CGT Inside News - 2/15/2006
Tesco Brings New Convenience Store Concept to America
February 15, 2006 - The UK's largest grocery retailer and the fifth largest retailer in the world, Tesco PLC, intends to enter the United States retail market with a new convenience format, beginning on the West Coast in 2007. Tesco allocated almost $500 million in capital to fund the new concept, which is modelled on its innovative Express format now operating in more than 800 stores across five countries.
So how will Tesco's latest move in international expansion impact the Unites States retail market?
While Tesco is concentrating soley on convenience chains in the West Coast for next year, it has a broad portfolio of store models and market opportunities to explore once the initial consumer reaction to the its brand is assessed, say AMR Research Analysts Scott Langdoc, Nigel Montgomery and Robert Garf. Should it decide to roll-out this new format nationally, Tesco may give convenience store operator 7-Eleven - which operates close to 1,200 stores in California alone -- a run for its money. In addition, AMR identifies Tesco's hold on Private Label and Store Execution as two points of competitive advantage:
The breadth and depth of private-label merchandise that Tesco stocks in its stores can be as much as four to five times higher (in percentage terms) than that of a typical U.S. grocer. The Tesco house brands are well entrenched in minds and wallets of regular shoppers, and customer satisfaction is very high. Similar approaches in the United States could yield a competitive advantage if consumers take readily to the combination of high quality and lower prices and adjust their buying habits away from better-known brands.
Tesco is well known in retail IT circles for being an early adopter of leading innovations like demand-driven assortment-to-space planning, perishables management, and universal supplier collaborative demand planning. This leads to better category performance while improving stock conditions and product quality in the fresh departments.
All things considered, retailers need to consider the impact that Tesco's entrance into the United States market can make on their businesses, even if its scope seems limited at the moment.
[PRINTER FRIENDLY VERSION]
February 15, 2006 - The UK's largest grocery retailer and the fifth largest retailer in the world, Tesco PLC, intends to enter the United States retail market with a new convenience format, beginning on the West Coast in 2007. Tesco allocated almost $500 million in capital to fund the new concept, which is modelled on its innovative Express format now operating in more than 800 stores across five countries.
So how will Tesco's latest move in international expansion impact the Unites States retail market?
While Tesco is concentrating soley on convenience chains in the West Coast for next year, it has a broad portfolio of store models and market opportunities to explore once the initial consumer reaction to the its brand is assessed, say AMR Research Analysts Scott Langdoc, Nigel Montgomery and Robert Garf. Should it decide to roll-out this new format nationally, Tesco may give convenience store operator 7-Eleven - which operates close to 1,200 stores in California alone -- a run for its money. In addition, AMR identifies Tesco's hold on Private Label and Store Execution as two points of competitive advantage:
All things considered, retailers need to consider the impact that Tesco's entrance into the United States market can make on their businesses, even if its scope seems limited at the moment.
[PRINTER FRIENDLY VERSION]