Friday, January 4, 2008

Charting Tesco's Success In Ireland: Is it an Object Lesson for Fresh & Easy in the USA?

Last month, British-based retailer Tesco opened its 100th supermarket in Ireland. This achievement is significant for a couple of reasons.

First, The British grocer only entered Ireland in 1997, a mere decade ago. Second, in that ten year period Tesco, parent company of Fresh & Easy Neighborhood Market in the USA, has become the number one food retailer on the Emerald Island.

In an article in today's, the publication's consumer correspondent Paul Kelly charts Tesco's road to success in Ireland. In the piece, Kelly talks about how the retailer has not only challenged the food retailing market in Ireland, but also has taken on retailers of many formats by selling electronics, clothes and other goods in its stores. This is a practice Tesco is well known for doing internationally.

The current success for Tesco in Ireland is all the more important for the retailer since it tried to crack the Irish market once before, and failed.

This time around Tesco, which is opening a new supermarket in Ireland every five months, is not only succeeding, but also is becoming a major service business player by offering Irish consumers everything from mobile phone plans and insurance, to personal loans and credit cards, in its supermarkets, along with fresh meats, groceries and other food and non-food products.

Tesco's Ireland example could portend the retailer's success in the Western U.S. with its Fresh & Easy Neighborhood Market stores. Although the Fresh & Easy markets are smaller, the grocer has plans to have as many as 200 of the stores operating in the Western USA by the end of this year or early 2009.

Tesco also is looking at putting Fresh & Easy stores in Chicago, New York and Florida, perhaps beginning as early as late 2008 or early 2009. The retailer's strategy is to create a critical mass of stores, similar to what Walgreens has done with drug stores and what Starbucks does with coffee shops.

Thus far the main focus of this "critical mass" strategy is Southern California. Tesco is currently opening stores using a strategic plan that essentially will ring the Southern California region with stores in the next two years.

The grocer is following this same plan to a slightly lessor degree in the Phoenix metro region in Arizona and in Las Vegas, Nevada. Additionally, Tesco is currently locking up real estate for Fresh & Easy store locations in Northern California, where it plans to follow this same strategy, opening as many as 30-50 stores in the next couple years.

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