These days there’s little you can’t buy from Tesco. Furniture, fashion and electrical goods have long since taken their place on the shelves alongside fruit and veg. It was intriguing to learn this week, courtesy of The Daily Telegraph, that Tesco is even going to launch a “fitness farm” next year.
But the beginning of it all was food. An improved food offer allowed Tesco to topple Sainsbury’s from the top of the grocery tree and the strength of that offer helped lay the foundations for a move into general merchandise.
And it’s food that is at the heart of Tesco’s new US enterprise Fresh & Easy. When Tesco revealed its intention to open stateside, the news was greeted with gasps of admiration and disbelief. There was concern that an American launch might be reflective of a hubris that has brought many British retail names to a low when they’ve tried to break into the US.
But early reports from visitors to Fresh & Easy stores have been, in the main, very complimentary. It sounds as if Tesco may have pulled off the seemingly impossible and brought US consumers, the best catered-for retail customers in the world, something new and very much in keeping with the trend towards convenience and making life easier.
Tesco is right to have launched a start-up business, rather than making an acquisition. Takeovers, especially when there are 3,000 miles of ocean between buyer and seller, have a nasty habit of coming unravelled.
Building a business from scratch, but at speed, gives Tesco clear control over its development and should allow it to avoid the cultural issues that often undermine mergers and acquisitions.
Fresh & Easy is only a couple of weeks old, so it’s too early to make hard and fast predictions about its eventual success. But first impressions do count and they seem to be good. TNS Retail Forward is already raising the prospect that Tesco will be one of the US’ top 10 supermarket operators by 2015.
There will certainly be some schadenfreude among retailers if Tesco messes up, but many in the industry hope – however grudgingly – that the venture is a success.
Tesco is one of the world’s best companies and a powerful symbol of the professionalism and verve of British retail. Tough as it may be as a competitor, its strengths force everyone else to raise the bar and that’s good for the industry and the consumer.
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