TESCO Article: Importing Tesco to the United States Chelyn, Mary and Keith

BACKGROUND INFORMATION: Over 30% market share in the UK Over 30% market share in the UK With over 2,500 store locations With over 2,500 store locations Flourishing in parts of the Europe and Asian markets Flourishing in parts of the Europe and Asian markets Global Sales of $65 billion U.S. dollars Global Sales of $65 billion U.S. dollars Total Profits of $3.5 billion U.S. dollars Total Profits of $3.5 billion U.S. dollars

FOUR RETAIL FORMATS: 1. Tesco Express 3,000 sq. feet. 3,000 sq. feet. A smaller store format A smaller store format sells fresh produce, wine and in-house baked goods sells fresh produce, wine and in-house baked goods 2. Tesco Metro 7,000 to 15,000 sq. feet. 7,000 to 15,000 sq. feet. Same products as Express Same products as Express More variety More variety

FOUR RETAIL FORMATS CONT: 3. Tesco Supercenters 20,000 to 50,000 sq. feet20,000 to 50,000 sq. feet Carry additional non-food itemsCarry additional non-food items For example: DVDs and books For example: DVDs and books 4. Tesco Extras Over 60,000 sq. feetOver 60,000 sq. feet Supreme Variety Product MixSupreme Variety Product Mix Wide variety of products:Wide variety of products: Clothing, housewares, electronics, cosmetics and garden furniture Clothing, housewares, electronics, cosmetics and garden furniture

Proposed Course of Action: Strong entrance into the US market Strong entrance into the US market Needed to take market share as soon as possible Needed to take market share as soon as possible stores are to be built initially stores are to be built initially Planning to invest $400 million to build stores Planning to invest $400 million to build stores

Proposed Course of Action Con’t: Provide variety of store formats to give flexibility Provide variety of store formats to give flexibility Express format is emphasis on US expansion Express format is emphasis on US expansion Express format offers same product variety and depth as larger stores but in a smaller and more convenient layout Express format offers same product variety and depth as larger stores but in a smaller and more convenient layout

Proposed Course of Action: Plans to locate on west coast exclusively Plans to locate on west coast exclusively Competitors like Wal-Mart less prevalent on west coast Competitors like Wal-Mart less prevalent on west coast Lack of a dominant retailer here Lack of a dominant retailer here Fully take advantage of all retail formats Fully take advantage of all retail formats

Identifying the Opportunity: creating a competitive advantage Customize to the community: offering a unique combination and creating efficiency Customize to the community: offering a unique combination and creating efficiency Following trends: adding relevance Following trends: adding relevance Employee satisfaction: learning from competitors Employee satisfaction: learning from competitors Creating customer value: connecting with the community Creating customer value: connecting with the community The success of their growth: the reason for expansion The success of their growth: the reason for expansion

Customizing: offering a unique combination and creating efficiency Four different store formats: Express, Metro, Extra, Superstore and online Four different store formats: Express, Metro, Extra, Superstore and online meet different needs for customers wherever they live and however they want to shop. meet different needs for customers wherever they live and however they want to shop. –Each offers different product line –Offers insurance, gas, clothing: competitors offer The Tescos being introduced on the west coast will be of the “express” format, and typically wont offer gas stations.

Following trends: adding relevance The movement towards organic and healthful products has affected American shopping habits The movement towards organic and healthful products has affected American shopping habits Tesco offers a Healthy Living brand that has been so popular, 80 new products have been added. They have also launched a Kid ’ s Healthy range of over 40 lines. Tesco offers a Healthy Living brand that has been so popular, 80 new products have been added. They have also launched a Kid ’ s Healthy range of over 40 lines. These products are bought by over a million customers each week These products are bought by over a million customers each week

