leclerc to contest ruling on supplier payments
- North Castle acquires stake in Sprout
- ABF's Kingsmill returns to Tesco
- UK's first free range milk label launched
- Nestlé SA in Packaged Food: Confectionery, Ice Cream, Sauces, Dressings and Condiments (World)
- ALDI 2015: Radically transforming Anglo Saxon grocery markets
- The Sugar Backlash and its Effects on Global Consumer Markets
- Management briefing: just-food’s industry outlook for 2015
- Global Savory Snacks Market: News and Events April 2015