Philip Clarke, director of international operations at the UK’s biggest retailer, has said that to succeed internationally it is necessary for retailers to think both globally and locally, identifying six lessons that the retailer has taken from its international expansion.
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Tesco’s international business started 11 years ago, when the company entered the Hungarian market where it is now market leader. Since then, it has expanded into 11 different markets outside the UK, Clarke said, adding that the company’s expansion plans do not end there. “We have a new team establishing operations on the West Coast of the United States where we confidently expect to open stores in 2007,” Clarke commented.
But the road to international growth has not always been smooth and the company has taken valuable lessons form its past endeavours, positioning it well for future growth in new markets.
“You must be flexible if you are to be successful,” Clarke said. “Each market is unique and requires a different approach. That means entering the market in different ways – joint ventures, stand-alone businesses, buying established players or start-ups,” he told delegates from international retailers and manufacturers at the IGD Annual Global Retailing Conference yesterday (13 June). Through the different markets that it is present in, Tesco presents itself in different ways to suit local tastes, Clarke observed.
“The second lesson,” Clarke continued, “is the need to be local. Local customers, local cultures, local supply chains and local regulations. And they all require a tailored offer delivered by local staff.”
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By GlobalDataHighlighting his point, Clarke used the example of wet markets in Bangkok. When the chain first entered this market, its original approach to selling produce was to “stick it all in plastic bags like we did in the UK”. However, when this proved unpopular, Tesco quickly adopted the local custom of wet markets and sales significantly increased as a consequence.
Tesco has also adopted a multi-format approach to its international expansion, with Express, Hypermarkets and different sized supermarkets, Clarke said. “This allows us to reach more customers” and applies in nine out of the 12 markets that the retailer operates in.
In order to succeed in a given market it is necessary to be focused, Clarke said. Tesco therefore has a management team that focuses exclusively on one country.
The Tesco international boss also stressed the importance of capability, stating that the retailer invests in developing capability in people, through training, and in processes and systems.
Finally, Clarke said, international expansion is not just about opening stores, it’s about building brands. This is done through both the quality of the shopping experience and the quality of own brand products, which are required to meet vigorous benchmark standards. High quality own label products, Clarke said, allow the retailer to build good relationships with customers and keeps people coming back to the stores.
“These six lessons have evolved into the strategy for Tesco outside the UK – important lessons about establishing winning positions,” Clarke concluded.
