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February 09, 2006
British Invasion: The Tesco Test
Get ready for an acceleration of intelligence-driven retailing in America. Indeed, this is one area of business in which the real innovators in customer intelligence have been overseas as opposed to the U.S. Now, one key retail player -- UK-based Tesco PLC -- is coming to the states to compete against other retail powerhouses such as Wal-Mart Stores Inc. and Costco Wholesale Corp.
Tesco intends to set up shop on the U.S. West Coast in 2007 with a convenience-store format. The company intends to annually invest £250 million ($436.1 million) on its West Coast expansion. It has already entered China and other emerging markets and half its shelf space is outside the UK.
"We have been watching the U.S. market for many years, but never thought we had the right approach and format for the American consumer," Chief Executive Terry Leahy said. "We could have gone in before, but our new format is tailored to the U.S. and brings something original."
Of course, there are skeptics. UK-based J Sainsbury PLC, the U.K. supermarket group, for instance, performed miserably in the US and eventually pulled out. "Any company which tries to enter the U.S. market ends up destroying shareholder value," said a trader in a Wall Street Journal article.
But they were not the innovators in customer intelligence that Tesco has turned out to be. That could prove a serious competitive advantage. "Everyone is an important competitor and you try to respect them and learn from them, but not be the same even though we're all competing for the same dollar," Leahy said.
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