Following trends: adding relevance cont. Tesco has invested over 10 million euros in reducing the prices of these products, and the total organic sales have grown 26% in the last year, including 30% growth in poultry and fish. Tesco has invested over 10 million euros in reducing the prices of these products, and the total organic sales have grown 26% in the last year, including 30% growth in poultry and fish. Also offer diet analysis and online menu Also offer diet analysis and online menu Ability to provide low cost organic foods will give them a competitive advantage over competitors who offer a small selection at high prices. Ability to provide low cost organic foods will give them a competitive advantage over competitors who offer a small selection at high prices. 10,000,000 euros is equal to roughly 20,000,000 dollars

Employee satisfaction: learning from competitors Tesco shares their success with their employees, offering a number of benefits and an attractive salary. Tesco shares their success with their employees, offering a number of benefits and an attractive salary. Two share schemes, they can either save as they earn, and buy Tesco stock at a discounted rate of up to 20%, or buy as they earn. Two share schemes, they can either save as they earn, and buy Tesco stock at a discounted rate of up to 20%, or buy as they earn. Childcare vouchers and a defined benefit pension are offered to part and full- time workers Childcare vouchers and a defined benefit pension are offered to part and full- time workers These benefits maintain a loyal and hardworking staff, while avoiding employee slander : Wal Mart These benefits maintain a loyal and hardworking staff, while avoiding employee slander : Wal Mart

Creating customer value: connecting with the community Tesco offers a Club card, which recently celebrated their 10th anniversary, with one million more customers than the previous year and a total of 13 million cardholders Tesco offers a Club card, which recently celebrated their 10th anniversary, with one million more customers than the previous year and a total of 13 million cardholders customers receive points that are quadrupled into deal tokens, which offer four times the value. customers receive points that are quadrupled into deal tokens, which offer four times the value. Tesco cardholders can easily redeem magazine subscriptions, theme park tickets, travel deals, and driving lessons. Tesco cardholders can easily redeem magazine subscriptions, theme park tickets, travel deals, and driving lessons. This offers a large incentive for consumers to shop at Tesco, and more brand name loyalty when the points are used for other activities. This offers a large incentive for consumers to shop at Tesco, and more brand name loyalty when the points are used for other activities.

The success of their growth: the reason for expansion Although the economy and unemployment have led to a loss in disposable income, Tesco group sales grew 16.7% to 43.1 billion euros. Although the economy and unemployment have led to a loss in disposable income, Tesco group sales grew 16.7% to 43.1 billion euros. Group profits before taxes increased by 18% Group profits before taxes increased by 18% Underlying earnings per share grew by 15.1%. Underlying earnings per share grew by 15.1%. Cost control and productivity have absorbed external costs increases throughout the year. Consequently operating profit for the UK was 14.9% higher and record efficiency savings of 330 million Euros were facilitated by the Step Change Program Cost control and productivity have absorbed external costs increases throughout the year. Consequently operating profit for the UK was 14.9% higher and record efficiency savings of 330 million Euros were facilitated by the Step Change Program

Conclusion Credibility Credibility –Background Established credibility through profits Established credibility through profits Store formats Store formats Location Location –Expanding to the United States Wal-Mart ’ s lack of presence, Tesco can survive and flourish in profit Wal-Mart ’ s lack of presence, Tesco can survive and flourish in profit

Once entering the U.S. Market Once entering the U.S. Market –Utilize their strengths and tailor to the U.S Market Customizing-combination of themes to intrigue the American consumer Customizing-combination of themes to intrigue the American consumer Local Trends-diet analysis to local tastes Local Trends-diet analysis to local tastes Public Image-employee satisfaction and customer delight Public Image-employee satisfaction and customer delight –Promote Uniqueness Express and Metro stores can be successful, because America has not been exposed to its uniqueness Express and Metro stores can be successful, because America has not been exposed to its uniqueness Conclusion

Questions?

Sources Bhatnagar, Parija. "Wal-Mart, Kroger, Safeway Better Watch Out. the British are Coming!" CNNMoney. 27 Feb CNNMoney. 16 Apr Bhatnagar, Parija. "Wal-Mart, Kroger, Safeway Better Watch Out. the British are Coming!" CNNMoney. 27 Feb CNNMoney. 16 Apr "International." Tesco. 17 Apr "International." Tesco. 17 Apr